<PAGE> 1
As filed with the Securities and Exchange Commission on April 30, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) April 15, 1997
VORNADO REALTY TRUST
(Exact Name of Registrant as Specified in Its Charter)
Maryland
(State or Other Jurisdiction of Incorporation)
1-11954 22-1657560
(Commission File Number) (IRS Employer Identification No.)
Park 80 West, Plaza II, Saddle Brook, New Jersey 07663
(Address of Principal Executive Offices) (Zip Code)
(201) 587-1000
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Page 1
Exhibit Index on Page 13
<PAGE> 2
Item 1. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Mendik Transaction.
- -------------------
On April 15, 1997, Vornado Realty Trust (the "Company"), a
real estate investment trust ("REIT") organized under the laws of the state of
Maryland, consummated the acquisition, through an operating partnership, of
interests in all or a portion of seven Manhattan office buildings (the "Mendik
Properties") and certain management and leasing assets held by the Mendik Group
(which means, as used herein, individually or collectively as the context may
require, Bernard H. Mendik, David R. Greenbaum and the entities controlled by
them, including Mendik Realty Company, Inc. and the subsidiaries and affiliates
of such entities) and certain of its affiliates (the "Mendik Transaction").
Simultaneously with the closing of the Mendik Transaction, and in connection
therewith, the Company converted to an Umbrella Partnership REIT (UPREIT) by
transferring (by contribution, merger or otherwise) all or substantially all of
the interests in its properties and other assets to The Mendik Company, L.P., a
Delaware limited partnership which has been renamed Vornado Realty L.P. (the
"Operating Partnership"), of which the Company is the sole general partner. As a
result of such conversion, the Company's activities will be conducted through
the Operating Partnership.
The consideration for the Mendik Transaction was approximately
$656 million, including $264 million in cash, $177 million in the limited
partnership units of the Operating Partnership and $215 million in indebtedness.
The Company financed the cash portion of the Mendik
Transaction by means of a public offering of Series A Convertible Preferred
Shares of Beneficial Interest, liquidation preference $50.00 per share.
In connection with the Mendik Transaction, Bernard Mendik, the
Chairman of the Board of Directors of Mendik Realty, has become Co-Chairman of
the Board of Trustees and Chief Executive Officer of the Mendik Division of the
Company. David Greenbaum has become President of the Mendik Division of the
Company. Steven Roth continues as the Company's Chairman and Chief Executive
Officer.
At any time after a holding period of one year (or two years
in the case of certain holders) following the consummation of the Mendik
Transaction, holders of limited partnership Units (other than the Company) will
have the right to have their Units redeemed in whole or in part by the Operating
Partnership for cash equal to the fair market value, at the time of redemption,
of one Common Share of the Company for each Unit redeemed or, at the option of
the Company, one Common Share of the Company for each Unit tendered, subject to
customary anti-dilution provisions (the "Unit Redemption Right"). In addition to
the foregoing, during the period from the 91st day after the Mendik Transaction
until the first anniversary of the Mendik Transaction, holders of Class E Units
will have the right to have redeemed their Class E Units for cash at a 6%
discount from the fair market value at the time of the redemption of one Common
Share of the Company for each Unit redeemed. Beginning one year following the
consummation of the Mendik Transaction, holders of Units
Page 2
<PAGE> 3
may be able to sell Common Shares received upon the exercise of their Unit
Redemption Right in the public market pursuant to a registration rights
agreement with the Company (a copy of which is attached hereto as an exhibit and
is incorporated herein by reference) or available exemptions from registration.
No prediction can be made about the effect that future sales of such Common
Shares will have on the market price for Common Shares.
For a more detailed description of the Mendik Transaction, see
the Company's Current Report on Form 8-K dated March 12, 1997 filed with the
Securities and Exchange Commission on March 26, 1997.
Items 3-4. Not Applicable.
Item 5. Other Events.
Term Loan.
- ----------
On April 15, 1997, the Operating Partnership, as borrower, the
Company, as guarantor, and Union Bank of Switzerland, New York Branch ("UBS")
entered into a Credit Agreement pursuant to which the Company borrowed
$400,000,000. The loan bears interest at the rate of LIBOR plus .625% and
matures, assuming exercise of extension options, on April 14, 1998. A copy of
the Credit Agreement is attached as an exhibit hereto and is incorporated herein
by reference.
Puerto Rico Transactions.
- -------------------------
On April 18, 1997, the Company announced that it acquired The
Montehiedra Town Center located in San Juan, Puerto Rico, from Kmart Corporation
("Kmart") for approximately $74 million, of which $63 million is newly-issued
ten year indebtedness. The Montehiedra shopping center, which opened in 1994,
contains 525,000 square feet, including a 135,000 square foot Kmart. In
addition, the Company agreed to acquire Kmart's 50% interest in the Caguas
Centrum Shopping Center, which is currently under construction, located in
Caguas, Puerto Rico. This acquisition is expected to close in 1998. A copy of
the Company's Press Release relating to this transaction is attached hereto as
an exhibit and is incorporated herein by reference.
Agreement to Purchase Mortgage.
- -------------------------------
On April 21, 1997, Tier-TMC Corp., a New York corporation (the
"Purchaser"), entered into a Purchase Agreement (the "Purchase Agreement") with
a bank pursuant to which the Purchaser agreed to acquire from such bank a
mortgage loan secured by a mortgage on the office building located at 90 Park
Avenue, New York, New York. The Purchaser executed the Purchase Agreement as
nominee for the Company. The purchase price of the mortgage loan is $185
million. The mortgage loan, which is in default, has a face value of $193
million. The purchase is subject to approval by the loan participants and is
expected to be completed during the second quarter of 1997. A copy of the
Company's Press Release relating thereto is attached as an exhibit hereto and is
incorporated herein by reference.
Item 6. Not Applicable.
Page 3
<PAGE> 4
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
Not Applicable. (Financial Statements for the Mendik
Properties were previously filed with the Company's Current Report on Form 8-K
dated March 12, 1997 filed with the Securities and Exchange Commission on March
26, 1997.)
(b) Pro Forma Financial Information. The following pro
forma financial statements of the Company reflecting the Mendik Transaction are
attached as Annex A:
Annex Financial Statements
A Condensed consolidated pro forma financial statements for the
Company for the year ended December 31, 1996
Page 4
<PAGE> 5
(c) Exhibits Required by Item 601 of Regulation S-K.
Exhibit No. Exhibit
----------- -------
2.1 Agreement for Contribution of Interests in 1740
Broadway Investment Company, dated as of April 15,
1997, by and among, The Mendik Company, L.P.,
Mendik 1740 Corp. and Certain Partners of 1740
Broadway Investment Company
2.2 Agreement for Contribution of Interests in Eleven
Penn Plaza Company, dated as of April 15, 1997, by
and among, The Mendik Company, L.P., The
Partners in M/F Associates, M/F Eleven Associates
and M/S Associates and M/S Eleven Associates and
Bernard H. Mendik
2.3 Agreement for Contribution of Interests in 866 UN
Plaza Associates LLC, dated as of April 15, 1997, by
and among, The Mendik Company, L.P., The
Members of 866 UN Plaza Associates LLC and
Bernard H. Mendik
2.4 Agreement for Contribution of Interests in M330
Associates, dated as of April 15, 1997, by and among, The
Mendik Company, L.P., The Partners in M330 Associates and
The Mendik Partnership, L.P.
2.5 Agreement for Contribution of Interests in 570
Lexington Investors, dated as of April 15, 1997, by
and among, The Mendik Company, L.P., Mendik
Realty Company and The Partners of 570 Lexington
Investors
2.6 Agreement for Contribution of Interests in B&B Park Avenue
L.P., dated as of April 15, 1997, by and among, The Mendik
Company, L.P., Mendik RELP Corporation and The Partners of
B&B Park Avenue L.P.
2.7 Agreement for Contribution of Interests in Two Penn
Plaza Associates L.P., dated as of April 15, 1997, by
and among, The Mendik Company, L.P., The
Partners of Two Penn Plaza Associates L.P. and
Bernard H. Mendik
Page 5
<PAGE> 6
2.8 Contribution Agreement (Transfer of 99% of REIT Management
Assets from Mendik/FW LLC to the Operating Partnership),
dated as of April 15, 1997, between FW/Mendik REIT, L.L.C.
and The Mendik Company, L.P.
2.9 Assignment and Assumption Agreement (Transfer of 1%
Interest in REIT Management Assets and Third- Party
Management Assets from Mendik/FW LLC to the Management
Corporation), dated as of April 15, 1997, between
FW/Mendik REIT, L.L.C. and Mendik Management Company, Inc.
4.1 First Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of April 15,
1997
10.1 Credit Agreement, dated as of April 15, 1997, between
Vornado Realty L.P., as Borrower, Vornado Realty Trust, as
General Partner and Union Bank of Switzerland (New York
Branch), as Bank and Union Bank of Switzerland (New York
Branch), as Administrative Agent
10.2 Registration Rights Agreement, dated as of April 15, 1997,
between Vornado Realty Trust and the holders of Units
listed on Schedule A thereto
10.3 Noncompetition Agreement, dated as of April 15, 1997, by
and among Vornado Realty Trust, The Mendik Company, L.P.,
and Bernard H. Mendik
10.4 Employment Agreement, dated as of April 15, 1997, by and
among Vornado Realty Trust, The Mendik Company, L.P., and
David R. Greenbaum
99.1 Press release, dated April 15, 1997, of Vornado Realty
Trust announcing its completion of the previously
announced combination with the Mendik Company and certain
of its affiliates
99.2 Press release, dated April 18, 1997, of Vornado Realty
Trust, announcing its acquisition of The Montehiedra Town
Center and its agreement to acquire a 50% interest in the
Caguas Centrum Shopping Center
Page 6
<PAGE> 7
99.3 Press release, dated April 21, 1997, of Vornado Realty
Trust announcing its execution of an agreement to acquire
a mortgage note secured by 90 Park Avenue
Items 8-9. Not applicable.
Page 7
<PAGE> 8
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 hereunto duly authorized.
VORNADO REALTY TRUST
Dated: April 30, 1997 By: /s/ Joseph Macnow
-------------------
Joseph Macnow
Vice President --
Chief Financial Officer
Page 8
<PAGE> 9
INDEX TO ANNEXES
Annex Financial Statements
----- --------------------
A Condensed consolidated pro forma financial statements for the
Company for the year ended December 31, 1996
Page 9
<PAGE> 10
Annex A
CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The unaudited condensed consolidated pro forma financial information set
forth below presents (i) the condensed consolidated pro forma statement of
income for the Company for the year ended December 31, 1996 as if the Mendik
Transaction and certain related transactions were consummated and the offering
of Series A Preferred Shares of Beneficial Interest, liquidation preference
$50.00 per share (the "Offering") and the use of proceeds therefrom had occurred
on January 1, 1996 and (ii) the condensed consolidated pro forma balance sheet
of the Company as of December 31, 1996 as if the Mendik Transaction and certain
related transactions were consummated and the Offering and the use of proceeds
therefrom had occurred on December 31, 1996.
The unaudited condensed consolidated pro forma financial information is
not necessarily indicative of what the Company's actual results of operations
or financial position would have been had the Mendik Transaction and related
transactions been consummated and had the Offering and the use of proceeds
therefrom occurred on the dates indicated, nor does it purport to represent the
Company's results of operations or financial position for any future period.
The unaudited condensed consolidated pro forma financial information
should be read in conjunction with the Consolidated Financial Statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and the financial statements of the significant
entities involved in the Mendik Transaction previously included in the
Company's Current Report on Form 8-K filed with the Commission on March 26,
1997. In management's opinion, all adjustments necessary to reflect the Mendik
Transaction and the related transactions and the Offering and the use of
proceeds therefrom have been made.
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
VORNADO MENDIK ADJUSTMENTS COMPANY
---------- ----------- -------------- ------------
ASSETS:
<S> <C> <C> <C> <C>
Real estate, net $ 246,249 $ 187,433 $ 390,950 (A) $ 824,632
Cash and cash equivalents 117,245 50,654 (263,721) (A) 129,270
(50,908) (A)
276,000 (B)
Investment in and advances to
Alexander's, Inc. 107,628 107,628
Investment in partnerships 19,863 19,863
Investment in Management
Company 7,425 (A) 7,425
Officer's deferred compensation
expense 22,917 22,917
Mortgage note receivable 17,000 17,000
Receivable arising from straight-
lining of rents 17,052 42,219 (42,219) (A) 17,052
Other assets 37,113 42,855 (6,908) (A) 52,673
(17,718) (A)
(2,669) (C)
========= ========= =========== =============
$ 565,204 $ 343,024 $ 290,232 $ 1,198,460
========= ========= =========== =============
LIABILITIES:
Notes and mortgages payable $ 232,387 $ 283,847 $ (5,000) (A) $ 399,222
(112,012) (A)
Due for US Treasury Obligations 9,636 9,636
Deferred leasing fee income 8,373 8,373
Officer's deferred compensation
payable 25,000 25,000
Negative investment in partnership 5,399 (5,399) (A) -
Other liabilities 13,551 13,806 (314) (C) 27,043
--------- --------- ----------- ------------
288,947 303,052 (122,725) 469,274
--------- --------- ----------- ------------
Minority interests -- -- 176,929 (A) 176,929
--------- --------- ----------- ------------
PREFERRED SHAREHOLDERS' EQUITY 276,000 (B) 276,000
COMMON SHAREHOLDERS' EQUITY 276,257 39,972 (39,972) (A) 276,257
--------- --------- ----------- ------------
276,257 39,972 236,028 552,257
--------- --------- ----------- ------------
$ 565,204 $ 343,024 $ 290,232 $ 1,198,460
========= ========= =========== ============
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL HISTORICAL PRO FORMA COMPANY
VORNADO MENDIK ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Property rentals $87,424 $87,261 $7,071 (E) $181,712
(44)(C)
Expense reimbursements 26,644 13,551 40,195
Other income 2,819 5,378 (5,378)(C) 2,819
------- ------- -------- -------
116,887 106,190 1,649 224,726
------- ------- -------- -------
EXPENSES:
Operating 36,412 46,691 (39)(C) 83,180
116 (H)
Depreciation and amortization 11,589 14,133 (144)(C) 35,559
9,981 (F)
General and administrative 5,167 6,783 (3,788)(C) 8,162
Amortization of officer's deferred compensation
expense 2,083 2,083
------- ------- -------- -------
55,251 67,607 6,126 128,984
------- ------- -------- -------
Operating income 61,636 38,583 (4,477) 95,742
Income applicable to Alexander's 7,956 7,956
Equity in net income of management companies 1,855 1,471 (C) 3,326
Equity in net income of investees 1,663 1,755 (I) 3,418
Interest income on mortgage note receivable 2,579 2,579
Interest and dividend income 3,151 2,536 (20)(C) 5,667
Interest and debt expense (16,726) (23,998) 9,016 (D) (31,708)
Net gain on marketable securities 913 913
Minority interest (10,372)(J) (10,372)
------- ------- -------- -------
Net income 61,364 18,784 (2,627) 77,521
Preferred stock dividends -- -- (19,800)(G) (19,800)
------- ------- -------- -------
Net income applicable to common shareholders $61,364 $18,784 ($22,427) $57,721
======= ======= ======== =======
Net income per share, based on 24,603,442 shares $2.49 $2.35
======= =======
OTHER DATA:
Funds from Operations (1):
Net income applicable to common shareholders $61,364 $18,784 ($22,427) $57,721
Depreciation and amortization of real property 10,583 14,133 9,837 34,553
Straight-lining of property rent escalations (2,676) (1,783) (7,071) (11,530)
Leasing fees received in excess of income
recognized 1,805 1,805
Proportionate share of adjustments to income
from equity investments to arrive at FFO (1,760) 2,747 (970) 17
------- ------- -------- -------
$69,316 $33,881 ($20,631) $82,566
======= ======= ======== =======
CASH FLOW PROVIDED BY (USED) IN:
Operating activities 70,703 29,267 9,407 109,377
Investing activities 14,912 (8,262) (328,638) (321,988)
Financing activities (15,046) (11,706) 270,209 243,457
</TABLE>
- -----------
(1) Funds from operations does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and
is not necessarily indicative of cash available to fund cash needs. Funds
from operations should not be considered as an alternative to net income as
an indicator of the Company's operating performance or as an alternative to
cash flows as a measure of liquidity. The Company's definition of funds from
operations does not conform to the NAREIT definition because the Company
deducts the effect of the straight-lining of property rentals for rent
escalations.
<PAGE> 12
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(A) The Mendik acquisition will be recorded under "purchase accounting" applying
the provisions of Accounting Principles Board Opinion No. 16. The respective
purchase costs will be allocated to acquired assets and assumed liabilities
using their relative fair values as of the closing dates, based on
valuations and other studies which are not yet complete. Accordingly, the
excess of the purchase cost over the net assets acquired has not yet been
allocated to individual assets and liabilities. However, the Company
believes that the excess purchase price will be allocated principally to
real estate.
The purchase costs and preliminary allocation of the excess of cost over net
assets acquired is as follows: (in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
Issuance of units of operating partnership $176,929
Cash paid directly associated with the Mendik acquisition:
Acquisition of partnership interest $109,508
Cash used to reduce existing debt 112,012
Acquisition of Mendik management operations 7,425
Fees and expenses 26,607
Other 8,169 263,721
-------- --------
Purchase Price 440,650
--------
Pro forma net book value of assets acquired:
Net book value of assets acquired per historical
financial statements 39,972
Write-off of deferred assets:
Receivable arising from the straight-lining of rents (42,219)
Tenant acquisition costs (6,908)
Deferred lease fees and loan costs (17,718)
Cash not acquired (50,908)
Cash used to reduce existing debt 112,012
Debt forgiven 5,000
Negative investment in partnerships 5,399
--------
Pro forma net book value of assets acquired 44,630
--------
Pro forma excess of purchase cost over net assets
acquired $396,020
========
Preliminary allocation of excess:
Allocated to Mendik management operations $5,070
Allocated to real estate 390,950
--------
$396,020
========
The total purchase price of $440,650 above excludes
the following:
Debt - wholly owned properties $166,262
- partially owned properties 49,279 215,541
--------
Purchase price, as above 440,650
--------
Total purchase price, including debt $656,191
========
</TABLE>
(B) Reflects proceeds from issuance of $3.25 Series A Convertible Preferred
Offering of $287,500, net of underwriting discount of $11,500.
(C) To reflect adjustments required to record the Company's investment in the
Mendik management operations under the equity method of accounting.
(D) Reflects decrease in interest expense and loan cost amortization resulting
from the reduction and refinancing of debt.
(E) To adjust rentals arising from the straight-lining of property rentals for
rent escalations.
(F) Increase in depreciation due to preliminary allocation of purchase price.
(G) To reflect dividends at a rate of 6.50% plus amortization of the
underwriting discount on the proportionate number of Series A Preferred
Shares used to fund the acquisition.
(H) Increase in operating expenses due to contract changes.
(I) Increase in equity in investees, due to net decrease in interest expense on
refinanced debt.
(J) To reflect minority interest of 9.6% in the Operating Partnership.
<PAGE> 13
EXHIBIT INDEX
-------------
Exhibit No. Exhibit
----------- -------
2.1 Agreement for Contribution of Interests in 1740
Broadway Investment Company, dated as of April 15,
1997, by and among, The Mendik Company, L.P.,
Mendik 1740 Corp. and Certain Partners of 1740
Broadway Investment Company
2.2 Agreement for Contribution of Interests in Eleven
Penn Plaza Company, dated as of April 15, 1997, by
and among, The Mendik Company, L.P., The
Partners in M/F Associates, M/F Eleven Associates
and M/S Associates and M/S Eleven Associates and
Bernard H. Mendik
2.3 Agreement for Contribution of Interests in 866 UN
Plaza Associates LLC, dated as of April 15, 1997, by
and among, The Mendik Company, L.P., The
Members of 866 UN Plaza Associates LLC and
Bernard H. Mendik
2.4 Agreement for Contribution of Interests in M330
Associates, dated as of April 15, 1997, by and among, The
Mendik Company, L.P., The Partners in M330 Associates and
The Mendik Partnership, L.P.
2.5 Agreement for Contribution of Interests in 570
Lexington Investors, dated as of April 15, 1997, by
and among, The Mendik Company, L.P., Mendik
Realty Company and The Partners of 570 Lexington
Investors
2.6 Agreement for Contribution of Interests in B&B Park Avenue
L.P., dated as of April 15, 1997, by and among, The Mendik
Company, L.P., Mendik RELP Corporation and The Partners of
B&B Park Avenue L.P.
2.7 Agreement for Contribution of Interests in Two Penn
Plaza Associates L.P., dated as of April 15, 1997, by
and among, The Mendik Company, L.P., The
Partners of Two Penn Plaza Associates L.P. and
Bernard H. Mendik
<PAGE> 14
2.8 Contribution Agreement (Transfer of 99% of REIT Management
Assets from Mendik/FW LLC to the Operating Partnership),
dated as of April 15, 1997, between FW/Mendik REIT, L.L.C.
and The Mendik Company, L.P.
2.9 Assignment and Assumption Agreement (Transfer of 1%
Interest in REIT Management Assets and Third- Party
Management Assets from Mendik/FW LLC to the Management
Corporation), dated as of April 15, 1997, between
FW/Mendik REIT, L.L.C. and Mendik Management Company, Inc.
4.1 First Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of April 15,
1997
10.1 Credit Agreement, dated as of April 15, 1997, between
Vornado Realty L.P., as Borrower, Vornado Realty Trust, as
General Partner and Union Bank of Switzerland (New York
Branch), as Bank and Union Bank of Switzerland (New York
Branch), as Administrative Agent
10.2 Registration Rights Agreement, dated as of April 15, 1997,
between Vornado Realty Trust and the holders of Units
listed on Schedule A thereto
10.3 Noncompetition Agreement, dated as of April 15, 1997, by
and among Vornado Realty Trust, The Mendik Company, L.P.,
and Bernard H. Mendik
10.4 Employment Agreement, dated as of April 15, 1997, by and
among Vornado Realty Trust, The Mendik Company, L.P., and
David R. Greenbaum
99.1 Press release, dated April 15, 1997, of Vornado Realty
Trust announcing its completion of the previously
announced combination with the Mendik Company and certain
of its affiliates
99.2 Press release, dated April 18, 1997, of Vornado Realty
Trust, announcing its acquisition of The Montehiedra Town
Center and its agreement to acquire a 50% interest in the
Caguas Centrum Shopping Center
99.3 Press release, dated April 21, 1997, of Vornado Realty
Trust announcing its execution of an agreement to acquire
a mortgage note secured by 90 Park Avenue
<PAGE> 1
EXHIBIT 2.1
AGREEMENT FOR CONTRIBUTION OF INTERESTS
IN
1740 BROADWAY INVESTMENT COMPANY
BY AND AMONG
THE MENDIK COMPANY, L.P.,
MENDIK 1740 CORP.
AND
CERTAIN PARTNERS OF 1740 BROADWAY INVESTMENT COMPANY
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE UNITS TO BE ISSUED
HEREUNDER WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO UNITS
MAY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND
UNLESS THE OTHER TRANSFER RESTRICTIONS ON SUCH UNITS HAVE BEEN SATISFIED.
CONTRIBUTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THEIR OWNERSHIP OF UNITS FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION CONTRIBUTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF
THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE
NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Contributions............................................................ 2
2. Consideration; Distributions Prior to Closing............................ 2
3. Acceptance of Contributions.............................................. 3
4. Closing Time and Place................................................... 3
5. Representations and Warranties of Operating Partnership.................. 3
5.1 Organization, Power and Authority, and Qualification................. 3
5.2 Authority Relative to this Agreement................................. 3
5.3 Binding Obligation................................................... 4
5.4 Insolvency........................................................... 4
5.5 Brokers.............................................................. 4
5.6 Valid Consideration.................................................. 4
6. Representations, Warranties and Agreements of Contributors............... 4
6.1 Title; Authority to Assign........................................... 5
6.2 No Breach of Partnership Agreement................................... 5
6.3 Insolvency........................................................... 5
6.4 Litigation........................................................... 5
6.5 Binding Obligation, etc.............................................. 5
6.6 Brokers.............................................................. 5
6.7 Securities Act and Other Representations and Agreements.............. 6
7. Conditions to Completion................................................. 8
7.1 Representations, Warranties and Covenants............................ 8
7.2 Consents............................................................. 8
7.3 No Order or Injunction............................................... 9
7.4 Instruments of Conveyance............................................ 9
8. The Closing.............................................................. 9
8.1 Contributors' and General Partner's Closing Documents................ 9
8.2 Operating Partnership's Closing Document............................. 9
9. Closing Costs............................................................ 10
10. Operation in the Ordinary Course........................................ 10
11. General Provisions...................................................... 10
11.1 Survival of Representations and Warranties.......................... 10
11.2 Notices............................................................. 11
11.3 Governing Law....................................................... 11
11.4 Headings............................................................ 11
11.5 Benefit and Assignment.............................................. 11
11.6 Severability........................................................ 11
11.7 Entire Agreement; Amendment......................................... 12
11.8 No Waiver........................................................... 12
11.9 Consent and Power of Attorney....................................... 12
11.10 Purchase If No Consolidation...................................... 13
</TABLE>
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<PAGE> 3
AGREEMENT FOR CONTRIBUTION OF INTERESTS
[1740 BROADWAY]
THIS AGREEMENT for the Contribution of Interests (this "Agreement") is
made and entered into as of April 15, 1997, by and among The Mendik Company,
L.P. ("Operating Partnership"), a Delaware limited partnership, whose general
partner as of the date hereof is The Mendik Company, Inc., a Maryland
corporation, Vornado Realty Trust, a Maryland real estate investment trust (the
"REIT"), each of the parties listed on Exhibit A annexed hereto who executes a
Partner Consent (hereinafter defined) agreeing to become a party to this
Agreement (collectively referred to herein as "Contributors") and Mendik 1740
Corp., a New York corporation ("Mendik 1740") (in its capacity as a general
partner of the Partnership (hereinafter defined), the "General Partner").
WHEREAS, it is desired to consolidate (the "Consolidation") the assets
of the REIT and interests in seven general or limited partnerships or limited
liability companies of which the General Partner or an affiliate is a general
partner, together with the assets of Mendik Realty Company, Inc and Mendik
Management Company, Inc., each a New York corporation and an affiliate of the
General Partner, with and into Operating Partnership.
WHEREAS, upon completion of and after the Consolidation, the REIT will
become and be the managing general partner of the Operating Partnership;
WHEREAS, Contributors are owners of interests (the "Contributed
Interests") (i) in 1740 Broadway Investment Company, a New York general
partnership (the "Partnership"), which is a limited partner in 1740 Broadway
Associates, L.P., a New York limited partnership ("Associates"), which owns land
and improvements (the "Property") known as 1740 Broadway, New York, New York,
and (ii) in the case of Mendik 1740, in Associates;
WHEREAS, in connection with the consummation of the Consolidation, the
parties hereto desire that Operating Partnership and, if designated by Operating
Partnership, one or more special purpose subsidiary partnerships or limited
liability companies of Operating Partnership or one or more other entities
controlled by Operating Partnership (each a "Designated Subsidiary") acquire all
of the interests in the Partnership through the contribution of such interests
to Operating Partnership and/or one or more Designated Subsidiaries upon the
terms and conditions provided herein;
WHEREAS, it is desired to simultaneously acquire all of the interests
in the Partnership owned by a major partner and its affiliates (together, the
"Major Partner") pursuant to an Agreement (the "Major Partner Agreement")
entered into between Major Partner and FW/Mendik REIT L.L.C., which Major
Partner Agreement will be amended and assigned to Operating Partnership and/or a
Designated Subsidiary prior to the Closing (as hereinafter defined);
<PAGE> 4
All of the foregoing are collectively referred to as the "Transaction".
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, Operating Partnership, Contributors and
the General Partner hereby agree as follows:
1. Contributions. Upon the Closing (hereinafter defined), and subject
to the satisfaction or waiver by Operating Partnership of the conditions set
forth in Section 7 of this Agreement, Contributors shall contribute, convey and
assign to Operating Partnership (and/or Designated Subsidiary) and Operating
Partnership (and/or Designated Subsidiary) shall acquire from Contributors all
of Contributors' right, title and interest in the Contributed Interests (the
"Contributions"), including, without limitation, all of Contributors' interest
in the profits, losses, property and capital of the Partnership allocable to the
Contributed Interests, upon the terms and conditions set forth in this
Agreement.
2. Consideration; Distributions Prior to Closing.
(a) In full consideration for the contribution of the
Contributed Interests, Operating Partnership shall deliver to Contributors (or
their designees as provided below) at the Closing an aggregate of 63,454 units
of limited partnership interests ("Units") in the Operating Partnership, such
Units being of the classes of Units and allocated among the Contributors as set
forth on Exhibit A.
Prior to the Closing, subject to compliance with all applicable
securities laws, any Contributor that is a partnership may give notice to the
Operating Partnership to allocate all or a portion of the Units otherwise
issuable to it among its partners in a manner set forth in the notice and to
issue the Units directly to those partners, and any Contributor who holds
interests in which another person or entity has a beneficial interest may give
notice to the Operating Partnership to issue all or a portion of the Units
otherwise issuable to that Contributor to the beneficial owner of that interest.
In such event, as a condition to receiving any Units, any such partners of any
Contributor or any such beneficial holder shall execute a Partner Consent (the
"Partner Consent") in the form annexed to and made part of the Confidential
Solicitation of Consents and Private Placement Memorandum (the "Memorandum")
dated March 29, 1997 and shall make to the Operating Partnership the
representations and warranties and agreements in Section 6.7(a), (b), (c) and
(d) pursuant to an instrument reasonably satisfactory to the Operating
Partnership (in addition to the Partner Consent to be executed by the
Contributor).
(b) On the date of the Closing (the "Closing Date"), the
General Partner shall cause the Partnership to satisfy any outstanding
liabilities and to distribute any remaining cash to its partners.
(c) The Operating Partnership shall cause any amounts
collected by Associates after the Closing Date relating to the period through
the Closing Date with respect to refunds of real estate taxes paid by Associates
(less any costs incurred by Associates, the
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<PAGE> 5
Partnership or the Operating Partnership in obtaining such refunds and less any
portion of such refunds required or, in the REIT's reasonable determination,
estimated to be required to be paid to tenants) to be paid to the General
Partner, as agent for the Contributors and certain other parties, not later than
10 days after the end of the month in which such amounts are collected, and the
General Partner shall promptly distribute such amounts to the Contributors.
3. Acceptance of Contributions. Subject to satisfaction of the
conditions listed or referred to in Section 7, Operating Partnership hereby
agrees that at the Closing it shall accept or, at its election, cause a
Designated Subsidiary to accept all or part of, the Contributions and shall
assume any and all rights, obligations and responsibilities of Contributors as
owners of the Contributed Interests that arise subsequent to the Closing Date.
4. Closing Time and Place. Unless another date or place is agreed to by
the parties, the closing of the Contributions (the "Closing") shall take place
contemporaneously with the closing of the Consolidation at the offices of
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York 10036,
or such other place and time as Operating Partnership and the General Partner
shall agree upon, upon the satisfaction or waiver of all conditions to the
Closing set forth in Section 7 hereof.
5. Representations and Warranties of Operating Partnership. Operating
Partnership hereby represents and warrants to Contributors as follows, which
representations and warranties shall be true and correct on the Closing Date:
5.1 Organization, Power and Authority, and Qualification. Operating
Partnership is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. The REIT is a real estate
investment trust duly organized, validly existing and in good standing under the
laws of the State of Maryland. Each of Operating Partnership and the REIT has
the requisite power and authority to carry on its respective business as it is
now being conducted. Each of Operating Partnership and the REIT is qualified to
do business and is in good standing in each jurisdiction in which the character
of its property owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, as the case may be.
5.2 Authority Relative to this Agreement. Operating Partnership has
taken all action necessary to authorize the execution, delivery and performance
of this Agreement by Operating Partnership and no other proceedings on the part
of Operating Partnership are necessary to authorize the execution and delivery
of this Agreement and the consummation of the Contributions.
None of the execution and delivery of this Agreement by Operating
Partnership, the consummation by Operating Partnership of the Contributions or
compliance by Operating Partnership with any of the provisions hereof shall (i)
conflict with or result in any breach of any provisions of the partnership
agreement of Operating Partnership; (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give
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<PAGE> 6
rise to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which
Operating Partnership is a party or by which it or any of its properties or
assets may be bound; or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Operating Partnership; except in the
case of (ii) or (iii) for violations, breaches, or defaults (A) that would not
in the aggregate have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, and that shall not impair the
effectiveness of the Contributions contemplated hereby, or (B) for which waivers
or consents have been or shall be obtained prior to the Closing Date.
5.3 Binding Obligation. This Agreement has been duly and validly
executed and delivered by Operating Partnership and constitutes a valid and
binding agreement of Operating Partnership, enforceable against Operating
Partnership in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, insolvency, moratorium, or
similar laws affecting creditors' rights generally or the rights of creditors of
limited partnerships and to general principles of equity.
5.4 Insolvency. There are no attachments, executions or assignments for
the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy,
or under any other debtor relief laws, contemplated by or pending or threatened
against Operating Partnership.
5.5 Brokers. Neither Operating Partnership nor the REIT has employed or
dealt with any broker or finder, or incurred any liability therefor, in
connection with the Contributions.
5.6 Valid Consideration. The Units, when issued in accordance with this
Agreement and the Partnership Agreement of Operating Partnership, will be duly
and validly issued, and the issuance thereof will not be subject to preemptive
or other similar rights.
6. Representations, Warranties and Agreements of Contributors. Each
Contributor, in its capacity as a partner of the Partnership (or, in the case of
Mendik 1740, Associates), hereby represents and warrants to and agrees with
Operating Partnership with respect to its Contributed Interests as follows,
which representations and warranties shall also be true and correct on the
Closing Date:
6.1 Title; Authority to Assign. Contributor (i) owns good and
marketable, legal and beneficial (except for holders of beneficial interests in
the amounts payable with respect to such Contributed Interests who have no other
rights with respect to those interests) title in and to its Contributed
Interests which as of the Closing Date will be held free of liens, encumbrances,
judgments, adverse interests, pledges or security interests, other than pledges
of partnership interests to the Partnership or the other partners to secure a
partner's obligations to meet capital calls or other obligations as set forth in
the partnership agreement of the Partnership (or, in the case of Mendik 1740,
Associates) (as to which no amounts are outstanding and no amounts will be
outstanding as of the Closing Date), (ii) holds the entire right, title and
interest in and to its
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<PAGE> 7
Contributed Interests, and (iii) has the full right, power, capacity and
authority to validly contribute and convey its Contributed Interests pursuant to
this Agreement.
6.2 No Breach of Partnership Agreement. None of the execution and
delivery of this Agreement by Contributor, the consummation by Contributor of
the Contribution or compliance by Contributor with any of the provisions hereof
shall as of the Closing Date conflict with or result in any breach of any
provisions of the Partnership Agreement of the Partnership (or, in the case of
Mendik 1740, Associates) or any other agreement to which Contributor is a party.
6.3 Insolvency. There are no attachments, executions or assignments for
the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy,
or under any other debtor relief laws, contemplated by or pending or, to the
knowledge of Contributor, threatened against Contributor.
6.4 Litigation. Contributor has no knowledge of any actual or pending
litigation or proceeding by any organization, person, individual or governmental
agency against Contributor with respect to or against or potentially affecting
its Contributed Interests.
6.5 Binding Obligation, etc. This Agreement has been duly and validly
executed and delivered by Contributor to Operating Partnership and constitutes a
legal, valid and binding agreement of Contributor, enforceable against
Contributor in accordance with its terms, except as such enforcement may be
limited by bankruptcy, conservatorship, receivership, insolvency, moratorium or
similar laws affecting creditors' rights generally and to general principles of
equity. Contributor further represents and warrants that if Contributor is a
corporation, partnership, trust or other entity, it has the power to, and is
duly authorized and otherwise duly qualified to, purchase and hold securities
such as Units and Common Shares (as hereinafter defined) and such entity has its
principal place of business as set forth on Exhibit A.
6.6 Brokers. Contributor has not employed or dealt with any broker or
finder, or incurred any liability therefor, in connection with the Contribution.
6.7 Securities Act and Other Representations and Agreements.
(a) (i) Upon the issuance of Units to Contributor (or a
designee as provided in Section 2), Contributor (or designee) shall become
subject to, and shall be bound by, the terms and provisions of the Partnership
Agreement of Operating Partnership, including the terms of the power of attorney
contained in Section 15.11 thereof, as the Partnership Agreement may be amended
and restated from time to time in accordance with its terms.
(ii) Contributor or its advisor(s) have had a
reasonable opportunity to ask questions of and receive information and answers
from a person or persons acting on behalf of the Partnership and Operating
Partnership concerning the Consolidation, and, as Contributor may deem
necessary, to verify the information contained in the Memorandum,
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<PAGE> 8
receipt of which is acknowledged, and any other information provided to
Contributor by the Partnership or Operating Partnership and all such questions
have been answered and all such information has been provided to the full
satisfaction of Contributor.
(iii) Contributor is acquiring Units for its own
account as principal, for investment and not with a view to resale or
distribution, and the Units may not be transferred or otherwise disposed of by
Contributor otherwise than in transactions pursuant to a registration statement
filed by the Operating Partnership (which it has no obligation to file) or that
are exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable state and foreign securities
laws, and the REIT may refuse to transfer any Units as to which evidence of such
registration or exemptions from such registration satisfactory to the REIT is
not provided to it, which evidence may include the requirement of legal opinions
regarding the exemption from such registration. If the REIT elects, in its sole
discretion, to deliver to any Contributor, common shares of beneficial interest
of the REIT ("Common Shares") upon redemption of any Units, the Common Shares
will be acquired for its own account as principal, for investment and not with a
view to resale or distribution, and the Common Shares may not be transferred or
otherwise disposed of by Contributor otherwise than in transactions pursuant to
any registration statement filed by the REIT with respect to such Common Shares
(which it has an obligation to file only pursuant to the Registration Rights
Agreement described in the Memorandum) or that are exempt from the registration
requirements of the Securities Act and all applicable state and foreign
securities laws, and the REIT may refuse to transfer any Common Shares as to
which evidence of such registration or exemptions from such registration
satisfactory to the REIT is not provided to it, which evidence may include the
requirement of legal opinions regarding the exemption from such registration.
(iv) Contributor (either alone or with its advisors)
has sufficient knowledge and experience in financial, tax and business matters
to enable it to evaluate the merits and risks of an investment in Units.
Contributor has the ability to bear the economic risk of acquiring the Units.
Contributor acknowledges that (1) the transactions contemplated by this
Agreement and the Memorandum involve complex tax consequences for each
Contributor and each Contributor is relying solely on the advice of its own tax
advisors in evaluating such consequences, and (2) neither Operating Partnership
nor the General Partner has made (or shall be deemed to have made) any
representations or warranties as to the tax consequences of such transaction to
any Contributor. Each Contributor remains solely responsible for all tax matters
relating to each Contributor.
(v) If needed, Contributor has discussed with its
professional, legal, tax or financial advisors the suitability of an investment
in Units or Common Shares for its particular tax and financial situation.
Nothing contained herein or in the Memorandum shall be deemed to imply any
representation by Operating Partnership or the General Partner as to a
particular tax effect that may be obtained by any Contributor.
(vi) All information that Contributor has provided to
Operating Partnership concerning itself and its financial position is correct
and complete as of the date hereof, and if there should be any material change
in such information prior to issuance of
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<PAGE> 9
Units to the Contributors, it shall immediately provide such changed information
to Operating Partnership.
(vii) Contributor has not disclosed any information
contained in the Memorandum to anyone other than its professional, legal, tax or
financial advisors advising it in connection with this investment and has not
reproduced the Memorandum other than for such use by such advisors.
(b) Status as a United States Person. (i) Unless otherwise
indicated on the Partner Consent, Contributor certifies that Contributor is not
a foreign person within the meaning of Section 1445 of the Internal Revenue Code
("Section 1445"). To the extent that Contributor is not a foreign person within
the meaning of Section 1445, (1) Contributor's U.S. taxpayer identification
number that has previously been provided to the Partnership is accurate, (2)
Contributor's home address (in the case of an individual) or office address (in
the case of an entity) is that address indicated on Exhibit A of this Agreement
and (3) if Contributor subsequently becomes a foreign person within the meaning
of Section 1445, Contributor shall notify Operating Partnership prior to the
Closing Date.
(ii) If Contributor is or prior to the Closing
becomes a foreign person within the meaning of Section 1445, Operating
Partnership shall, and is authorized to, withhold ten percent (10%) of the
amount realized (as such term is defined in Section 1001 of the Internal Revenue
Code) by Contributor in connection with the Contribution, unless Operating
Partnership shall receive from Contributor a notice of nonrecognition transfer
with respect to the Contribution by Contributor (in a form to be provided by
Operating Partnership).
(c) Indemnification. Contributor hereby agrees to indemnify
and hold harmless the Partnership, the REIT, Operating Partnership, The Mendik
Company, Inc. and the General Partner and any of the employees, agents,
officers, directors and affiliated persons of the foregoing from any and all
damages, losses, costs and expenses (including reasonable attorneys' fees) which
they, or any of them, may incur by reason of a failure by Contributor to fulfill
any of its obligations under this Agreement or by reason of the breach by
Contributor of any of the representations and warranties contained herein.
(d) Waiver and Contribution. Contributor understands that (i)
the Units to be issued pursuant to the Consolidation have not been registered
under the Securities Act and (ii) the failure to register such Units could
result in Contributor being granted certain rights under the Federal securities
laws, including a right to rescind Contributor's consent to the Consolidation.
For the benefit of Operating Partnership, and in consideration of Operating
Partnership's consummating the Consolidation, Contributor (x) hereby waives any
and all rights it now has or may hereafter be granted to rescind its consent to
the Consolidation on the basis that the Units issued in connection with the
Consolidation were not registered (the "Waiver") and (y) agrees that if the
Waiver is deemed void or unenforceable for any reason, including, without
limitation, under Section 14 of the Securities Act, the entire beneficial
interest in all property and amounts received by Contributor in any action to
rescind the Consolidation (regardless of whether such action was initiated by
Contributor) or otherwise received by Contributor as damages for
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<PAGE> 10
failure to register the Units under the Securities Act, shall be promptly paid
over and contributed by Contributor to Operating Partnership, for no additional
consideration from Operating Partnership, other than the Units originally issued
pursuant to the Consolidation.
Whenever the context shall require, all words in the male, female or
neuter gender shall be deemed to include the other genders, all singular words
shall include the plural, and all plural words shall include the singular. All
representations, covenants and agreements of Contributor set forth in this
Agreement shall survive the consummation of the Consolidation contemplated by
the Memorandum.
7. Conditions to Completion. In addition to the conditions to
completion of the Consolidation set forth in the Memorandum, the obligations of
Operating Partnership to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment (or waiver by Operating Partnership)
at or prior to the Closing of the following conditions:
7.1 Representations, Warranties and Covenants. The representations,
warranties and covenants made by Contributors in this Agreement or in any
document delivered by any of them pursuant to this Agreement shall be true and
correct in all material respects when made and on and as of the Closing as
though such representations, warranties and covenants were made on and as of
such date.
7.2 Consents. Any and all consents required by the Partnership
Agreement of the Partnership (or, in the case of Mendik 1740, Associates), and
any certificates, agreements, contribution and assumption instruments and other
documents necessary or advisable to evidence the conveyance of the Contributed
Interests and the admission of Operating Partnership (or Designated Subsidiary)
into the Partnership or Associates, by virtue of the contribution of the
Contributed Interests, shall have been obtained.
7.3 No Order or Injunction. The consummation of the Contributions shall
not have been restrained, enjoined or prohibited by any order or injunction of
any court or governmental authority of competent jurisdiction.
7.4 Instruments of Conveyance. The Contributors shall have delivered
the instruments evidencing conveyance of their interests referred to in Section
8.1.
8. The Closing.
8.1 Contributors' and General Partner's Closing Documents. At Closing,
each Contributor shall deliver (or cause to be delivered pursuant to the Power
of Attorney referred to in Section 11.9) or the General Partner shall deliver
the following (all of which shall be duly executed and acknowledged where
required):
(a) A written document of conveyance contributing to Operating
Partnership (and/or any Designated Subsidiary) title to Contributor's
Contributed Interests, free and clear of any adverse claim or interest;
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<PAGE> 11
(b) Such documents and certificates as Operating Partnership
reasonably may require to establish the authority of the parties executing any
documents in connection with the Contributions including, in the case of any
Contributor that is a corporation, partnership, limited liability company or
other similar entity (other than a trust or estate), an opinion of counsel,
reasonably satisfactory to the Operating Partnership, as to the due execution
and delivery of such documents;
(c) Such consents and instruments of admission as are
contemplated by Section 7.2 hereof; and
(d) Such other documents, instruments and certificates as
Operating Partnership and the General Partner, as agent for the Contributors,
reasonably agree are necessary or appropriate, including without limitation
recording and transfer forms and affidavits.
8.2 Operating Partnership's Closing Documents. At Closing, Operating
Partnership shall deliver or cause to be delivered to the General Partner, as
agent for the Contributors, the following:
(a) The Units to be issued for the Contributed Interests;
(b) Copies of the Executed Partnership Agreement of the
Operating Partnership and the Registration Rights Agreement and Unit Redemption
Agreement referred to in Section 11.09; and
(c) Such other documents and instruments as the General
Partner, as agent for the Contributors, and Operating Partnership agree are
necessary or appropriate, including without limitation recording and transfer
forms and affidavits.
9. Closing Costs.
(a) The General Partner and the Operating Partnership shall
join on the Closing Date in completing, executing, delivering and verifying the
returns, affidavits and other documents required in connection with the
documentary stamps in accordance with Article 31 of the Tax Law, the New York
City Real Property Transfer Tax imposed by Title Chapter 46 of Title II of the
Administrative Code of the City of New York and any other tax payable by reason
of the contribution of the Contributed Interests (collectively, the "Conveyance
Taxes").
(b) The Contributors shall be solely responsible to pay the
Conveyance Taxes due on the conveyance of the Contributed Interests including,
but not limited to, any Conveyance Taxes imposed due to the Contributor's
failure to satisfy any holding period or continuity requirements for qualifying
for a reduced rate of Conveyance Taxes, including the holding period
requirements with respect to certain transfers to a REIT imposed in connection
with the New York Real Estate Transfer Tax imposed by Article 31 of the Tax Law
and the New York City Real Property Transfer Tax imposed by Chapter 46 of Title
11 of the Administrative
- 9 -
<PAGE> 12
Code of the City of New York. The Contributors shall pay to the General Partner
at the Closing, and the General Partner, as agent for the Contributors, shall
pay at the Closing to the appropriate tax collecting agency or official the
amount of all Conveyance Taxes payable by reason of the Contributors' agreement
to pay the Conveyance Taxes (assuming satisfaction of the requirements set forth
in the preceding sentence). The Contributors shall indemnify, defend and hold
harmless the Operating Partnership, the Partnership and Associates from and
against all claims, liabilities, costs and expenses (including reasonable
attorney's fees), incurred by the Operating Partnership or the Partnership by
reason of the failure of the Contributors to pay any Conveyance Taxes assessed
or alleged to be due at any time with respect to the transfer of the Interests
to Operating Partnership, including, without limitation, all interest and
penalties thereon.
(c) Operating Partnership shall also pay or provide for the
payment of all other costs associated with the closing of the contributions of
the Contributed Interests pursuant to this Agreement, as described in and
subject to the terms of the Memorandum.
10. Operation in the Ordinary Course. The General Partner shall use
reasonable efforts to operate the Partnership, Associates and the Property in
the ordinary course of business between the date hereof and the closing of the
Consolidation, including making any necessary capital expenditures and leasing
expenditures consistent with past practices to maintain the quality and value of
the Property.
11. General Provisions.
11.1 Survival of Representations and Warranties. It is the express
intention and agreement of the parties hereto that the representations and
warranties of the parties set forth in this Agreement shall survive the
consummation of the Contributions and the Closing.
11.2 Notices. All notices, demands, requests or other communications
that may be or are required to be given or made by any party to the other
parties pursuant to this Agreement shall be in writing and shall be hand
delivered or transmitted by certified mail, express overnight mail or delivery
service, telegram, telex or facsimile transmission to the parties at the
addresses specified in Exhibit A or such other address as the addressee may
indicate by written notice to the other party.
Each notice, demand, request or communication that is given or made in
the manner described above shall be deemed sufficiently given or made for all
purposes at such time as it is delivered to the addressee (with the delivery
receipt, the affidavit of messenger or (with respect to a telex) the answer back
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
11.3 Governing Law. This Agreement, the rights and obligations of the
parties hereto and any claims or disputes relating to such rights and
obligations shall be governed by and construed under the laws of the State of
New York.
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<PAGE> 13
11.4 Headings. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
11.5 Benefit and Assignment. No Contributor shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Operating Partnership. Any purported
assignment contrary to the terms hereof shall be null, void and of no force and
effect.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns as permitted
hereunder. No person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder. The Operating Partnership may designate one or more Designated
Subsidiaries to acquire all or any part of the Contributed Interests (in which
case the Designated Subsidiary shall execute a certificate at closing making the
same representations and warranties as are made by Operating Partnership and
references to Operating Partnership shall include the Designated Subsidiaries
except where the context clearly indicates otherwise).
11.6 Severability. If any part of any provision of this Agreement or
any other agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said agreement so long as the economic and legal
substance of the Contributions is not affected in any manner materially adverse
to either party.
11.7 Entire Agreement; Amendment. The Schedules and the Exhibits
attached hereto are hereby incorporated into the Agreement as if fully set forth
herein. This Agreement, and the Schedules and Exhibits attached hereto, together
with the Memorandum, contain the final and entire agreement between the parties
hereto with respect to the Contributions, supersede all prior oral and written
memoranda and agreements with respect to the matters contemplated herein, and
are intended to be an integration of all prior negotiations and understandings.
Contributors and Operating Partnership shall not be bound by any terms,
conditions, statements, warranties or representations, oral or written, not
contained or referred to herein or therein. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto.
11.8 No Waiver. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise
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<PAGE> 14
of such right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent expressly specified
therein.
11.9 Consent and Power of Attorney. The General Partner hereby consents
to the contribution of the Contributed Interests pursuant hereto by each of the
Contributors. Each Contributor is executing a Partner Consent pursuant to which
such Contributor (a) is executing this Agreement, and (b) is consenting to each
matter set forth therein. In addition, by executing this Agreement pursuant to
the Consent, each Contributor is constituting and appointing each of David R.
Greenbaum, John J. Silberstein and Christopher G. Bonk, individually, with full
power of substitution, the true and lawful attorney-in-fact (the "Attorney") of
such Contributor, with full power and authority in the name of and for and on
behalf of such Contributor, to execute an instrument of conveyance contributing
its Contributed Interests to Operating Partnership pursuant to the Consolidation
on the terms set forth in the Memorandum (or to the REIT pursuant to Section
11.10), to execute the Partnership Agreement of Operating Partnership and the
Registration Rights Agreement and a Unit Redemption Agreement (if the
Contributor elects to redeem its Units for cash immediately after the Closing),
to execute any instruments required to be filed in connection with the
Conveyance Taxes and to execute any other instruments that the General Partner
reasonably determines necessary or appropriate in connection with the
contribution of the Contributed Interests pursuant to this Agreement and the
consummation of the Consolidation (or the REIT determines necessary or
appropriate in connection with its purchase), including, without limitation, to
consummate the transactions which are the subject matter of the Major Partner
Agreement.
Each Contributor shall promptly notify the General Partner if any of
the representations and warranties by that partner were not true and correct
when made or become untrue at any time prior to the Closing.
11.10 Purchase If No Consolidation. Notwithstanding anything to the
contrary in this Agreement, if the Consolidation does not occur and the Master
Consolidation Agreement dated as of March 12, 1997 among the REIT, the Operating
Partnership and certain other parties terminates in accordance with its terms,
then, subject to satisfaction of the conditions in Section 7.1, 7.2, 7.3 and
7.4, (i) the closing shall occur on the third business day after the termination
of the Master Consolidation Agreement; and (ii) at the closing, (a) the REIT
shall purchase the Contributed Interests from the Contributors for an aggregate
cash purchase price of $3,299,442, allocated among the Contributors in the same
proportion as the Units are allocated as set forth on Exhibit A, (b) the
Contributors shall deliver the documents and instruments referred to in Section
8.1(a), (b), (c) and (d), and (c) the REIT shall deliver the purchase price for
the Contributed Interests and such other documents and instruments as the
General Partner, as agent for the Contributors, and the REIT agree are necessary
or appropriate, including, without limitation, recording and transfer forms and
affidavits. In such event, references in this Agreement to the Operating
Partnership shall be deemed references to the REIT, to the extent consistent
with the foregoing.
- 12 -
<PAGE> 15
IN WITNESS WHEREOF, each of the Contributors has executed a separate
Partner Consent agreeing to be bound by the terms of this Agreement and each of
Operating Partnership and the General Partner has caused this Agreement to be
duly executed and delivered on its behalf as of the date first above written.
THE MENDIK COMPANY, L.P.
By: The Mendik Company, Inc., general partner
By: /s/ David R. Greenbaum
------------------------------
Name: David R. Greenbaum
Title: President
MENDIK 1740 CORP.
By: /s/ David R. Greenbaum
------------------------------
Name: David R. Greenbaum
Title: President
VORNADO REALTY TRUST
By: /s/ Joseph Macnow
------------------------------
Name: Joseph Macnow
Title: Vice President
[ADDITIONAL SIGNATURES OMITTED]
- 13 -
<PAGE> 16
1740 BROADWAY ASSOCIATES, L.P.
1740 BROADWAY INVESTMENT COMPANY
EXHIBIT A
LIST OF PARTNERS
<TABLE>
<CAPTION>
Name Units
---- -----
<S> <C>
Bernard H. Mendik 11,058
330 Madison Avenue
New York, New York 10017
Nendik 1740 Corp. 951
330 Madison Avenue
New York, NY 10017
Mil Equities 4,327
330 Madison Avenue
New York, NY 10017
Vicki Alpert 1,923
80 Summit Road
Port Washington, NY 11050`
Ambassador Construction Company, Inc. 9,615
317 Madison Avenue
New York, NY 10017
Leonard Barkin 962
775 Park Avenue
New York, NY 10021
Doris Bianculli, Revocable Trust 4,808
513 Palm Drive
Hallandale, FL 33009
Shirley Dember, UGMA for Lindsey Dembner 1,731
100 Boulder Ridge Rd.
Scarsdale, NY 10583
Jacqueline Dryfoos 962
775 Park Avenue
New York, NY 10021
</TABLE>
<PAGE> 17
<TABLE>
<CAPTION>
Name Units
---- -----
<S> <C>
Robert Freeman 2,885
114 East 72nd Street
10-A
New York, NY 10021
Andrea Kosloff, UGMA for A. Kosloff 1,058
55 East End Avenue
New York, NY 10028
Andrea Kosloff, UGMA for J. Kosloff 1,058
55 East End Avenue
New York, NY 10028
Maayan Partners 4,808
c/o Bram Fierstein
252 Elderwood Avenue
Pelham, NY 10803
Plum Partners 4,808
1995 Broadway, 17th Fl.
New York, NY 10023
H. Richard Roberts 9,615
7 Soundview Lane
Great Neck, NY 11024
Alfred & Hanina Shasha, Trustees 2,885
15 Cotswold Way
Scarsdale, NY 20583-3511
TOTAL 63,454.00
=========
</TABLE>
<PAGE> 1
EXHIBIT 2.2
AGREEMENT FOR CONTRIBUTION OF INTERESTS
IN
ELEVEN PENN PLAZA COMPANY
BY AND AMONG
THE MENDIK COMPANY, L.P.;
THE PARTNERS IN M/F ASSOCIATES,
M/F ELEVEN ASSOCIATES,
M/S ASSOCIATES AND
M/S ELEVEN ASSOCIATES;
AND
BERNARD H. MENDIK
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE UNITS TO BE ISSUED
HEREUNDER WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO UNITS MAY
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND UNLESS THE OTHER
TRANSFER RESTRICTIONS ON SUCH UNITS HAVE BEEN SATISFIED. CONTRIBUTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR OWNERSHIP
OF UNITS FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION CONTRIBUTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
PAGE
1. Contributions.............................................................2
2. Consideration; Distributions Prior to Closing.............................2
3. Acceptance of Contributions...............................................5
4. Closing Time and Place....................................................5
5. Representations and Warranties of Operating Partnership...................5
5.1 Organization, Power and Authority, and Qualification...................5
5.2 Authority Relative to this Agreement...................................5
5.3 Binding Obligation.....................................................6
5.4 Insolvency.............................................................6
5.5 Brokers................................................................6
5.6 Valid Consideration....................................................6
6. Representations, Warranties and Agreements of Contributors................6
6.1 Title; Authority to Assign.............................................6
6.2 No Breach of Partnership Agreement.....................................7
6.3 Insolvency.............................................................7
6.4 Litigation.............................................................7
6.5 Binding Obligation, etc................................................7
6.6 Brokers................................................................7
6.7 Securities Act and Other Representations and Agreements................7
7. Conditions to Completion.................................................10
7.1 Representations, Warranties and Covenants.............................10
7.2 Consents..............................................................10
7.3 No Order or Injunction................................................10
7.4 Instruments of Conveyance............................................11
8. The Closing..............................................................11
8.1 Contributors' and General Partner's Closing Documents.................11
8.2 Operating Partnership's Closing Documents.............................11
9. Transfer Taxes and Closing Costs.........................................12
10. Operation in the Ordinary Course........................................12
11. General Provisions......................................................12
11.1 Survival of Representations and Warranties...........................12
11.2 Notices..............................................................13
11.3 Governing Law........................................................13
11.4 Headings.............................................................13
11.5 Benefit and Assignment...............................................13
11.6 Severability.........................................................13
11.7 Entire Agreement; Amendment..........................................14
11.8 No Waiver............................................................14
11.9 Consent and Power of Attorney........................................14
Exhibit A List of Partners
Exhibit B Committed Capital Expenditures
Exhibit C Contingent Leasing Expenditures
i
<PAGE> 3
AGREEMENT FOR CONTRIBUTION OF INTERESTS
[ELEVEN PENN PLAZA]
THIS AGREEMENT for the Contribution of Interests (this "Agreement") is
made and entered into as of Aprik 15, 1997, by and among The Mendik Company,
L.P. ("Operating Partnership"), a Delaware limited partnership, whose general
partner as of the date hereof is The Mendik Company, Inc., a Maryland
corporation, each of the parties listed on Exhibit A annexed hereto who executes
a Partner Consent (hereinafter defined) agreeing to become a party to this
Agreement (collectively referred to herein as "Contributors") and Bernard H.
Mendik (in his capacity as a general partner of each of the Partnerships
(hereinafter defined), the "General Partner").
WHEREAS, it is desired to consolidate (the "Consolidation") the assets
of Vornado Realty Trust, a Maryland real estate investment trust (the "REIT"),
and interests in seven general or limited partnerships or limited liability
companies of which the General Partner or an affiliate is a general partner or
managing member, together with the assets of Mendik Realty Company, Inc. and
Mendik Management Company, Inc., each a New York corporation and an affiliate of
the General Partner, with and into Operating Partnership;
WHEREAS, upon completion of and after the Consolidation, the REIT will
become and be the managing general partner of the Operating Partnership;
WHEREAS, Contributors are owners of interests (the "Contributed
Interests") in one or more of M/F Associates, a New York limited partnership,
M/F Eleven Associates, a New York limited partnership, M/S Associates, a New
York limited partnership, and M/S Eleven Associates, a New York limited
partnership (collectively, the "Partnerships"), which together own all of the
partnership interests in M393 Associates, a New York general partnership, and M
Eleven Associates, a New York general partnership (collectively, the "Middle
Partnerships"), which together own all of the interests in Eleven Penn Plaza
Company, a New York joint venture ("Eleven Penn"), which owns land and
improvements (the "Property") known as Eleven Penn Plaza, New York, New York;
WHEREAS, the Contributed Interests represent a 51.25% percentage
interest in Eleven Penn (the "Percentage"); and
WHEREAS, in connection with the consummation of the Consolidation, the
parties hereto desire that Operating Partnership and, if designated by Operating
Partnership, one or more special purpose subsidiary partnerships or limited
liability companies of Operating Partnership or one or more other entities
controlled by Operating Partnership (each a "Designated Subsidiary") acquire all
of the interests in the Partnerships owned by the Contributors through the
contribution of such interests to Operating Partnership and/or one or more
Designated Subsidiaries upon the terms and conditions provided herein, and
acquire all
<PAGE> 4
of the interests in the Partnerships owned by a major partner and its affiliates
(collectively, the "Major Partner") pursuant to an Agreement (the "Major Partner
Agreement") between the Major Partner and the Operating Partnership.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, Operating Partnership, Contributors and
the General Partner hereby agree as follows:
1. Contributions. Upon the Closing (hereinafter defined), and
subject to the satisfaction or waiver by Operating Partnership of the conditions
set forth in Section 7 of this Agreement, Contributors shall contribute, convey
and assign to Operating Partnership (and/or Designated Subsidiary) and Operating
Partnership (and/or Designated Subsidiary) shall acquire from Contributors all
of Contributors' right, title and interest in the Contributed Interests (the
"Contributions"), including, without limitation, all of Contributors' interest
in the profits, losses, property and capital of the Partnership allocable to the
Contributed Interests, upon the terms and conditions set forth in this
Agreement.
2. Consideration; Distributions Prior to Closing.
(a) In full consideration for the contribution of the
Contributed Interests, Operating Partnership shall deliver to Contributors (or
their designees as provided below) at the Closing, with respect to the Exchange
Value (as such term is defined in the Confidential Solicitation of Consents and
Private Placement Memorandum (the "Memorandum") dated March 29, 1997) for the
Property, an aggregate of 408,035 units of limited partnership interests
("Units") in the Operating Partnership, such Units being allocated among the
Contributors as set forth on Exhibit A, subject to adjustment as provided in
Section 2(b) hereof.
Prior to the Closing, subject to compliance with all
applicable securities laws, any Contributor that is a partnership may give
notice to the Operating Partnership to allocate all or a portion of the Units
otherwise issuable to it among its partners in a manner set forth in the notice
and to issue the Units directly to those partners, and any Contributor who holds
interests in which another person or entity has a beneficial interest may give
notice to the Operating Partnership to issue all or a portion of the Units
otherwise issuable to that Contributor to the beneficial owner of that interest.
In such event, as a condition to receiving any Units, any such partners of any
Contributor or any such beneficial holder shall execute a Partner Consent (the
"Partner Consent") in the form annexed to and made part of the Memorandum and
shall make to the Operating Partnership the representations and warranties and
agreements in Section 6.7(a), (b), (c) and (d) pursuant to an instrument
reasonably satisfactory to the Operating Partnership (in addition to the Partner
Consent to be executed by the Contributor).
(b) If the aggregate amount of the Net Other Assets
(hereinafter defined) of Eleven Penn as of the close of business on the day
preceding the date of the Closing (the "Closing Date") exceeds $0, Operating
Partnership shall issue additional Units (valued at the average of the closing
prices on the New York Stock Exchange of shares of the
2
<PAGE> 5
REIT for the last ten trading days ending on the third trading day prior to the
Closing Date) with a value equal to the Percentage times the amount of the
excess Net Other Assets, and such additional Units shall be issued to each
Contributor in the same proportion as the Units will be issued in accordance
with Exhibit A.
As used in this Agreement, the following terms have the
following meanings:
(i) "Net Other Assets" means the excess of
Certain Other Assets over Certain Other Liabilities (as such terms are
hereinafter defined).
(ii) "Certain Other Assets" means, subject to
Section 2(e), cash and cash equivalents (other than any condemnation or casualty
proceeds held by Eleven Penn), marketable securities, amortization from November
1, 1996 through the Closing on the first mortgage loan to Eleven Penn from The
Equitable Life Assurance Society of the United States, accounts receivable
(including an estimate of any rent escalations payable by tenants with respect
to the period through the Closing Date, but excluding any amounts payable by
tenants with respect to any period after the Closing Date, as well as any amount
payable by tenants after the Closing Date to the extent such amount has been
recognized as income prior to the Closing), prepaid expenses (excluding any
prepaid leasing costs relating to leases entered into prior to October 1, 1996),
escrow deposits made by Eleven Penn, capital expenditures (other than tenant
improvements or building improvements required by the terms of any lease and
other than those committed capital expenditures listed on Exhibit B annexed
hereto) made on or after October 1, 1996, amounts paid for leasing costs, tenant
and building improvements or tenant acquisition costs relating to (1) leases
entered into on or after October 1, 1996 and (2) leases entered into prior to
October 1, 1996, but only to the extent of any leasing expenditures with respect
to such leases entered into prior to October 1, 1996 which are set forth on
Exhibit C annexed hereto. For the purpose of calculating Certain Other Assets,
the accounts receivable of Eleven Penn shall be valued at the face amount of the
accounts receivable, net of a reserve for doubtful accounts determined in
accordance with generally accepted accounting principles consistently applied,
and without giving effect to the straight-line requirement of FASB 13.
(iii) "Certain Other Liabilities" means accounts
payable, accrued interest payable and other accrued liabilities (including any
liability or obligation for leasing costs, tenant or building improvements or
tenant acquisition costs payable relating to leases entered into prior to
October 1, 1996, but excluding any liability or obligation for leasing costs,
tenant or building improvements or tenant acquisition costs payable relating to
(1) leases entered into on or after October 1, 1996 and (2) leases entered into
prior to October 1, 1996, but only to the extent of any leasing expenditures
with respect to such leases entered into prior to October 1, 1996 which are set
forth on Exhibit C annexed hereto), the unpaid remaining cost of any committed
capital expenditures listed on Exhibit B annexed hereto and prepaid rent
received from tenants.
3
<PAGE> 6
For purposes of this Section 2, the exercise of an
option to renew a lease or to rent additional space pursuant to a lease shall be
deemed a new lease entered into on the effective date of the renewal option.
(c) The General Partner shall prepare and submit to the
REIT, not later than five days prior to the Closing Date, its best, good faith
estimate of the Net Other Assets as of the close of business on the day
preceding the Closing Date; such estimate shall be determined based upon the
books and records of Eleven Penn. The estimate submitted to the REIT shall be
accompanied by (i) a statement setting forth in reasonable detail the
calculation of the estimated Net Other Assets as of the close of business on the
day preceding the Closing Date, and (ii) a certificate signed by the General
Partner confirming that the estimate was calculated in accordance with the terms
of this Section 2. The estimate shall be final and binding on the parties
unless, at least two days prior to the Closing, the REIT gives written notice to
the General Partner that it objects to any item. The REIT and the General
Partner shall immediately consult with respect to any item objected to and their
joint determination with respect to any items in dispute shall be final and
binding on the parties. The number of additional Units to be delivered at
Closing shall be based on the statement of Net Other Assets delivered by the
General Partner if there is no objection thereto by the REIT (or the undisputed
amount of Net Other Assets if there is such an objection) and additional Units,
if any, shall be delivered to the General Partner, as agent for the
Contributors, promptly after the accountants' determination referred to in the
next sentence, it being understood that the Contributors shall be deemed to own
such additional Units, if any, as of the Closing Date. If the REIT and the
General Partner are unable to reach agreement on the amount of Net Other Assets
prior to Closing, within ten days after the Closing, the dispute shall be
referred to and resolved by a "Big 6" firm of independent certified public
accountants proposed by the REIT and reasonably acceptable to the General
Partner, and the determination by that accounting firm shall be final and
binding on the parties. The fees and expenses of the accounting firm shall be
borne by Operating Partnership.
(d) Any amounts collected by Eleven Penn after the
Closing Date relating to the period through the Closing Date with respect to
refunds of real estate taxes paid by Eleven Penn (less any costs incurred by
Eleven Penn, the Partnerships or the Operating Partnership in obtaining such
refunds and less any portion of such refunds required or, in the REIT's
reasonable determination, estimated to be required to be paid to tenants) shall
be paid to the General Partner, as agent for the Contributors and certain other
persons, not later than 10 days after the end of the month in which such amounts
are collected, and the General Partner shall promptly distribute such amounts to
the Contributors.
(e) An amount equal to $1,900,000 (plus any additional
Conveyance Taxes (hereinafter defined) payable as a result of the value of the
Units issued hereunder or under the Major Partner Agreement (based on the value
of the shares of the REIT) exceeding $52 per Unit) shall be deducted from the
Partnership's cash on hand prior to the calculation of Net Other Assets,
regardless of the actual amount of the Conveyance Taxes. On the Closing Date,
the General
4
<PAGE> 7
Partner shall cause each of the Middle Partnerships and each of the Partnerships
to satisfy any outstanding liabilities and, then on the Closing Date, the
General Partner shall cause Eleven Penn to distribute to the Partnerships and
the Partnerships to distribute to the General Partner, as agent for the
Contributors and the Major Partner, an amount (estimated at $1,900,000 based on
a value of $52 per Unit) sufficient to pay the Conveyance Taxes payable by the
Major Partner and by the Contributors pursuant to Section 9(b) hereof, assuming
that the Contributions hereunder and under the Major Partner Agreement are
treated as "qualifying REIT transfers" under the laws referred to in Section
9(a) hereof, it being understood that the funds referred to in the first
sentence of this clause (e) shall be applied toward satisfaction of this
distribution requirement.
3. Acceptance of Contributions. Subject to satisfaction of the
conditions listed or referred to in Section 7, Operating Partnership hereby
agrees that at the Closing it shall accept or, at its election, cause a
Designated Subsidiary to accept all or part of, the Contributions and shall
assume any and all rights, obligations and responsibilities of Contributors as
owners of the Contributed Interests that arise subsequent to the Closing Date.
4. Closing Time and Place. Unless another date or place is agreed
to by the parties, the closing of the Contributions (the "Closing") shall take
place contemporaneously with the closing of the Consolidation at the offices of
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York 10036,
or such other place and time as Operating Partnership and the General Partner
shall agree, upon the satisfaction or waiver of all conditions to the Closing
set forth in Section 7 hereof.
5. Representations and Warranties of Operating Partnership.
Operating Partnership hereby represents and warrants to Contributors as follows,
which representations and warranties shall be true and correct on the Closing
Date:
5.1 Organization, Power and Authority, and Qualification.
Operating Partnership is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware. The REIT is a real
estate investment trust duly organized, validly existing and in good standing
under the laws of the State of Maryland. Each of Operating Partnership and the
REIT has the requisite power and authority to carry on its respective business
as it is now being conducted. Each of Operating Partnership and the REIT is
qualified to do business and is in good standing in each jurisdiction in which
the character of its property owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not have a material adverse effect on the business or
financial condition of Operating Partnership or the REIT, as the case may be.
5.2 Authority Relative to this Agreement. Operating Partnership
has taken all action necessary to authorize the execution, delivery and
performance of this Agreement by Operating Partnership and no other proceedings
on the part of Operating Partnership are necessary to authorize the execution
and delivery of this Agreement and the consummation of the Contributions.
5
<PAGE> 8
None of the execution and delivery of this Agreement by Operating
Partnership, the consummation by Operating Partnership of the Contributions or
compliance by Operating Partnership with any of the provisions hereof shall (i)
conflict with or result in any breach of any provisions of the Partnership
Agreement of Operating Partnership; (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Operating Partnership is a party or by which it or any of its properties or
assets may be bound; or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Operating Partnership; except in the
case of (ii) or (iii) for violations, breaches, or defaults (A) that would not
in the aggregate have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, and that shall not impair the
effectiveness of the Contributions contemplated hereby, or (B) for which waivers
or consents have been or shall be obtained prior to the Closing Date.
5.3 Binding Obligation. This Agreement has been duly and validly
executed and delivered by Operating Partnership and constitutes a valid and
binding agreement of Operating Partnership, enforceable against Operating
Partnership in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, insolvency, moratorium, or
similar laws affecting creditors' rights generally or the rights of creditors of
limited partnerships and to general principles of equity.
5.4 Insolvency. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against Operating Partnership.
5.5 Brokers. Neither Operating Partnership nor the REIT has
employed or dealt with any broker or finder, or incurred any liability therefor,
in connection with the Contributions.
5.6 Valid Consideration. The Units, when issued in accordance with
this Agreement and the Partnership Agreement of Operating Partnership, will be
duly and validly issued, and the issuance thereof will not be subject to
preemptive or other similar rights.
6. Representations, Warranties and Agreements of Contributors.
Each Contributor, in his, her or its capacity as a partner of the Partnerships,
hereby represents and warrants to and agrees with Operating Partnership with
respect to his, her or its Contributed Interests as follows, which
representations and warranties shall also be true and correct on the Closing
Date:
6.1 Title; Authority to Assign. Contributor (i) owns good and
marketable, legal and beneficial (except for holders of beneficial interests in
the amounts payable with respect to such Contributed Interests who have no other
rights with respect to those interests) title in and to his, her or its
Contributed Interests which as of the Closing Date will be held
6
<PAGE> 9
free of any liens, encumbrances, judgments, adverse interests, pledges or
security interests, other than pledges of partnership interests to the
Partnerships or the other partners to secure a partner's obligations to meet
capital calls or other obligations as set forth in the Partnership Agreement of
the Partnerships (as to which no amounts are outstanding and no amounts will be
outstanding as of the Closing Date), (ii) holds the entire right, title and
interest in and to his, her or its Contributed Interests, and (iii) has the full
right, power, capacity and authority to validly contribute and convey his, her
or its Contributed Interests pursuant to this Agreement.
6.2 No Breach of Partnership Agreement. None of the execution and
delivery of this Agreement by Contributor, the consummation by Contributor of
the Contribution or compliance by Contributor with any of the provisions hereof
shall as of the Closing Date conflict with or result in any breach of any
provisions of the Partnership Agreements of the Partnerships or any other
agreement to which Contributor is a party.
6.3 Insolvency. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or, to the knowledge of Contributor, threatened against
Contributor.
6.4 Litigation. Contributor has no knowledge of any actual or
pending litigation or proceeding by any organization, person, individual or
governmental agency against Contributor with respect to or against or
potentially affecting his, her or its Contributed Interests.
6.5 Binding Obligation, etc. This Agreement has been duly and
validly executed and delivered by Contributor to Operating Partnership and
constitutes a legal, valid and binding agreement of Contributor, enforceable
against Contributor in accordance with its terms, except as such enforcement may
be limited by bankruptcy, conservatorship, receivership, insolvency, moratorium
or similar laws affecting creditors' rights generally and to general principles
of equity. Contributor further represents and warrants that if Contributor is a
corporation, partnership, trust or other entity, it has the power to, and is
duly authorized and otherwise duly qualified to, purchase and hold securities
such as Units and Common Shares (as hereinafter defined) and such entity has its
principal place of business as set forth on Exhibit A.
6.6 Brokers. Contributor has not employed or dealt with any broker
or finder, or incurred any liability therefor, in connection with the
Contribution.
6.7 Securities Act and Other Representations and Agreements.
(a) (i) Upon the issuance of Units to Contributor (or a
designee as provided in Section 2), Contributor (or designee) shall become
subject to, and shall be bound by, the terms and provisions of the Partnership
Agreement of Operating Partnership, including the terms of the power of attorney
contained in Section 15.11 thereof,
7
<PAGE> 10
as the Partnership Agreement may be amended and restated from time to time in
accordance with its terms.
(ii) Contributor or his, her or its advisor(s)
have had a reasonable opportunity to ask questions of and receive information
and answers from a person or persons acting on behalf of the Partnerships and
Operating Partnership concerning the Consolidation, and, as Contributor may deem
necessary, to verify the information contained in the Memorandum, receipt of
which is acknowledged, and any other information provided to Contributor by the
Partnerships or Operating Partnership and all such questions have been answered
and all such information has been provided to the full satisfaction of
Contributor.
(iii) Contributor is acquiring Units for his, her
or its own account as principal, for investment and not with a view to resale or
distribution, and the Units may not be transferred or otherwise disposed of by
Contributor otherwise than in transactions pursuant to a registration statement
filed by the Operating Partnership (which it has no obligation to file) or that
are exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable state and foreign securities
laws, and the REIT may refuse to transfer any Units as to which evidence of such
registration or exemptions from such registration satisfactory to the REIT is
not provided to it, which evidence may include the requirement of legal opinions
regarding the exemption from such registration. If the REIT elects, in its sole
discretion, to deliver to any Contributor common shares of beneficial interest
of the REIT ("Common Shares") upon redemption of any Units, the Common Shares
will be acquired for his, her or its own account as principal, for investment
and not with a view to resale or distribution, and the Common Shares may not be
transferred or otherwise disposed of by Contributor otherwise than in
transactions pursuant to any registration statement filed by the REIT with
respect to such Common Shares (which it has an obligation to file only pursuant
to the Registration Rights Agreement described in the Memorandum) or that are
exempt from the registration requirements of the Securities Act and all
applicable state and foreign securities laws, and the REIT may refuse to
transfer any Common Shares as to which evidence of such registration or
exemptions from such registration satisfactory to the REIT is not provided to
it, which evidence may include the requirements of legal opinions regarding the
exemption from such registration.
(iv) Contributor (either alone or with his, her
or its advisors) has sufficient knowledge and experience in financial, tax and
business matters to enable him, her or it to evaluate the merits and risks of an
investment in Units. Contributor has the ability to bear the economic risk of
acquiring the Units. Contributor acknowledges that (1) the transactions
contemplated by this Agreement and the Memorandum involve complex tax
consequences for each Contributor and each Contributor is relying solely on the
advice of his, her or its own tax advisors in evaluating such consequences, and
(2) neither Operating Partnership nor the General Partner has made (or shall be
deemed to have made) any representations or warranties as to the tax
consequences of such transaction to any Contributor. Each Contributor remains
solely responsible for all tax matters relating to each Contributor.
8
<PAGE> 11
(v) If needed, Contributor has discussed with
his, her or its professional, legal, tax or financial advisors the suitability
of an investment in Units or Common Shares for his, her or its particular tax
and financial situation. Nothing contained herein or in the Memorandum shall be
deemed to imply any representation by Operating Partnership or the General
Partner as to a particular tax effect that may be obtained by any Contributor.
(vi) All information that Contributor has
provided to Operating Partnership concerning himself or herself or itself and
his, her or its financial position is correct and complete as of the date
hereof, and if there should be any material change in such information prior to
issuance of Units to the Contributors, he, she or it shall immediately provide
such changed information to Operating Partnership.
(vii) Contributor has not disclosed any
information contained in the Memorandum to anyone other than his or her spouse
or his, her or its professional, legal, tax or financial advisors advising him,
her or it in connection with this investment and has not reproduced the
Memorandum other than for such use by such advisors.
(b) Status as a United States Person. (i) Unless
otherwise indicated on the Partner Consent, Contributor certifies that
Contributor is not a foreign person within the meaning of Section 1445 of the
Internal Revenue Code ("Section 1445"). To the extent that Contributor is not a
foreign person within the meaning of Section 1445, (1) Contributor's U.S.
taxpayer identification number that has previously been provided to the
Partnership is accurate, (2) Contributor's home address (in the case of an
individual) or office address (in the case of an entity) is that address
indicated on Exhibit A of this Agreement and (3) if Contributor subsequently
becomes a foreign person within the meaning of Section 1445, Contributor shall
notify Operating Partnership prior to the Closing.
(ii) If Contributor is or prior to the Closing
becomes a foreign person within the meaning of Section 1445, Operating
Partnership shall, and is authorized to, withhold ten percent (10%) of the
amount realized (as such term is defined in Section 1001 of the Internal Revenue
Code) by Contributor in connection with the Contribution, unless Operating
Partnership shall receive from Contributor a notice of nonrecognition transfer
with respect to the Contribution by Contributor (in a form to be provided by
Operating Partnership).
(c) Indemnification. Contributor hereby agrees to
indemnify and hold harmless the Partnerships, the REIT, Operating Partnership,
The Mendik Company, Inc. and the General Partner and any of the employees,
agents, officers, directors and affiliated persons of the foregoing from any and
all damages, losses, costs and expenses (including reasonable attorneys' fees)
which they, or any of them, may incur by reason of a failure by Contributor to
fulfill any of its obligations under this Agreement or by reason of the breach
by Contributor of any of the representations and warranties contained herein.
9
<PAGE> 12
(d) Waiver and Contribution. Contributor understands that
(i) the Units to be issued pursuant to the Consolidation have not been
registered under the Securities Act and (ii) the failure to register such Units
could result in Contributor being granted certain rights under the Federal
securities laws, including a right to rescind Contributor's consent to the
Consolidation. For the benefit of Operating Partnership, and in consideration of
Operating Partnership's consummating the Consolidation, Contributor (x) hereby
waives any and all rights he or she now has or may hereafter be granted to
rescind his or her consent to the Consolidation on the basis that the Units
issued in connection with the Consolidation were not registered (the "Waiver")
and (y) agrees that if the Waiver is deemed void or unenforceable for any
reason, including, without limitation, under Section 14 of the Securities Act,
the entire beneficial interest in all property and amounts received by
Contributor in any action to rescind the Consolidation (regardless of whether
such action was initiated by Contributor) or otherwise received by Contributor
as damages for failure to register the Units under the Securities Act, shall be
promptly paid over and contributed by Contributor to Operating Partnership, for
no additional consideration from Operating Partnership, other than the Units
originally issued pursuant to the Consolidation.
Whenever the context shall require, all words in the male, female or
neuter gender shall be deemed to include the other genders, all singular words
shall include the plural, and all plural words shall include the singular. All
representations, covenants and agreements of Contributor set forth in this
Agreement shall survive the consummation of the Consolidation contemplated by
the Memorandum.
7. Conditions to Completion. In addition to the conditions to
completion of the Consolidation set forth in the Memorandum, the obligations of
Operating Partnership to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment (or waiver by Operating Partnership)
at or prior to the Closing of the following conditions:
7.1 Representations, Warranties and Covenants. The
representations, warranties and covenants made by Contributors in this Agreement
or in any document delivered by any of them pursuant to this Agreement shall be
true and correct in all material respects when made and on and as of the Closing
as though such representations, warranties and covenants were made on and as of
such date.
7.2 Consents. Any and all consents required by the Partnership
Agreements of the Partnerships, and any certificates, agreements, contribution
and assumption instruments and other documents necessary or advisable to
evidence the conveyance of the Contributed Interests and the admission of
Operating Partnership (or Designated Subsidiary) into the Partnerships by virtue
of the contribution of the Contributed Interests, shall have been obtained.
7.3 No Order or Injunction. The consummation of the Contributions
shall not have been restrained, enjoined or prohibited by any order or
injunction of any court or governmental authority of competent jurisdiction.
10
<PAGE> 13
7.4 Instruments of Conveyance. The Contributors shall have
delivered the instruments evidencing conveyance of their interests referred to
in Section 8.1.
8. The Closing.
8.1 Contributors' and General Partner's Closing Documents. At
Closing, each Contributor shall deliver (or cause to be delivered pursuant to
the Power of Attorney referred to in Section 11.9) or the General Partner shall
deliver the following (all of which shall be duly executed and acknowledged
where required):
(a) A written document of conveyance contributing to
Operating Partnership (and/or any Designated Subsidiary) title to Contributor's
Contributed Interests, free and clear of any adverse claim or interest;
(b) Such documents and certificates as Operating
Partnership reasonably may require to establish the authority of the parties
executing any documents in connection with the Contributions including, in the
case of any Contributor that is a corporation, partnership, limited liability
company or other similar entity (other than a trust or estate), an opinion of
counsel, reasonably satisfactory to the Operating Partnership, as to the due
execution and delivery of such documents;
(c) Such consents and instruments of admission as are
contemplated by Section 7.2 hereof; and
(d) Such other documents, instruments and certificates as
Operating Partnership and the General Partner, as agent for the Contributors,
reasonably agree are necessary or appropriate, including without limitation
recording and transfer forms and affidavits.
8.2 Operating Partnership's Closing Documents. At Closing,
Operating Partnership shall deliver or cause to be delivered to the General
Partner, as agent for the Contributors, the following:
(a) The Units referred to in Section 2(a);
(b) Copies of the executed Partnership Agreement of the
Operating Partnership and the Registration Rights Agreement and Unit Redemption
Agreement referred to in Section 11.09; and
(c) Such other documents and instruments as the General
Partner, as agent for the Contributors, and Operating Partnership agree are
necessary or appropriate, including without limitation recording and transfer
forms and affidavits.
9. Transfer Taxes and Closing Costs.
11
<PAGE> 14
(a) The General Partner and Operating Partnership shall
join on the Closing Date in completing, executing, delivering and verifying the
returns, affidavits and other documents required in connection with the
documentary stamps in accordance with the New York State Real Estate Transfer
Tax imposed by Article 31 of the Tax Law, the New York City Real Property
Transfer Tax imposed by Chapter 46 of Title 11 of the Administrative Code of the
City of New York, and any other tax payable by reason of the contribution of the
Contributed Interests (collectively, the "Conveyance Taxes").
(b) The Contributors hereby agree to pay and shall be
solely responsible for the Conveyance Taxes due on the conveyance of the
Contributed Interests including, but not limited to, any Conveyance Taxes
imposed due to the Contributor's failure to satisfy any holding period or
continuity requirements for qualifying for a reduced rate of Conveyance Taxes,
including the holding period requirements with respect to certain transfers to a
REIT imposed in connection with the New York Real Estate Transfer Tax imposed by
Article 31 of the Tax Law and the New York City Real Property Transfer Tax
imposed by Chapter 46 of Title 11 of the Administrative Code of the City of New
York. Using the amount distributed to the General Partner pursuant to Section
2(e) hereof, the General Partner, as agent for the Contributors and the Major
Partner, shall timely pay to the appropriate tax collecting agency or official
the amount of all Conveyance Taxes payable by reason of the Contributors' and
the Major Partner's agreement to pay the Conveyance Taxes (assuming satisfaction
of the requirements set forth in the preceding sentence). The Contributors shall
indemnify, defend and hold harmless Operating Partnership and the Partnerships
from and against all claims, liabilities, costs and expenses (including
reasonable attorney's fees), incurred by Operating Partnership or the
Partnerships by reason of the failure of the Contributors to pay any Conveyance
Taxes assessed or alleged to be due at any time with respect to the transfer of
the Interests to Operating Partnership, including, without limitation, all
interest and penalties thereon.
(c) Operating Partnership shall also pay or provide for
the payment of all other costs associated with the closing of the contributions
of the Contributed Interests pursuant to this Agreement, as described in and
subject to the terms of the Memorandum.
10. Operation in the Ordinary Course. The General Partner shall
use reasonable efforts to operate the Partnership and the Property in the
ordinary course of business between the date hereof and the closing of the
Consolidation, including making any necessary capital expenditures and leasing
expenditures consistent with past practices to maintain the quality and value of
the Property.
11. General Provisions.
11.1 Survival of Representations and Warranties. It is the express
intention and agreement of the parties hereto that the representations and
warranties of the parties set forth in this Agreement shall survive the
consummation of the Contributions and the Closing.
12
<PAGE> 15
11.2 Notices. All notices, demands, requests or other
communications that may be or are required to be given or made by any party to
the other parties pursuant to this Agreement shall be in writing and shall be
hand delivered or transmitted by certified mail, express overnight mail or
delivery service, telegram, telex or facsimile transmission to the parties at
the addresses specified in Exhibit A or such other address as the addressee may
indicate by written notice to the other party.
Each notice, demand, request or communication that is given or made in
the manner described above shall be deemed sufficiently given or made for all
purposes at such time as it is delivered to the addressee (with the delivery
receipt, the affidavit of messenger or (with respect to a telex) the answer back
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
11.3 Governing Law. This Agreement, the rights and obligations of
the parties hereto and any claims or disputes relating to such rights and
obligations shall be governed by and construed under the laws of the State of
New York.
11.4 Headings. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
11.5 Benefit and Assignment. No Contributor shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Operating Partnership. Any purported
assignment contrary to the terms hereof shall be null, void and of no force and
effect.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns as permitted
hereunder. No person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
The Operating Partnership may designate one or more Designated
Subsidiaries to acquire all or any part of the Contributed Interests (in which
case the Designated Subsidiary shall execute a certificate at closing making the
same representations and warranties as are made by Operating Partnership and
references to Operating Partnership shall include the Designated Subsidiaries
except where the context clearly indicates otherwise).
11.6 Severability. If any part of any provision of this Agreement
or any other agreement, document or writing given pursuant to or in connection
with this Agreement shall be invalid or unenforceable under applicable law, such
part shall be ineffective to the extent of such invalidity or unenforceability
only, without in any way affecting the remaining
13
<PAGE> 16
parts of such provisions or the remaining provisions of said agreement so long
as the economic and legal substance of the Contributions is not affected in any
manner materially adverse to either party.
11.7 Entire Agreement; Amendment. The Schedules and the Exhibits
attached hereto are hereby incorporated into the Agreement as if fully set forth
herein. This Agreement, and the Schedules and Exhibits attached hereto, together
with the Memorandum, contain the final and entire agreement between the parties
hereto with respect to the Contributions, supersede all prior oral and written
memoranda and agreements with respect to the matters contemplated herein, and
are intended to be an integration of all prior negotiations and understandings.
Contributors and Operating Partnership shall not be bound by any terms,
conditions, statements, warranties or representations, oral or written, not
contained or referred to herein or therein. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto.
11.8 No Waiver. No delay or failure on the part of any party hereto
in exercising any right, power or privilege under this Agreement or under any
other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial exercise
of any such right, power or privilege shall preclude the further exercise of
such right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent expressly specified
therein.
11.9 Consent and Power of Attorney. The General Partner hereby
consents to the contribution of the Contributed Interests pursuant hereto by
each of the Contributors. Each Contributor is executing a Partner Consent
pursuant to which such Contributor (a) is executing this Agreement, and (b) is
consenting to each matter set forth therein. In addition, by executing this
Agreement pursuant to the Consent, each Contributor is constituting and
appointing each of David R. Greenbaum, John J. Silberstein and Christopher G.
Bonk, individually, with full power of substitution, the true and lawful
attorney-in-fact (the "Attorney") of such Contributor, with full power and
authority in the name of and for and on behalf of such Contributor, to execute
an instrument of conveyance contributing his, her or its Contributed Interests
to Operating Partnership pursuant to the Consolidation on the terms set forth in
the Memorandum, to execute the Partnership Agreement of Operating Partnership
and the Registration Rights Agreement and a Unit Redemption Agreement (if the
Contributor elects to redeem its Units for cash immediately after the Closing)
and to execute any instruments required to be filed in connection with the
Conveyance Taxes, and to execute any other instruments that the General Partner
reasonably determines necessary or appropriate in connection with the
contribution of the Contributed Interests pursuant to this Agreement and the
consummation of the Consolidation.
Each Contributor shall promptly notify the General Partner if any of
the representations and warranties by that partner were not true and correct
when made or become untrue at any time prior to the Closing.
14
<PAGE> 17
IN WITNESS WHEREOF, each of the Contributors has executed a separate
Partner Consent agreeing to be bound by the terms of this Agreement and each of
Operating Partnership, and the General Partner has caused this Agreement to be
duly executed and delivered on its or his behalf as of the date first above
written.
THE MENDIK COMPANY, L.P.
By: The Mendik Company, Inc., general partner
By: /s/ David R. Greenbaum
--------------------------------
Name: David R. Greenbaum
Title: President
/s/ Bernard H. Mendik
------------------------------------
Bernard H. Mendik
[ADDITIONAL SIGNATURES OMITTED]
15
<PAGE> 18
Exhibit A
M/F Associates
M/F Eleven Associates
List of Partners
<TABLE>
<CAPTION>
Number
of Units
--------
<S> <C>
Equby Associates 143,212
c/o Richard Vespa
Goldschmidt & Goldschmidt
641 Lexington Avenue
New York, NY 10022-4503
INS Realty Associates )
c/o Weissbarth, Altman & Michaelson )
156 56th Street )
New York, NY 10019 )
) 134,758
INS Eleven Associates )
c/o Weissbarth, Altman & Michaelson )
156 West 56th Street )
New York, NY 10019 )
Bernard H. Mendik 162,210
330 Madison Avenue
New York, NY 10017
The Mendik Partnership, L.P. (Not contributing interests equal
330 Madison Avenue to the override held by Rcay, S.A.)
New York, NY 10017
Mendik Realty Company, Inc. 8,758
330 Madison Avenue
New York, NY 10017
--------
448,938
</TABLE>
16
<PAGE> 19
Exhibit B
Committed Capital Expenditures
Completion of the HVAC replacement project
17
<PAGE> 20
Exhibit C
Contingent Leasing Expenditures
<TABLE>
<S> <C>
BOMA $105,187
Newbridge Networks 400,000
Faulkner & Gray 210,000
TOTAL $715,187
</TABLE>
18
<PAGE> 1
Exhibit 2.3
AGREEMENT FOR CONTRIBUTION OF INTERESTS
IN
866 UN PLAZA ASSOCIATES LLC
BY AND AMONG
THE MENDIK COMPANY, L.P.,
THE MEMBERS OF 866 UN PLAZA ASSOCIATES LLC
AND
BERNARD H. MENDIK
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE UNITS TO BE ISSUED
HEREUNDER WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO UNITS MAY
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND UNLESS THE OTHER
TRANSFER RESTRICTIONS ON SUCH UNITS HAVE BEEN SATISFIED. CONTRIBUTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR OWNERSHIP
OF UNITS FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION CONTRIBUTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
PAGE
1. Contributions........................................................... 1
2. Consideration; Distributions Prior to Closing........................... 2
3. Acceptance of Contributions............................................. 5
4. Closing Time and Place.................................................. 5
5. Representations and Warranties of Operating Partnership................. 5
5.1 Power and Authority, and Qualification......................... 5
5.2 Authority Relative to this Agreement........................... 5
5.3 Binding Obligation............................................. 6
5.4 Insolvency..................................................... 6
5.5 Brokers........................................................ 6
5.6 Valid Consideration............................................ 6
6. Representations, Warranties and Agreements of Contributors.............. 6
6.1 Title; Authority to Assign..................................... 7
6.3 Insolvency..................................................... 7
6.4 Litigation..................................................... 7
6.5 Binding Obligation, etc........................................ 7
6.6 Brokers........................................................ 8
6.7 Securities Act and Other Representations and Agreements........ 8
7. Conditions to Completion................................................ 11
7.1 Representations, Warranties and Covenants...................... 11
7.2 Consents....................................................... 11
7.3 No Order or Injunction......................................... 11
8. The Closing............................................................. 11
8.1 Contributors' and General Partner's Closing Documents.......... 11
8.2 Operating Partnership's Closing Documents...................... 12
9. Transfer Taxes and Closing Costs........................................ 12
10. Operation in the Ordinary Course........................................ 13
11. General Provisions...................................................... 13
11.1 Survival of Representations and Warranties.................... 13
11.2 Notices....................................................... 13
11.3 Governing Law................................................. 14
11.4 Headings...................................................... 14
11.5 Benefit and Assignment........................................ 14
11.7 Entire Agreement; Amendment................................... 14
11.8 No Waiver..................................................... 15
11.9 Consent and Power of Attorney................................. 15
Exhibit A List of Partners
Exhibit B Committed Capital Expenditures
Exhibit C Contingent Leasing Expenditures
i
<PAGE> 3
AGREEMENT FOR CONTRIBUTION OF INTERESTS
[866 UN PLAZA]
THIS AGREEMENT for the Contribution of Interests (this
"Agreement") is made and entered into as of April 15, 1997, by and among The
Mendik Company, L.P. ("Operating Partnership"), a Delaware limited partnership,
whose general partner as of the date hereof is The Mendik Company, Inc., a
Maryland corporation, each of the parties listed on Exhibit A annexed hereto who
executes a Partner Consent (hereinafter defined) agreeing to become a party to
this Agreement (collectively referred to herein as "Contributors") and Bernard
H. Mendik (in his capacity as a managing member of the Company (hereinafter
defined), the "Managing Member").
WHEREAS, it is desired to consolidate (the "Consolidation")
the assets of Vornado Realty Trust, a Maryland real estate investment trust (the
"REIT"), and interests in seven general or limited partnerships or limited
liability companies of which the Managing Member or an affiliate is a general
partner or managing member, together with the assets of Mendik Realty Company,
Inc. and Mendik Management Company, Inc., each a New York corporation and an
affiliate of the Managing Member, with and into Operating Partnership;
WHEREAS, upon completion of and after the Consolidation, the
REIT will become and be the managing general partner of the Operating
Partnership;
WHEREAS, Contributors are owners of interests (the
"Contributed Interests") in 866 UN Plaza Associates LLC, a New York limited
liability company (the "Company"), which Company owns land and improvements (the
"Property") known as 866 UN Plaza, New York, New York; and
WHEREAS, in connection with the consummation of the
Consolidation, the parties hereto desire that Operating Partnership and, if
designated by Operating Partnership, one or more special purpose subsidiary
partnerships or limited liability companies of Operating Partnership or one or
more other entities controlled by Operating Partnership (each a "Designated
Subsidiary") acquire all of the interests in the Company through the
contribution of such interests to Operating Partnership and/or one or more
Designated Subsidiaries upon the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises and covenants set forth herein, Operating Partnership,
Contributors and the Managing Member hereby agree as follows:
1. CONTRIBUTIONS. Upon the Closing (hereinafter defined), and
subject to the satisfaction or waiver by Operating Partnership of the conditions
set forth in Section 7 of this Agreement, Contributors shall contribute, convey
and assign to Operating Partnership (and/or Designated Subsidiary) and Operating
Partnership (and/or Designated Subsidiary) shall acquire
<PAGE> 4
from Contributors all of Contributors' right, title and interest in the
Contributed Interests (the "Contributions"), including, without limitation, all
of Contributors' interest in the profits, losses, property and capital of the
Company allocable to the Contributed Interests, upon the terms and conditions
set forth in this Agreement.
2. CONSIDERATION; DISTRIBUTIONS PRIOR TO CLOSING.
(a) In full consideration for the contribution of the
Contributed Interests, Operating Partnership shall deliver to Contributors (or
their designees as provided below) at the Closing, with respect to the Exchange
Value (as such term is defined in the Confidential Solicitation of Consents and
Private Placement Memorandum (the "Memorandum") dated March 29, 1997), an
aggregate of 192,305 units of limited partnership interests ("Units") in the
Operating Partnership, such Units being allocated among the Contributors as set
forth on Exhibit A, subject to adjustment as provided in Section 2(b) hereof.
Prior to the Closing, subject to compliance with all
applicable securities laws, any Contributor that is a partnership may give
notice to the Operating Partnership to allocate all or a portion of the Units
otherwise issuable to it among its partners in a manner set forth in the notice
and to issue the Units directly to those partners, and any Contributor who holds
interests in which another person or entity has a beneficial interest may give
notice to the Operating Partnership to issue all or a portion of the Units
otherwise issuable to that Contributor to the beneficial owner of that interest.
In such event, as a condition to receiving any Units, any such partners of any
Contributor or any such beneficial holder shall execute a Partner Consent (the
"Partner Consent") in the form annexed to and made part of the Memorandum and
shall make to the Operating Partnership the representations and warranties and
agreements in Section 6.7(a), (b), (c) and (d) pursuant to an instrument
reasonably satisfactory to the Operating Partnership (in addition to the Partner
Consent to be executed by the Contributor).
(b) If the aggregate amount of the Net Other Assets
(hereinafter defined) of the Company as of the close of business on the day
preceding the date of the Closing (the "Closing Date") exceeds $9,250,000,
Operating Partnership shall issue additional Units (valued at the average of the
closing prices on the New York Stock Exchange of shares of the REIT for the last
ten trading days ending on the third trading day prior to the Closing Date) with
a value equal to the amount of the excess Net Other Assets, and such additional
Units shall be issued to each Contributor in the same proportion as the Units
will be issued in accordance with Exhibit A.
As used in this Agreement, the following terms have the
following meanings:
(i) "Net Other Assets" means the excess of Certain Other
Assets over Certain Other Liabilities (as such terms are hereinafter defined).
2
<PAGE> 5
(ii) "Certain Other Assets" means, subject to Section 2(e),
cash and cash equivalents (other than any condemnation or casualty proceeds held
by the Company), marketable securities, accounts receivable (including an
estimate of any rent escalations payable by tenants with respect to the period
through the Closing Date, but excluding any amounts payable by tenants with
respect to any period after the Closing Date, as well as any amount payable by
tenants after the Closing Date to the extent such amount has been recognized as
income prior to the Closing), prepaid expenses (excluding any prepaid leasing
costs relating to leases entered into prior to October 1, 1996), escrow deposits
made by the Company, capital expenditures (other than tenant improvements or
building improvements required by the terms of any lease and other than those
committed capital expenditures listed on Exhibit B annexed hereto) made on or
after October 1, 1996, amounts paid for leasing costs, tenant and building
improvements or tenant acquisition costs relating to (1) leases entered into on
or after October 1, 1996 and (2) leases entered into prior to October 1, 1996,
but only to the extent of any leasing expenditures with respect to such leases
entered into prior to October 1, 1996 which are set forth on Exhibit C annexed
hereto. For the purpose of calculating Certain Other Assets, the accounts
receivable of the Company shall be valued at the face amount of the accounts
receivable, net of a reserve for doubtful accounts determined in accordance with
generally accepted accounting principles consistently applied, and without
giving effect to the straight-line requirement of FASB 13.
(iii) "Certain Other Liabilities" means accounts payable,
accrued interest payable and other accrued liabilities (including any liability
or obligation for leasing costs, tenant or building improvements or tenant
acquisition costs payable relating to leases entered into prior to October 1,
1996 but excluding any liability or obligation for leasing costs, tenant or
building improvements or tenant acquisition costs payable relating to (1) leases
entered into on or after October 1, 1996 and (2) leases entered into prior to
October 1, 1996, but only to the extent of any leasing expenditures with respect
to such leases entered into prior to October 1, 1996 which are set forth on
Exhibit C annexed hereto), the unpaid remaining cost of any committed capital
expenditures listed on Exhibit B annexed hereto and prepaid rent received from
tenants.
For purposes of this Section 2, the exercise of an option to
renew a lease or to rent additional space pursuant to a lease shall be deemed a
new lease entered into on the effective date of the renewal option.
(c) The Managing Member shall prepare and submit to the REIT,
not later than five days prior to the Closing Date, its best, good faith
estimate of the Net Other Assets as of the close of business on the day
preceding the Closing Date; such estimate shall be determined based upon the
books and records of the Company. The estimate submitted to the REIT shall be
accompanied by (i) a statement setting forth in reasonable detail the
calculation of the estimated Net Other Assets as of the close of business on the
day preceding the Closing Date, and (ii) a certificate signed by the Managing
Member confirming that the estimate was calculated
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in accordance with the terms of this Section 2. The estimate shall be final and
binding on the parties unless, at least two days prior to the Closing, the REIT
gives written notice to the Managing Member that it objects to any item. The
REIT and the Managing Member shall immediately consult with respect to any item
objected to and their joint determination with respect to any items in dispute
shall be final and binding on the parties. The number of additional Units to be
delivered at Closing shall be based on the statement of Net Other Assets
delivered by the Managing Member if there is no objection thereto by the REIT
(or the undisputed amount of Net Other Assets if there is such an objection) and
additional Units, if any, shall be delivered to the General Partner, as agent
for the Contributors, promptly after the accountants' determination referred to
in the next sentence, it being understood that the Contributors shall be deemed
to own such additional Units, if any, as of the Closing Date. If the REIT and
the Managing Member are unable to reach agreement on the amount of Net Other
Assets prior to Closing, within ten days after the Closing, the dispute shall be
referred to and resolved by a "Big 6" firm of independent certified public
accountants proposed by the REIT and reasonably acceptable to the Managing
Member, and the determination by that accounting firm shall be final and binding
on the parties. The fees and expenses of the accounting firm shall be borne by
Operating Partnership.
(d) The Operating Partnership shall cause the Company to pay
any amounts collected by the Company after the Closing Date relating to the
period through the Closing Date with respect to refunds of real estate taxes
paid by the Company (less any costs incurred by the Company or the Operating
Partnership in obtaining such refunds and less any portion of such refunds
required or, in the REIT's reasonable determination, estimated to be required to
be paid to tenants) to the Managing Member, as agent for the Contributors, not
later than 10 days after the end of the month in which such amounts are
collected, and the General Partner shall promptly distribute such amounts to the
Contributors.
(e) An amount equal to $750,000 (plus any additional
Conveyance Taxes (hereinafter defined) payable as a result of the value of the
Units (based on the value of the shares of the REIT) exceeding $52 per Unit)
shall be deducted from the Partnership's cash on hand prior to the calculation
of Net Other Assets, regardless of the actual amount of the Conveyance Taxes. On
the Closing Date, the Managing Member shall cause the Company to distribute to
the Managing Member, as agent for the members, an amount (estimated at $750,000
based on a value of $52 per Unit) sufficient to pay the Conveyance Taxes payable
by them pursuant to Section 9(b) hereof, assuming that the Contributions
hereunder are treated as "qualifying REIT transfers" under the laws referred to
in Section 9(a) hereof, it being understood that the funds referred to in the
first sentence of this clause (e) shall be applied toward satisfaction of this
distribution requirement.
(f) Notwithstanding the foregoing, each Contributor may elect,
by notice to the Operating Partnership given at least five days prior to the
Closing Date, not to receive up to 80% of the Units issuable to him or it prior
to any adjustment pursuant to Section 2(b), but instead to receive cash in an
amount equal to $48.36 per Unit in lieu of those Units. In
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that event, at the Closing, the Company shall distribute to each such
Contributor the amount of cash to which he or it is entitled pursuant to the
preceding sentence. Notwithstanding the foregoing, each Contributor that is a
partnership may make the foregoing election separately with respect to up to 80%
of the Units distributable to each partner in the Partnership.
3. ACCEPTANCE OF CONTRIBUTIONS. Subject to satisfaction of the
conditions listed or referred to in Section 7, Operating Partnership hereby
agrees that at the Closing it shall accept or, at its election, cause a
Designated Subsidiary to accept all or part of, the Contributions and shall
assume any and all rights, obligations and responsibilities of Contributors as
owners of the Contributed Interests that arise subsequent to the Closing Date.
4. CLOSING TIME AND PLACE. Unless another date or place is agreed
to by the parties, the closing of the Contributions (the "Closing") shall take
place contemporaneously with the closing of the Consolidation at the offices of
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York 10036,
or such other place and time as Operating Partnership and the Managing Member
shall agree upon, upon the satisfaction or waiver of all conditions to the
Closing set forth in Section 7 hereof.
5. REPRESENTATIONS AND WARRANTIES OF OPERATING PARTNERSHIP.
Operating Partnership hereby represents and warrants to Contributors as follows,
which representations and warranties shall be true and correct on the Closing
Date:
5.1 POWER AND AUTHORITY, AND QUALIFICATION. Operating
Partnership is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. The REIT is a real estate
investment trust duly organized, validly existing and in good standing under the
laws of the State of Maryland. Each of Operating Partnership and the REIT has
the requisite power and authority to carry on its respective business as it is
now being conducted. Each of Operating Partnership and the REIT is qualified to
do business and is in good standing in each jurisdiction in which the character
of its property owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, as the case may be.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Operating
Partnership has taken all action necessary to authorize the execution, delivery
and performance of this Agreement by Operating Partnership and no other
proceedings on the part of Operating Partnership are necessary to authorize the
execution and delivery of this Agreement and the consummation of the
Contributions.
None of the execution and delivery of this Agreement by
Operating Partnership, the consummation by Operating Partnership of the
Contributions or compliance by Operating Partnership with any of the provisions
hereof shall (i) conflict with or result in any
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breach of any provisions of the partnership agreement of Operating Partnership;
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Operating Partnership is a
party or by which it or any of its properties or assets may be bound; or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Operating Partnership; except in the case of (ii) or (iii) for
violations, breaches, or defaults (A) that would not in the aggregate have a
material adverse effect on the business or financial condition of Operating
Partnership or the REIT, and that shall not impair the effectiveness of the
Contributions contemplated hereby, or (B) for which waivers or consents have
been or shall be obtained prior to the Closing Date.
5.3 BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Operating Partnership and constitutes a valid
and binding agreement of Operating Partnership, enforceable against Operating
Partnership in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, insolvency, moratorium, or
similar laws affecting creditors' rights generally or the rights of creditors of
limited partnerships and to general principles of equity.
5.4 INSOLVENCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against Operating Partnership.
5.5 BROKERS. Neither Operating Partnership nor the REIT
has employed or dealt with any broker or finder, or incurred any liability
therefor, in connection with the Contributions.
5.6 VALID CONSIDERATION. The Units, when issued in
accordance with this Agreement and the Partnership Agreement of Operating
Partnership, will be duly and validly issued, and the issuance thereof will not
be subject to preemptive or other similar rights.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF CONTRIBUTORS.
Each Contributor, in his, her or its capacity as a partner of the Company,
hereby represents and warrants to and agrees with Operating Partnership with
respect to his, her or its Contributed Interests as follows, which
representations and warranties shall also be true and correct on the Closing
Date:
6.1 TITLE; AUTHORITY TO ASSIGN. Contributor (i) owns good
and marketable, legal and beneficial (except for holders of beneficial interests
in the amounts payable with respect to such Contributed Interests who have no
other rights with respect to those interests) title in and to his, her or its
Contributed Interests which as of the Closing Date will be held free of any
liens, encumbrances, judgments, adverse interests, pledges or security
interests,
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other than pledges of partnership interests to the Partnership or the other
partners to secure a partner's obligations to meet capital calls or other
obligations as set forth in the partnership agreement of the Partnership (as to
which no amounts are outstanding and no amounts will be outstanding as of the
Closing Date), (ii) holds the entire right, title and interest in and to his,
her or its Contributed Interests, and (iii) has the full right, power, capacity
and authority to validly contribute and convey his, her or its Contributed
Interests pursuant to this Agreement.
6.2 NO BREACH OF OPERATING AGREEMENT. None of the
execution and delivery of this Agreement by Contributor, the consummation by
Contributor of the Contribution or compliance by Contributor with any of the
provisions hereof shall as of the Closing Date conflict with or result in any
breach of any provisions of the Operating Agreement of the Company or any other
agreement to which Contributor is a party.
6.3 INSOLVENCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or, to the knowledge of Contributor, threatened against
Contributor.
6.4 LITIGATION. Contributor has no knowledge of any
actual or pending litigation or proceeding by any organization, person,
individual or governmental agency against Contributor with respect to or against
or potentially affecting his, her or its Contributed Interests.
6.5 BINDING OBLIGATION, ETC. This Agreement has been duly
and validly executed and delivered by Contributor to Operating Partnership and
constitutes a legal, valid and binding agreement of Contributor, enforceable
against Contributor in accordance with its terms, except as such enforcement may
be limited by bankruptcy, conservatorship, receivership, insolvency, moratorium
or similar laws affecting creditors' rights generally and to general principles
of equity. Contributor further represents and warrants that if Contributor is a
corporation, partnership, trust or other entity, it has the power to, and is
duly authorized and otherwise duly qualified to, purchase and hold securities
such as Units and Common Shares (as hereinafter defined) and such entity has its
principal place of business as set forth on Exhibit A.
6.6 BROKERS. Contributor has not employed or dealt with
any broker or finder, or incurred any liability therefor, in connection with the
Contribution.
6.7 SECURITIES ACT AND OTHER REPRESENTATIONS AND
AGREEMENTS.
(a) (i) Upon the issuance of Units to Contributor (or a
designee as provided in Section 2), Contributor (or designee) shall become
subject to, and shall be bound by, the terms and provisions of the Partnership
Agreement of Operating Partnership, including the terms of the power of attorney
contained in Section 15.11 thereof, as the Partnership Agreement may be amended
and restated from time to time in accordance with its terms.
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(ii) Contributor or his, her or its advisor(s) have had a
reasonable opportunity to ask questions of and receive information and answers
from a person or persons acting on behalf of the Company and Operating
Partnership concerning the Consolidation, and, as Contributor may deem
necessary, to verify the information contained in the Memorandum, receipt of
which is acknowledged, and any other information provided to Contributor by the
Company or Operating Partnership and all such questions have been answered and
all such information has been provided to the full satisfaction of Contributor.
(iii) Contributor is acquiring Units for his, her or its own
account as principal, for investment and not with a view to resale or
distribution, and the Units may not be transferred or otherwise disposed of by
Contributor otherwise than in transactions pursuant to a registration statement
filed by the Operating Partnership (which it has no obligation to file) or that
are exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable state and foreign securities
laws, and the REIT may refuse to transfer any Units as to which evidence of such
registration or exemptions from such registration satisfactory to the REIT is
not provided to it, which evidence may include the requirement of legal opinions
regarding the exemption from such registration. If the REIT elects, in its sole
discretion, to deliver to any Contributor common shares of beneficial interest
of the REIT ("Common Shares") upon redemption of any Units, the Common Shares
will be acquired for his, her or its own account as principal, for investment
and not with a view to resale or distribution, and the Common Shares may not be
transferred or otherwise disposed of by Contributor otherwise than in
transactions pursuant to any registration statement filed by the REIT with
respect to such Common Shares (which it has an obligation to file only pursuant
to the Registration Rights Agreement described in the Memorandum) or that are
exempt from the registration requirements of the Securities Act and all
applicable state and foreign securities laws, and the REIT may refuse to
transfer any Common Shares as to which evidence of such registration or
exemptions from such registration satisfactory to the REIT is not provided to
it, which evidence may include the requirement of legal opinions regarding the
exemption from such registration.
(iv) Contributor (either alone or with his, her or its
advisors) has sufficient knowledge and experience in financial, tax and business
matters to enable him, her or it to evaluate the merits and risks of an
investment in the Units. Contributor has the ability to bear the economic risk
of acquiring the Units. Contributor acknowledges that (1) the transactions
contemplated by this Agreement and the Memorandum involve complex tax
consequences for each Contributor and each Contributor is relying solely on the
advice of his, her or its own tax advisors in evaluating such consequences, and
(2) neither Operating Partnership nor the Managing Member has made (or shall be
deemed to have made) any representations or warranties as to the tax
consequences of such transaction to any Contributor. Each Contributor remains
solely responsible for all tax matters relating to each Contributor.
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(v) If needed, Contributor has discussed with his, her or
its professional, legal, tax or financial advisors the suitability of an
investment in Units or Common Shares for his, her or its particular tax and
financial situation. Nothing contained herein or in the Memorandum shall be
deemed to imply any representation by Operating Partnership or the Managing
Member as to a particular tax effect that may be obtained by any Contributor.
(vi) All information that Contributor has provided to
Operating Partnership concerning himself or herself or itself and his, her or
its financial position is correct and complete as of the date hereof, and if
there should be any material change in such information prior to issuance of
Units to the Contributors, he, she or it shall immediately provide such changed
information to Operating Partnership.
(vii) Contributor has not disclosed any information contained
in the Memorandum to anyone other than his or her spouse or his, her or its
professional, legal, tax or financial advisors advising him, her or it in
connection with this investment and has not reproduced the Memorandum other than
for such use by such advisors.
(b) STATUS AS A UNITED STATES PERSON.
(i) Unless otherwise indicated on the Partner Consent,
Contributor certifies that Contributor is not a foreign person within the
meaning of Section 1445 of the Internal Revenue Code ("Section 1445"). To the
extent that Contributor is not a foreign person within the meaning of Section
1445, (1) Contributor's U.S. taxpayer identification number that has previously
been provided to the Partnership is accurate, (2) Contributor's home address (in
the case of an individual) or office address (in the case of an entity) is that
address indicated on Exhibit A of this Agreement and (3) if Contributor
subsequently becomes a foreign person within the meaning of Section 1445,
Contributor shall notify Operating Partnership prior to the Closing Date.
(ii) If Contributor is or prior to the Closing Date becomes a
foreign person within the meaning of Section 1445, Operating Partnership shall,
and is authorized to, withhold ten percent (10%) of the amount realized (as such
term is defined in Section 1001 of the Internal Revenue Code) by Contributor in
connection with the Contribution, unless Operating Partnership shall receive
from Contributor a notice of nonrecognition transfer with respect to the
Contribution by Contributor (in a form to be provided by Operating Partnership).
(c) Indemnification. Contributor hereby agrees to indemnify and
hold harmless the Company, the REIT, Operating Partnership, The Mendik Company,
Inc. and the Managing Member and any of the employees, agents, officers,
directors and affiliated persons of the foregoing from any and all damages,
losses, costs and expenses (including reasonable attorneys' fees) which they, or
any of them, may incur by reason of a failure by Contributor to
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fulfill any of its obligations under this Agreement or by reason of the breach
by Contributor of any of the representations and warranties contained herein.
(d) Waiver and Contribution. Contributor understands that (i)
the Units to be issued pursuant to the Consolidation have not been registered
under the Securities Act and (ii) the failure to register such Units could
result in Contributor being granted certain rights under the Federal securities
laws, including a right to rescind Contributor's consent to the Consolidation.
For the benefit of Operating Partnership, and in consideration of Operating
Partnership's consummating the Consolidation, Contributor (x) hereby waives any
and all rights he or she now has or may hereafter be granted to rescind his or
her consent to the Consolidation on the basis that the Units issued in
connection with the Consolidation were not registered (the "Waiver") and (y)
agrees that if the Waiver is deemed void or unenforceable for any reason,
including, without limitation, under Section 14 of the Securities Act, the
entire beneficial interest in all property and amounts received by Contributor
in any action to rescind the Consolidation (regardless of whether such action
was initiated by Contributor) or otherwise received by Contributor as damages
for failure to register the Units under the Securities Act, shall be promptly
paid over and contributed by Contributor to Operating Partnership, for no
additional consideration from Operating Partnership, other than the Units
originally issued pursuant to the Consolidation.
Whenever the context shall require, all words in the male,
female or neuter gender shall be deemed to include the other genders, all
singular words shall include the plural, and all plural words shall include the
singular. All representations, covenants and agreements of Contributor set forth
in this Agreement shall survive the consummation of the Consolidation
contemplated by the Memorandum.
7. CONDITIONS TO COMPLETION. In addition to the conditions to
completion of the Consolidation set forth in the Memorandum, the obligations of
Operating Partnership to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment (or waiver by Operating Partnership)
at or prior to the Closing of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants made by Contributors in this Agreement
or in any document delivered by any of them pursuant to this Agreement shall be
true and correct in all material respects when made and on and as of the Closing
as though such representations, warranties and covenants were made on and as of
such date.
7.2 CONSENTS. Any and all consents required by the Operating
Agreement of the Company, and any certificates, agreements, contribution and
assumption instruments and other documents necessary or advisable to evidence
the conveyance of the Contributed Interests and the admission of Operating
Partnership (or Designated Subsidiary) into the Company by virtue of the
contribution of the Contributed Interests, shall have been obtained.
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7.3 NO ORDER OR INJUNCTION. The consummation of the
Contributions shall not have been restrained, enjoined or prohibited by any
order or injunction of any court or governmental authority of competent
jurisdiction.
7.4 INSTRUMENTS OF CONVEYANCE. The Contributors shall have
delivered the instruments evidencing conveyance of their interests referred to
in Section 8.1.
8. THE CLOSING.
8.1 CONTRIBUTORS' AND GENERAL PARTNER'S CLOSING DOCUMENTS. At
Closing, each Contributor shall deliver (or cause to be delivered pursuant to
the Power of Attorney referred to in Section 11.9) or the Managing Member shall
deliver the following (all of which shall be duly executed and acknowledged
where required):
(a) A written document of conveyance contributing to Operating
Partnership (and/or any Designated Subsidiary) title to Contributor's
Contributed Interests, free and clear of any adverse claim or interest;
(b) Such documents and certificates as Operating Partnership
reasonably may require to establish the authority of the parties executing any
documents in connection with the Contributions including, in the case of any
Contributor that is a corporation, partnership, limited liability company or
other similar entity (other than a trust or estate), an opinion of counsel,
reasonably satisfactory to the Operating Partnership, as to the due execution
and delivery of such documents;
(c) Such consents and instruments of admission as are
contemplated by Section 7.2 hereof; and
(d) Such other documents, instruments and certificates as
Operating Partnership and the Managing Member, as agent for the Contributors,
reasonably agree are necessary or appropriate, including without limitation
recording and transfer forms and affidavits.
8.2 OPERATING PARTNERSHIP'S CLOSING DOCUMENTS. At Closing,
Operating Partnership shall deliver or cause to be delivered to the Managing
Member, as agent for the Contributors, the following:
(a) The Units referred to in Section 2(a); and
(b) Copies of the executed Partnership Agreement of the
Operating Partnership and the Registration Rights Agreement and Unit Redemption
Agreement referred to in Section 11.09; and
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(c) Such other documents and instruments as the Managing
Member, as agent for the Contributors, and Operating Partnership agree are
necessary or appropriate, including without limitation recording and transfer
forms and affidavits.
9. TRANSFER TAXES AND CLOSING COSTS.
(a) The Managing Member and Operating Partnership shall join
on the Closing Date in completing, executing, delivering and verifying the
returns, affidavits and other documents required in connection with the
documentary stamps in accordance with the New York State Real Estate Transfer
Tax imposed by Article 31 of the Tax Law, the New York City Real Property
Transfer Tax imposed by Chapter 46 of Title 11 of the Administrative Code of the
City of New York, and any other tax payable by reason of the contribution of the
Contributed Interests (collectively, the "Conveyance Taxes").
(b) The Contributors hereby agree to pay and shall be solely
responsible for the Conveyance Taxes due on the conveyance of the Contributed
Interests including, but not limited to, any Conveyance Taxes imposed due to the
Contributor's failure to satisfy any holding period or continuity requirements
for qualifying for a reduced rate of Conveyance Taxes, including the holding
period requirements with respect to certain transfers to a REIT imposed in
connection with the New York Real Estate Transfer Tax imposed by Article 31 of
the Tax Law and the New York City Real Property Transfer Tax imposed by Chapter
46 of Title 11 of the Administrative Code of the City of New York. Using the
amount distributed to the Managing Member pursuant to Section 2(e) hereof, the
Managing Member, as agent for the Contributors, shall timely pay to the
appropriate tax collecting agency or official the amount of all Conveyance Taxes
payable by reason of the Contributors' agreement to pay the Conveyance Taxes
(assuming satisfaction of the requirements set forth in the preceding sentence).
The Contributors shall indemnify, defend and hold harmless Operating Partnership
and the Company from and against all claims, liabilities, costs and expenses
(including reasonable attorney's fees), incurred by Operating Partnership or the
Company by reason of the failure of the Contributors to pay any Conveyance Taxes
assessed or alleged to be due at any time with respect to the transfer of the
Interests to Operating Partnership, including, without limitation, all interest
and penalties thereon.
(c) Operating Partnership shall also pay or provide for the
payment of all other costs associated with the closing of the contributions of
the Contributed Interests pursuant to this Agreement, as described in and
subject to the terms of the Memorandum.
10. OPERATION IN THE ORDINARY COURSE. The Managing Member shall
use reasonable efforts to operate the Company and the Property in the ordinary
course of business between the date hereof and the closing of the Consolidation,
including making any necessary
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capital expenditures and leasing expenditures consistent with past practices to
maintain the quality and value of the Property.
11. GENERAL PROVISIONS.
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. It is the
express intention and agreement of the parties hereto that the representations
and warranties of the parties set forth in this Agreement shall survive the
consummation of the Contributions and the Closing.
11.2 NOTICES. All notices, demands, requests or other
communications that may be or are required to be given or made by any party to
the other parties pursuant to this Agreement shall be in writing and shall be
hand delivered or transmitted by certified mail, express overnight mail or
delivery service, telegram, telex or facsimile transmission to the parties at
the addresses specified in Exhibit A or such other address as the addressee may
indicate by written notice to the other party.
Each notice, demand, request or communication that is given or
made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
delivery receipt, the affidavit of messenger or (with respect to a telex) the
answer back being deemed conclusive but not exclusive evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation.
11.3 GOVERNING LAW. This Agreement, the rights and obligations
of the parties hereto and any claims or disputes relating to such rights and
obligations shall be governed by and construed under the laws of the State of
New York.
11.4 HEADINGS. Section and subsection headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
11.5 BENEFIT AND ASSIGNMENT. No Contributor shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Operating Partnership. Any purported
assignment contrary to the terms hereof shall be null, void and of no force and
effect.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns as
permitted hereunder. No person or entity other than the parties hereto is or
shall be entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto, and the covenants and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the parties hereto or their respective successors and assigns as permitted
hereunder.
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The Operating Partnership may designate one or more Designated
Subsidiaries to acquire all or any part of the Contributed Interests (in which
case the Designated Subsidiary shall execute a certificate at closing making the
same representations and warranties as are made by Operating Partnership and
references to Operating Partnership shall include the Designated Subsidiaries
except where the context clearly indicates otherwise).
11.6 SEVERABILITY. If any part of any provision of this
Agreement or any other agreement, document or writing given pursuant to or in
connection with this Agreement shall be invalid or unenforceable under
applicable law, such part shall be ineffective to the extent of such invalidity
or unenforceability only, without in any way affecting the remaining parts of
such provisions or the remaining provisions of said agreement so long as the
economic and legal substance of the Contributions is not affected in any manner
materially adverse to either party.
11.7 ENTIRE AGREEMENT; AMENDMENT. The Schedules and the
Exhibits attached hereto are hereby incorporated into the Agreement as if fully
set forth herein. This Agreement, and the Schedules and Exhibits attached
hereto, together with the Memorandum, contain the final and entire agreement
between the parties hereto with respect to the Contributions, supersede all
prior oral and written memoranda and agreements with respect to the matters
contemplated herein, and are intended to be an integration of all prior
negotiations and understandings. Contributors and Operating Partnership shall
not be bound by any terms, conditions, statements, warranties or
representations, oral or written, not contained or referred to herein or
therein. No change or modification of this Agreement shall be valid unless the
same is in writing and signed by the parties hereto.
11.8 NO WAIVER. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Agreement or under
any other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial exercise
of any such right, power or privilege shall preclude the further exercise of
such right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent expressly specified
therein.
11.9 CONSENT AND POWER OF ATTORNEY. The Managing Member hereby
consents to the contribution of the Contributed Interests pursuant hereto by
each of the Contributors. Each Contributor is executing a Partner Consent
pursuant to which such Contributor (a) is executing this Agreement, and (b) is
consenting to each matter set forth therein. In addition, by executing this
Agreement pursuant to the Consent, each Contributor is constituting and
appointing each of David R. Greenbaum, John J. Silberstein and Christopher G.
Bonk, individually, with full power of substitution, the true and lawful
attorney-in-fact (the "Attorney") of such Contributor, with full power and
authority in the name of and for and on
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behalf of such Contributor, to execute an instrument of conveyance contributing
his, her or its Contributed Interests to Operating Partnership pursuant to the
Consolidation on the terms set forth in the Memorandum, to execute the
Partnership Agreement of Operating Partnership and the Registration Rights
Agreement and a Unit Redemption Agreement (if the Contributor elects to redeem
its Units for cash immediately after the Closing) and to execute any instruments
required to be filed in connection with the Conveyance Taxes, and to execute any
other instruments that the Managing Member reasonably determines necessary or
appropriate in connection with the contribution of the Contributed Interests
pursuant to this Agreement and the consummation of the Consolidation.
Each Contributor shall promptly notify the Managing Member if
any of the representations and warranties by that partner were not true and
correct when made or become untrue at any time prior to the Closing.
15
<PAGE> 18
IN WITNESS WHEREOF, each of the Contributors has executed a
separate Partner Consent agreeing to be bound by the terms of this Agreement and
each of Operating Partnership, and the Managing Member has caused this Agreement
to be duly executed and delivered on its or his behalf as of the date first
above written.
THE MENDIK COMPANY, L.P.
By: The Mendik Company, Inc., general partner
By: /s/ David R. GreenBaum
-----------------------------------------
Name: David R. Greenbaum
Title: President
/s/ Bernard H. Mendik
-----------------------------------------
Bernard H. Mendik
[ADDITIONAL SIGNATURES OMITTED]
16
<PAGE> 19
866 U.N. Plaza Associates LLC
Exhibit A
List of Partners
<TABLE>
<CAPTION>
Number
of Units
--------
<S> <C>
Ambassador Construction
c/o Irving Koven
317 Madison Avenue, Suite 1200
New York, NY 10017 6,977
Madlyn Braverman
270-26H Grand Central
Floral Park, NY 11005 6,286
Lawrence Goldschmidt
c/o Richard Vespa
Goldschmidt & Goldschmidt
641 Lexington Avenue
New York, NY 10022-4503 19,205
Menby Associates
c/o Richard Vespa
Goldschmidt & Goldschmidt
641 Lexington Avenue
New York, NY 10022-4503 93,123
Fierstein Co.
12 Secor Road
Scarsdale, NY 10583 6,286
Leonard Lauder
767 Fifth Avenue
New York, NY 10022 2,330
Ronald Lauder
767 Fifth Avenue
New York, NY 10022 2,330
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C>
Bernard H. Mendik
330 Madison Avenue
New York, NY 10017 9,782
Mendik Realty Company, Inc.
330 Madison Avenue
New York, NY 10017 109,063
Vicki Alpert
80 Summit Road
Port Washington, NY 11050 691
-------
256,073
</TABLE>
<PAGE> 21
Exhibit B
Committed Capital Expenditures
NONE
<PAGE> 22
Exhibit C
Contingent Leasing Expenditures
<TABLE>
<CAPTION>
<S> <C>
Assembly of Bahai's $ 16,000
Mission of Kazakstan 85,000
Coach Management 41,500
TOTAL $142,500
</TABLE>
<PAGE> 1
Exhibit 2.4
AGREEMENT FOR CONTRIBUTION OF INTERESTS
IN
M330 ASSOCIATES
BY AND AMONG
THE MENDIK COMPANY, L.P.,
THE PARTNERS IN M330 ASSOCIATES
AND
THE MENDIK PARTNERSHIP, L.P.
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE UNITS TO BE ISSUED
HEREUNDER WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO UNITS MAY
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND UNLESS THE OTHER
TRANSFER RESTRICTIONS ON SUCH UNITS HAVE BEEN SATISFIED. CONTRIBUTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR OWNERSHIP
OF UNITS FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION CONTRIBUTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
Page
1. Contributions.......................................................... 2
2. Consideration; Distributions Prior to Closing.......................... 2
3. Acceptance of Contributions............................................ 5
4. Closing Time and Place................................................. 6
5. Representations and Warranties of Operating Partnership................ 6
5.1 Organization, Power and Authority, and Qualification .............. 6
5.2 Authority Relative to this Agreement .............................. 6
5.3 Binding Obligation ................................................ 7
5.4 Insolvency ........................................................ 7
5.5 Brokers ........................................................... 7
5.6 Valid Consideration ............................................... 7
6. Representations, Warranties and Agreements of Contributors............. 7
6.1 Title; Authority to Assign ........................................ 7
6.2 No Breach of Partnership Agreement ................................ 7
6.3 Insolvency ........................................................ 8
6.4 Litigation ........................................................ 8
6.5 Binding Obligation, etc. .......................................... 8
6.6 Brokers ........................................................... 8
6.7 Securities Act and Other Representations and Agreements ........... 8
7. Conditions to Completion............................................... 11
7.1 Representations, Warranties and Covenants ......................... 11
7.2 Consents .......................................................... 11
7.3 No Order or Injunction ............................................ 11
7.4 Instruments of Conveyance ......................................... 11
8. The Closing............................................................ 11
8.1 Contributors' and General Partner's Closing Documents ............. 11
8.2 Operating Partnership's Closing Documents ......................... 12
9. Closing Costs.......................................................... 12
10. Operation in the Ordinary Course....................................... 12
11. General Provisions..................................................... 13
11.1 Survival of Representations and Warranties ....................... 13
11.2 Notices .......................................................... 13
11.3 Governing Law .................................................... 13
11.4 Headings ......................................................... 13
11.5 Benefit and Assignment ........................................... 13
11.6 Severability ..................................................... 14
11.7 Entire Agreement; Amendment ...................................... 14
11.8 No Waiver ........................................................ 14
11.9 Consent and Power of Attorney .................................... 14
Exhibit A List of Partners
Exhibit B Committed Capital Expenditures
Exhibit C Contingent Leasing Expenditures
<PAGE> 3
AGREEMENT FOR CONTRIBUTION OF INTERESTS
[330 MADISON AVENUE]
THIS AGREEMENT for the Contribution of Interests (this
"Agreement") is made and entered into as of April 15, 1997, by and among The
Mendik Company, L.P. ("Operating Partnership"), a Delaware limited partnership,
whose general partner as of the date hereof is The Mendik Company, Inc., a
Maryland corporation, each of the parties listed on Exhibit A annexed hereto who
executes a Partner Consent (hereinafter defined) agreeing to become a party to
this Agreement (collectively referred to herein as "Contributors") and The
Mendik Partnership, L.P. (formerly known as The Mendik Company, L.P.) (in its
capacity as a general partner of the Partnership (hereinafter defined), the
"General Partner").
WHEREAS, it is desired to consolidate (the "Consolidation")
the assets of Vornado Realty Trust, a Maryland real estate investment trust (the
"REIT"), and interests in seven general or limited partnerships or limited
liability companies of which the General Partner or an affiliate is a general
partner or managing member, together with the assets of Mendik Realty Company,
Inc. and Mendik Management Company, Inc., each a New York corporation and an
affiliate of the General Partner, with and into Operating Partnership.
WHEREAS, upon completion of and after the Consolidation, the
REIT will become and be the managing general partner of the Operating
Partnership;
WHEREAS, Contributors are owners of interests in M330
Associates, a New York limited partnership (the "Partnership"), which is a
general partner in 330 Madison Company, a New York general partnership ("330
Madison"), which owns land and improvements (the "Property") known as 330
Madison Avenue, New York, New York;
WHEREAS, Contributors wish to transfer all of their interests
in the Partnership (excluding the transfer by the General Partner of a portion
of its interest as general partner of the Partnership equal to a 1% interest in
the Partnership and the obligations as managing general partner of the
Partnership, but including the General Partner's preference right to
distributions) (the interests to be assigned by Contributors being hereinafter
collectively referred to as the "Contributed Interests"); and
WHEREAS, in connection with the consummation of the
Consolidation, the parties hereto desire that Operating Partnership and, if
designated by Operating Partnership, one or more special purpose subsidiary
partnerships or limited liability companies of Operating Partnership or one or
more other entities controlled by Operating Partnership (each a "Designated
Subsidiary") acquire all of the interests in the Partnership through the
contribution of such interests to Operating Partnership and/or one or more
Designated Subsidiaries upon the terms and conditions provided herein.
<PAGE> 4
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises and covenants set forth herein, Operating Partnership,
Contributors and the General Partner hereby agree as follows:
1. Contributions. Upon the Closing (hereinafter defined), and
subject to the satisfaction or waiver by Operating Partnership of the conditions
set forth in Section 7 of this Agreement, Contributors shall contribute, convey
and assign to Operating Partnership (and/or Designated Subsidiary) and Operating
Partnership (and/or Designated Subsidiary) shall acquire from Contributors all
of Contributors' right, title and interest in the Contributed Interests (the
"Contributions"), including, without limitation, all of Contributors' interest
in the profits, losses, property and capital of the Partnership allocable to the
Contributed Interests, upon the terms and conditions set forth in this
Agreement.
2. Consideration; Distributions Prior to Closing.
(a) In full consideration for the contribution of the
Contributed Interests, Operating Partnership shall deliver to Contributors (or
their designees as provided below) at the Closing, with respect to the Exchange
Value (as such term is defined in the Confidential Solicitation of Consents and
Private Placement Memorandum (the "Memorandum") dated March 29, 1997) for the
Property, an aggregate of 207,688 units of limited partnership interests
("Units") in the Operating Partnership, such Units being allocated among the
Contributors as set forth on Exhibit A, subject to adjustment as provided in
Section 2(b) hereof.
Prior to the Closing, subject to compliance with all
applicable securities laws, any Contributor that is a partnership may give
notice to the Operating Partnership to allocate all or a portion of the Units
otherwise issuable to it among its partners in a manner set forth in the notice
and to issue the Units directly to those partners, and any Contributor who holds
interests in which another person or entity has a beneficial interest may give
notice to the Operating Partnership to issue all or a portion of the Units
otherwise issuable to that Contributor to the beneficial owner of that interest.
In such event, as a condition to receiving any Units, any such partners of any
Contributor or any such beneficial holder shall execute a Partner Consent (the
"Partner Consent") in the form annexed to and made part of the Memorandum and
shall make to the Operating Partnership the representations and warranties and
agreements in Section 6.7(a), (b), (c) and (d) pursuant to an instrument
reasonably satisfactory to the Operating Partnership (in addition to the Partner
Consent to be executed by the Contributor).
(b) If the aggregate amount of the Net Other Assets
(hereinafter defined) of 330 Madison as of the close of business on the day
preceding the date of the Closing (the "Closing Date") exceeds $6,036,000,
Operating Partnership shall issue additional Units (valued at the average of the
closing prices on the New York Stock Exchange of shares of the REIT for the last
ten trading days ending on the third trading day prior to the Closing Date) with
a value equal to 24.75% of such excess Net Other Assets, and such additional
Units shall be issued to each Contributor in the same proportion as the Units
will be issued in accordance with Exhibit A.
-2-
<PAGE> 5
If the aggregate amount of the Net Other Assets of 330 Madison
as of the close of business on the day preceding the Closing Date is less than
$6,036,000, then, notwithstanding the provisions of Section 2(e) hereof, the
Contributors shall cause the Partnership to have cash at Closing in an amount
equal to 25% of the amount by which the Net Other Assets are less than
$6,036,000.
As used in this Agreement, the following terms have the
following meanings:
(i) "Net Other Assets" means the excess of Certain
Other Assets over Certain Other Liabilities (as such terms are hereinafter
defined).
(ii) "Certain Other Assets" means cash and cash
equivalents (other than any condemnation or casualty proceeds held by 330
Madison), marketable securities, accounts receivable (including an estimate of
any rent escalations payable by tenants with respect to the period through the
Closing Date, but excluding any amounts payable by tenants with respect to any
period after the Closing Date, as well as any amount payable by tenants after
the Closing Date to the extent such amount has been recognized as income prior
to the Closing), prepaid expenses (excluding any prepaid leasing costs relating
to leases entered into prior to October 1, 1996), escrow deposits made by 330
Madison, capital expenditures (other than tenant improvements or building
improvements required by the terms of any lease and other than those committed
capital expenditures listed on Exhibit B annexed hereto) made on or after
October 1, 1996, amounts paid for leasing costs, tenant and building
improvements or tenant acquisition costs relating to (1) leases entered into on
or after October 1, 1996 and (2) leases entered into prior to October 1, 1996,
but only to the extent of any leasing expenditures with respect to such leases
entered into prior to October 1, 1996 which are set forth on Exhibit C annexed
hereto. For the purpose of calculating Certain Other Assets, the accounts
receivable of 330 Madison shall be valued at the face amount of the accounts
receivable, net of a reserve for doubtful accounts determined in accordance with
generally accepted accounting principles consistently applied, and without
giving effect to the straight-line requirement of FASB 13.
(iii) "Certain Other Liabilities" means accounts payable,
accrued interest from and after October 1, 1996 (which has been capitalized) and
any other accrued interest payable and any other accrued liabilities (including
any liability or obligation for leasing costs, tenant or building improvements
or tenant acquisition costs payable relating to leases entered into prior to
October 1, 1996 but excluding any liability or obligation for leasing costs,
tenant or building improvements or tenant acquisition costs payable relating to
(1) leases entered into on or after October 1, 1996 and (2) leases entered into
prior to October 1, 1996, but only to the extent of any leasing expenditures
with respect to such leases entered into prior to October 1, 1996 which are set
forth on Exhibit C annexed hereto), the unpaid remaining cost of any committed
capital expenditures listed on Exhibit B annexed hereto and prepaid rent
received from tenants.
-3-
<PAGE> 6
For purposes of this Section 2, the exercise of an option to
renew a lease or to rent additional space pursuant to a lease shall be deemed a
new lease entered into on the effective date of the renewal option.
(c) The General Partner shall prepare and submit to the REIT,
not later than five days prior to the Closing Date, its best, good faith
estimate of the Net Other Assets as of the close of business on the day
preceding the Closing Date; such estimate shall be determined based upon the
books and records of 330 Madison. The estimate submitted to the REIT shall be
accompanied by (i) a statement setting forth in reasonable detail the
calculation of the estimated Net Other Assets as of the close of business on the
day preceding the Closing Date, and (ii) a certificate signed by the General
Partner confirming that the estimate was calculated in accordance with the terms
of this Section 2. The estimate shall be final and binding on the parties
unless, at least two days prior to the Closing, the REIT gives written notice to
the General Partner that it objects to any item. The REIT and the General
Partner shall immediately consult with respect to any item objected to and their
joint determination with respect to any items in dispute shall be final and
binding on the parties. The number of additional Units to be delivered at
Closing shall be based on the statement of Net Other Assets delivered by the
General Partner if there is no objection thereto by the REIT (or the undisputed
amount of Net Other Assets if there is such an objection) and additional Units,
if any, shall be delivered to the General Partner, as agent for the
Contributors, promptly after the accountants' determination referred to in the
next sentence, it being understood that the Contributors shall be deemed to own
such additional Units, if any, as of the Closing Date. If the REIT and the
General Partner are unable to reach agreement on the amount of Net Other Assets
prior to Closing, within ten days after the Closing, the dispute shall be
referred to and resolved by a "Big 6" firm of independent certified public
accountants proposed by the REIT and reasonably acceptable to the General
Partner, and the determination by that accounting firm shall be final and
binding on the parties. The fees and expenses of the accounting firm shall be
borne by Operating Partnership.
(d) An amount equal to any amounts received by the Partnership
after the Closing Date relating to the period through the Closing Date with
respect to refunds of real estate taxes paid by 330 Madison (after deduction of
any costs incurred by 330 Madison, the Partnership or the Operating Partnership
in obtaining such refunds and less any portion of such refunds required or, in
the REIT's reasonable determination, estimated to be required to be paid to
tenants) shall be paid to the General Partner, as agent for the Contributors and
certain other persons, not later than 10 days after the end of the month in
which such amounts are received, and the General Partner shall promptly
distribute such amounts to the Contributors.
(e) On the Closing Date, the General Partner shall cause the
Partnership to satisfy any outstanding liabilities and to distribute all
remaining cash to its partners.
(f) A dispute currently exists between 330 Madison and Bank of
Credit and Commerce International S.A. (in Compulsory Liquidation) ("BCCI") as
to the outstanding principal amount of 330 Madison's indebtedness to BCCI (the
"BCCI Indebtedness"). At the Closing, the General Partner and the REIT shall
agree upon the amount of the BCCI Indebtedness as asserted by BCCI, the amount
as asserted by 330 Madison and therefore the amount in dispute
-4-
<PAGE> 7
as of the Closing Date (the "Closing Disputed Amount"). At such time as BCCI and
330 Madison agree on the amount to be paid to satisfy the BCCI Indebtedness (or
that amount is finally determined by a court or arbitrator) (the "BCCI Payment
Amount"), the REIT and the General Partner shall agree upon the amount of the
BCCI Indebtedness at that time as asserted by BCCI (the "BCCI Asserted Amount")
and as asserted by 330 Madison, and the difference between those amounts (the
"Pay-Off Time Disputed Amount"). Promptly after the BCCI Indebtedness is repaid,
the Operating Partnership shall issue to the Contributors, in proportion to
their interests in the Partnership, an aggregate number of additional Units
(valued at the average of the closing price on the New York Stock Exchange of
common shares of the REIT for the last ten trading days ending three trading
days prior to the date of the BCCI payment) with a value equal to the product of
(1) 24.75%, times (2) the excess of the BCCI Asserted Amount over the BCCI
Payment Amount, times (3) a fraction of which the numerator is the Closing
Disputed Amount and the denominator is the Pay-Off Time Disputed Amount.
(g) If the Operating Partnership (and/or Designated
Subsidiary) acquires any interests in the Partnership, other than interests
acquired from Contributors, which causes the Contributors to owe any tax payable
as a result of the New York Real Estate Transfer Tax imposed by Article 31 of
the Tax Law, the New York City Real Property Transfer Tax imposed by Chapter 46
of Title 11 of the Administrative Code of the City of New York, or any other
similar tax payable by reason of the contribution of the Contributed Interests
(collectively, the "Conveyance Taxes"), the Operating Partnership agrees to pay
and shall be solely responsible for such Conveyance Taxes; provided, however,
that the Contributors shall be solely responsible for and shall indemnify,
defend and hold harmless Operating Partnership and the Partnership from and
against all claims, liabilities, costs and expenses (including attorney's fees)
incurred by Operating Partnership and the Partnership by reason of the failure
of the Contributor to pay any Conveyance Taxes that would not have been imposed
but for a Contributor's failure to satisfy any holding period or continuity
requirements for qualifying for a reduced rate of Conveyance Taxes, including
the holding period requirements with respect to certain transfers to a REIT
imposed in connection with the New York Real Estate Transfer Tax imposed by
Article 31 of the Tax Law and the New York City Real Property Transfer Tax
imposed by Chapter 46 of Title 11 of the Administrative Code of the City of New
York.
3. Acceptance of Contributions. Subject to satisfaction of the
conditions listed or referred to in Section 7, Operating Partnership hereby
agrees that at the Closing it shall accept or, at its election, cause a
Designated Subsidiary to accept all or part of, the Contributions and shall
assume any and all rights, obligations and responsibilities of Contributors as
owners of the Contributed Interests that arise subsequent to the Closing Date.
4. Closing Time and Place. Unless another date or place is agreed
to by the parties, the closing of the Contributions (the "Closing") shall take
place contemporaneously with the closing of the Consolidation at the offices of
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York 10036,
or such other place and time as Operating Partnership and the General Partner
shall agree, upon the satisfaction or waiver of all conditions to the Closing
set forth in Section 7 hereof.
-5-
<PAGE> 8
5. Representations and Warranties of Operating Partnership.
Operating Partnership hereby represents and warrants to Contributors as follows,
which representations and warranties shall be true and correct on the Closing
Date:
5.1 Organization, Power and Authority, and Qualification.
Operating Partnership is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware. The REIT is a real
estate investment trust duly organized, validly existing and in good standing
under the laws of the State of Maryland. Each of Operating Partnership and the
REIT has the requisite power and authority to carry on its respective business
as it is now being conducted. Each of Operating Partnership and the REIT is
qualified to do business and is in good standing in each jurisdiction in which
the character of its property owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not have a material adverse effect on the business or
financial condition of Operating Partnership or the REIT, as the case may be.
5.2 Authority Relative to this Agreement. Operating Partnership
has taken all action necessary to authorize the execution, delivery and
performance of this Agreement by Operating Partnership and no other proceedings
on the part of Operating Partnership are necessary to authorize the execution
and delivery of this Agreement and the consummation of the Contributions.
None of the execution and delivery of this Agreement by Operating
Partnership, the consummation by Operating Partnership of the Contributions or
compliance by Operating Partnership with any of the provisions hereof shall (i)
conflict with or result in any breach of any provisions of the partnership
agreement of Operating Partnership; (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Operating Partnership is a party or by which it or any of its properties or
assets may be bound; or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Operating Partnership; except in the
case of (ii) or (iii) for violations, breaches, or defaults (A) that would not
in the aggregate have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, and that shall not impair the
effectiveness of the Contributions contemplated hereby, or (B) for which waivers
or consents have been or shall be obtained prior to the Closing Date.
5.3 Binding Obligation. This Agreement has been duly and validly
executed and delivered by Operating Partnership and constitutes a valid and
binding agreement of Operating Partnership, enforceable against Operating
Partnership in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, insolvency, moratorium, or
similar laws affecting creditors' rights generally or the rights of creditors of
limited partnerships and to general principles of equity.
-6-
<PAGE> 9
5.4 Insolvency. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against Operating Partnership.
5.5 Brokers. Neither Operating Partnership nor the REIT has
employed or dealt with any broker or finder, or incurred any liability therefor,
in connection with the Contributions.
5.6 Valid Consideration. The Units, when issued in accordance with
this Agreement and the Partnership Agreement of Operating Partnership, will be
duly and validly issued, and the issuance thereof will not be subject to
preemptive or other similar rights.
6. Representations, Warranties and Agreements of Contributors.
Each Contributor, in his, her or its capacity as a partner of the Partnership,
hereby represents and warrants to and agrees with Operating Partnership with
respect to his, her or its Contributed Interests as follows, which
representations and warranties shall also be true and correct on the Closing
Date:
6.1 Title; Authority to Assign. Contributor (i) owns good and
marketable, legal and beneficial (except for holders of beneficial interests in
the amounts payable with respect to such Contributed Interests who have no other
rights with respect to those interests) title in and to his, her or its
Contributed Interests which as of the Closing Date will be held free of any
liens, encumbrances, judgments, adverse interests, pledges or security
interests, other than pledges of partnership interests to the Partnership or the
other partners to secure a partner's obligations to meet capital calls or other
obligations as set forth in the partnership agreement of the Partnership (as to
which no amounts are outstanding and no amounts will be outstanding as of the
Closing Date), (ii) holds the entire right, title and interest in and to his,
her or its Contributed Interests, and (iii) has the full right, power, capacity
and authority to validly contribute and convey his, her or its Contributed
Interests pursuant to this Agreement.
6.2 No Breach of Partnership Agreement. None of the execution and
delivery of this Agreement by Contributor, the consummation by Contributor of
the Contribution or compliance by Contributor with any of the provisions hereof
shall as of the Closing Date conflict with or result in any breach of any
provisions of the Partnership Agreement of the Partnership or any other
agreement to which Contributor is a party.
6.3 Insolvency. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or, to the knowledge of Contributor, threatened against
Contributor.
6.4 Litigation. Contributor has no knowledge of any actual or
pending litigation or proceeding by any organization, person, individual or
governmental agency against Contributor with respect to or against or
potentially affecting his, her or its Contributed Interests.
-7-
<PAGE> 10
6.5 Binding Obligation, etc. This Agreement has been duly and
validly executed and delivered by Contributor to Operating Partnership and
constitutes a legal, valid and binding agreement of Contributor, enforceable
against Contributor in accordance with its terms, except as such enforcement may
be limited by bankruptcy, conservatorship, receivership, insolvency, moratorium
or similar laws affecting creditors' rights generally and to general principles
of equity. Contributor further represents and warrants that if Contributor is a
corporation, partnership, trust or other entity, it has the power to, and is
duly authorized and otherwise duly qualified to, purchase and hold securities
such as Units and Common Shares (as hereinafter defined) and such entity has its
principal place of business as set forth on Exhibit A.
6.6 Brokers. Contributor has not employed or dealt with any broker
or finder, or incurred any liability therefor, in connection with the
Contribution.
6.7 Securities Act and Other Representations and Agreements.
(a) (i) Upon the issuance of Units to Contributor (or a
designee as provided in Section 2), Contributor (or designee) shall become
subject to, and shall be bound by, the terms and provisions of the Partnership
Agreement of Operating Partnership, including the terms of the power of attorney
contained in Section 15.11 thereof, as the Partnership Agreement may be amended
and restated from time to time in accordance with its terms.
(ii) Contributor or his, her or its advisor(s) have
had a reasonable opportunity to ask questions of and receive information and
answers from a person or persons acting on behalf of the Partnership and
Operating Partnership concerning the Consolidation, and, as Contributor may deem
necessary, to verify the information contained in the Memorandum, receipt of
which is acknowledged, and any other information provided to Contributor by the
Partnership or Operating Partnership and all such questions have been answered
and all such information has been provided to the full satisfaction of
Contributor.
(iii) Contributor is acquiring Units for his, her or
its own account as principal, for investment and not with a view to resale or
distribution, and the Units may not be transferred or otherwise disposed of by
Contributor otherwise than in transactions pursuant to a registration statement
filed by the Operating Partnership (which it has no obligation to file) or that
are exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable state and foreign securities
laws, and the REIT may refuse to transfer any Units as to which evidence of such
registration or exemptions from such registration satisfactory to the REIT is
not provided to it, which evidence may include the requirement of legal opinions
regarding the exemption from such registration. If the REIT elects, in its sole
discretion, to deliver to any Contributor common shares of beneficial interest
of the REIT ("Common Shares") upon redemption of any Units, the Common Shares
will be acquired for his, her or its own account as principal, for investment
and not with a view to resale or distribution, and the Common Shares may not be
transferred or otherwise disposed of by Contributor otherwise than in
transactions pursuant to any registration statement filed by the REIT with
respect to such Common Shares (which it has an obligation to file only pursuant
to the Registration Rights Agreement described in the Memorandum) or that are
exempt from the registration requirements
-8-
<PAGE> 11
of the Securities Act and all applicable state and foreign securities laws, and
the REIT may refuse to transfer any Common Shares as to which evidence of such
registration or exemptions from such registration satisfactory to the REIT is
not provided to it, which evidence may include the requirement of legal opinions
regarding the exemption from such registration.
(iv) Contributor (either alone or with his, her or
its advisors) has sufficient knowledge and experience in financial, tax and
business matters to enable him, her or it to evaluate the merits and risks of an
investment in the Units. Contributor has the ability to bear the economic risk
of acquiring the Units. Contributor acknowledges that (1) the transactions
contemplated by this Agreement and the Memorandum involve complex tax
consequences for each Contributor and each Contributor is relying solely on the
advice of his, her or its own tax advisors in evaluating such consequences, and
(2) neither Operating Partnership nor the General Partner has made (or shall be
deemed to have made) any representations or warranties as to the tax
consequences of such transaction to any Contributor. Each Contributor remains
solely responsible for all tax matters relating to each Contributor.
(v) If needed, Contributor has discussed with his,
her or its professional, legal, tax or financial advisors the suitability of an
investment in Units or Common Shares for his, her or its particular tax and
financial situation. Nothing contained herein or in the Memorandum shall be
deemed to imply any representation by Operating Partnership or the General
Partner as to a particular tax effect that may be obtained by any Contributor.
(vi) All information that Contributor has provided
to Operating Partnership concerning himself or herself or itself and his, her or
its financial position is correct and complete as of the date hereof, and if
there should be any material change in such information prior to issuance of
Units to the Contributors, he, she or it shall immediately provide such changed
information to Operating Partnership.
(vii) Contributor has not disclosed any information
contained in the Memorandum to anyone other than his or her spouse or his, her
or its professional, legal, tax or financial advisors advising him, her or it in
connection with this investment and has not reproduced the Memorandum other than
such use by such advisors.
(b) Status as a United States Person. (i) Unless
otherwise indicated on the Partner Consent, Contributor certifies that
Contributor is not a foreign person within the meaning of Section 1445 of the
Internal Revenue Code ("Section 1445"). To the extent that Contributor is not a
foreign person within the meaning of Section 1445, (1) Contributor's U.S.
taxpayer identification number that has previously been provided to the
Partnership is accurate, (2) Contributor's home address (in the case of an
individual) or office address (in the case of an entity) is that address
indicated on Exhibit A of this Agreement and (3) if Contributor subsequently
becomes a foreign person within the meaning of Section 1445, Contributor shall
notify Operating Partnership prior to the Closing.
(ii) If Contributor is or prior to the Closing
becomes a foreign person within the meaning of Section 1445, Operating
Partnership shall, and is authorized to,
-9-
<PAGE> 12
withhold ten percent (10%) of the amount realized (as such term is defined in
Section 1001 of the Internal Revenue Code) by Contributor in connection with the
Contribution, unless Operating Partnership shall receive from Contributor a
notice of nonrecognition transfer with respect to the Contribution by
Contributor (in a form to be provided by Operating Partnership).
(c) Indemnification. Contributor hereby agrees to indemnify
and hold harmless the Partnership, the REIT, Operating Partnership, The Mendik
Company, Inc. and the General Partner and any of the employees, agents,
officers, directors and affiliated persons of the foregoing from any and all
damages, losses, costs and expenses (including reasonable attorneys' fees) which
they, or any of them, may incur by reason of a failure by Contributor to fulfill
any of its obligations under this Agreement or by reason of the breach by
Contributor of any of the representations and warranties contained herein.
(d) Waiver and Contribution. Contributor understands that (i)
the Units to be issued pursuant to the Consolidation have not been registered
under the Securities Act and (ii) the failure to register such Units could
result in Contributor being granted certain rights under the Federal securities
laws, including a right to rescind Contributor's consent to the Consolidation.
For the benefit of Operating Partnership, and in consideration of Operating
Partnership's consummating the Consolidation, Contributor (x) hereby waives any
and all rights he or she now has or may hereafter be granted to rescind his or
her consent to the Consolidation on the basis that the Units issued in
connection with the Consolidation were not registered (the "Waiver") and (y)
agrees that if the Waiver is deemed void or unenforceable for any reason,
including, without limitation, under Section 14 of the Securities Act, the
entire beneficial interest in all property and amounts received by Contributor
in any action to rescind the Consolidation (regardless of whether such action
was initiated by Contributor) or otherwise received by Contributor as damages
for failure to register the Units under the Securities Act, shall be promptly
paid over and contributed by Contributor to Operating Partnership, for no
additional consideration from Operating Partnership, other than the Units
originally issued pursuant to the Consolidation.
Whenever the context shall require, all words in the male,
female or neuter gender shall be deemed to include the other genders, all
singular words shall include the plural, and all plural words shall include the
singular. All representations, covenants and agreements of Contributor set forth
in this Agreement shall survive the consummation of the Consolidation
contemplated by the Memorandum.
7. Conditions to Completion. In addition to the conditions to
completion of the Consolidation set forth in the Memorandum, the obligations of
Operating Partnership to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment (or waiver by Operating Partnership)
at or prior to the Closing of the following conditions:
7.1 Representations, Warranties and Covenants. The
representations, warranties and covenants made by Contributors in this Agreement
or in any document delivered by any of them pursuant to this Agreement shall be
true and correct in all material respects when
-10-
<PAGE> 13
made and on and as of the Closing as though such representations, warranties and
covenants were made on and as of such date.
7.2 Consents. Any and all consents required by the Partnership
Agreement of the Partnership, and any certificates, agreements, contribution and
assumption instruments and other documents necessary or advisable to evidence
the conveyance of the Contributed Interests and the admission of Operating
Partnership (or Designated Subsidiary) into the Partnership by virtue of the
contribution of the Contributed Interests, shall have been obtained.
7.3 No Order or Injunction. The consummation of the Contributions
shall not have been restrained, enjoined or prohibited by any order or
injunction of any court or governmental authority of competent jurisdiction.
7.4 Instruments of Conveyance. The Contributors shall have
delivered the instruments evidencing conveyance of their interests referred to
in Section 8.1.
8. The Closing.
8.1 Contributors' and General Partner's Closing Documents. At
Closing, each Contributor shall deliver (or cause to be delivered pursuant to
the Power of Attorney referred to in Section 11.9) or the General Partner shall
deliver the following (all of which shall be duly executed and acknowledged
where required):
(a) A written document of conveyance contributing to
Operating Partnership (and/or any Designated Subsidiary) title to Contributor's
Contributed Interests, free and clear of any adverse claim or interest;
(b) Such documents and certificates as Operating
Partnership reasonably may require to establish the authority of the parties
executing any documents in connection with the Contributions including, in the
case of any Contributor that is a corporation, partnership, limited liability
company or other similar entity (other than a trust or an estate), an opinion of
counsel, reasonably satisfactory to the Operating Partnership, as to the due
execution and delivery of such documents;
(c) Such consents and instruments of admission as are
contemplated by Section 7.2 hereof; and
(d) Such other documents, instruments and certificates as
Operating Partnership and the General Partner, as agent for the Contributors,
reasonably agree are necessary or appropriate, including without limitation
recording and transfer forms and affidavits.
8.2 Operating Partnership's Closing Documents. At Closing,
Operating Partnership shall deliver or cause to be delivered to the General
Partner, as agent for the Contributors, the following:
-11-
<PAGE> 14
(a) The Units referred to in Section 2(a);
(b) Copies of the executed Partnership Agreement of the
Operating Partnership and the Registration Rights Agreement and Unit Redemption
Agreement referred to in Section 11.09; and
(c) Such other documents and instruments as the General
Partner, as agent for the Contributors, and Operating Partnership agree are
necessary or appropriate, including without limitation recording and transfer
forms and affidavits.
9. Closing Costs. Operating Partnership shall pay or provide for
the payment of all costs associated with the closing of the contributions of the
Contributed Interests pursuant to this Agreement, as described in and subject to
the terms of the Memorandum.
10. Operation in the Ordinary Course. The General Partner shall
use reasonable efforts to operate the Partnership and the Property in the
ordinary course of business between the date hereof and the closing of the
Consolidation, including making any necessary capital expenditures and leasing
expenditures consistent with past practices to maintain the quality and value of
the Property.
11. General Provisions.
11.1 Survival of Representations and Warranties. It is the express
intention and agreement of the parties hereto that the representations and
warranties of the parties set forth in this Agreement shall survive the
consummation of the Contributions and the Closing.
11.2 Notices. All notices, demands, requests or other
communications that may be or are required to be given or made by any party to
the other parties pursuant to this Agreement shall be in writing and shall be
hand delivered or transmitted by certified mail, express overnight mail or
delivery service, telegram, telex or facsimile transmission to the parties at
the addresses specified in Exhibit A or such other address as the addressee may
indicate by written notice to the other party.
Each notice, demand, request or communication that is given or made in
the manner described above shall be deemed sufficiently given or made for all
purposes at such time as it is delivered to the addressee (with the delivery
receipt, the affidavit of messenger or (with respect to a telex) the answer back
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
11.3 Governing Law. This Agreement, the rights and obligations of
the parties hereto and any claims or disputes relating to such rights and
obligations shall be governed by and construed under the laws of the State of
New York.
11.4 Headings. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement
-12-
<PAGE> 15
for any purpose, and shall not in any way define or affect the meaning,
construction or scope of any of the provisions hereof.
11.5 Benefit and Assignment. No Contributor shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Operating Partnership. Any purported
assignment contrary to the terms hereof shall be null, void and of no force and
effect.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns as permitted
hereunder. No person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
The Operating Partnership may designate one or more Designated
Subsidiaries to acquire all or any part of the Contributed Interests (in which
case the Designated Subsidiary shall execute a certificate at closing making the
same representations and warranties as are made by Operating Partnership and
references to Operating Partnership shall include the Designated Subsidiaries
except where the context clearly indicates otherwise).
11.6 Severability. If any part of any provision of this Agreement
or any other agreement, document or writing given pursuant to or in connection
with this Agreement shall be invalid or unenforceable under applicable law, such
part shall be ineffective to the extent of such invalidity or unenforceability
only, without in any way affecting the remaining parts of such provisions or the
remaining provisions of said agreement so long as the economic and legal
substance of the Contributions is not affected in any manner materially adverse
to either party.
11.7 Entire Agreement; Amendment. The Schedules and the Exhibits
attached hereto are hereby incorporated into the Agreement as if fully set forth
herein. This Agreement, and the Schedules and Exhibits attached hereto, together
with the Memorandum, contain the final and entire agreement between the parties
hereto with respect to the Contributions, supersede all prior oral and written
memoranda and agreements with respect to the matters contemplated herein, and
are intended to be an integration of all prior negotiations and understandings.
Contributors and Operating Partnership shall not be bound by any terms,
conditions, statements, warranties or representations, oral or written, not
contained or referred to herein or therein. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto.
11.8 No Waiver. No delay or failure on the part of any party hereto
in exercising any right, power or privilege under this Agreement or under any
other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial exercise
of any such right, power or privilege shall preclude the further exercise of
such right, power or privilege. No waiver shall be valid against any party
hereto unless made in
-13-
<PAGE> 16
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
11.9 Consent and Power of Attorney. The General Partner hereby
consents to the contribution of the Contributed Interests pursuant hereto by
each of the Contributors. Each Contributor is executing a Partner Consent
pursuant to which such Contributor (a) is executing this Agreement, and (b) is
consenting to each matter set forth therein. In addition, by executing this
Agreement pursuant to the Consent, each Contributor is constituting and
appointing each of David R. Greenbaum, John J. Silberstein and Christopher G.
Bonk, individually, with full power of substitution, the true and lawful
attorney-in-fact (the "Attorney") of such Contributor, with full power and
authority in the name of and for and on behalf of such Contributor, to execute
an instrument of conveyance contributing his, her or its Contributed Interests
to Operating Partnership pursuant to the Consolidation on the terms set forth in
the Memorandum, to execute the Partnership Agreement of Operating Partnership
and the Registration Rights Agreement and a Unit Redemption Agreement (if the
Contributor elects to redeem its Units for cash immediately after the Closing)
and to execute any other instruments that the General Partner reasonably
determines necessary or appropriate in connection with the contribution of the
Contributed Interests pursuant to this Agreement and the consummation of the
Consolidation.
Each Contributor shall promptly notify the General Partner if any of
the representations and warranties by that partner were not true and correct
when made or become untrue at any time prior to the Closing.
-14-
<PAGE> 17
IN WITNESS WHEREOF, each of the Contributors has executed a separate
Partner Consent agreeing to be bound by the terms of this Agreement and each of
Operating Partnership, and the General Partner has caused this Agreement to be
duly executed and delivered on its or his behalf as of the date first above
written.
THE MENDIK COMPANY, L.P.
By: The Mendik Company, Inc., general partner
By: /s/ David R. Greenbaum
-----------------------------------------
Name: David R. Greenbaum
Title: President
THE MENDIK PARTNERSHIP, L.P.
By: Mendik Realty Company, Inc., general partner
By: /s/ David R. Greenbaum
-----------------------------------------
Name: David R. Greenbaum
Title: President
[ADDITIONAL SIGNATURES OMITTED]
-15-
<PAGE> 18
M 330 Associates
Exhibit A
List of Partners
<TABLE>
<CAPTION>
Number
of Units
--------
<S> <C>
Madby Associates 2,700
c/o Richard Vespa
Goldschmidt & Goldschmidt
641 Lexington Avenue
New York, NY 10033-4503
Knatten, Inc. 51,282
c/o Weissbarth, Altman & Michaelson
156 West 56th Street
New York, NY 10022
Harvey L. Silbert 8,097
10100 Santa Monica Blvd.
Los Angeles, CA 90067
Harvey L. Silbert, as Trustee 8,097
10100 Santa Monica Blvd.
Los Angeles, CA 90067
Bernard H. Mendik 6,408
330 Madison Avenue
New York, NY 10017
The Mendik Partnership, L.P. 131,104
330 Madison Avenue -------
New York, NY 10017
207,688
</TABLE>
<PAGE> 19
Exhibit B
Committed Capital Expenditures
NONE
<PAGE> 20
Exhibit C
Contingent Leasing Expenditures
<TABLE>
<CAPTION>
<S> <C>
Chapman & Fennell $ 173,290
Dean Witter 948,400
Tukiye Ziraat Bank 86,570
TOTAL $1,208,260
</TABLE>
<PAGE> 1
Exhibti 2.5
AGREEMENT FOR CONTRIBUTION OF INTERESTS
IN
570 LEXINGTON INVESTORS
BY AND AMONG
THE MENDIK COMPANY, L.P.,
MENDIK REALTY COMPANY
AND
THE PARTNERS OF 570 LEXINGTON INVESTORS
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE UNITS TO BE ISSUED
HEREUNDER WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO UNITS MAY
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND UNLESS THE OTHER
TRANSFER RESTRICTIONS ON SUCH UNITS HAVE BEEN SATISFIED. CONTRIBUTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR OWNERSHIP
OF UNITS FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION CONTRIBUTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
Page
1. Contributions ...................................................... 2
2. Consideration; Distributions Prior to Closing ...................... 2
3. Acceptance of Contributions ........................................ 3
4. Closing Time and Place ............................................. 3
5. Representations and Warranties of Operating Partnership ............ 3
5.1 Organization, Power and Authority, and Qualification ........... 3
5.2 Authority Relative to this Agreement ........................... 4
5.3 Binding Obligation ............................................. 4
5.4 Insolvency ..................................................... 4
5.5 Brokers ........................................................ 5
5.6 Valid Consideration ............................................ 5
6. Representations, Warranties and Agreements of Contributors ......... 5
6.1 Title; Authority to Assign ..................................... 5
6.2 No Breach of Partnership Agreement ............................. 5
6.3 Insolvency ..................................................... 5
6.4 Litigation ..................................................... 5
6.5 Binding Obligation, etc ........................................ 6
6.6 Brokers ........................................................ 6
6.7 ................................................................ 6
7. Conditions to Completion ........................................... 9
7.1 Representations, Warranties and Covenants ...................... 9
7.2 Consents ....................................................... 9
7.3 No Order or Injunction ......................................... 9
7.4 ................................................................ 9
8. The Closing ........................................................ 9
8.1 Contributors' and General Partner's Closing Documents .......... 9
8.2 Operating Partnership's Closing Documents ...................... 10
8.3 Release of Security ............................................ 10
9. Closing Costs ...................................................... 10
10. Operation in the Ordinary Course .................................. 10
11. General Provisions ................................................ 10
11.1 Survival of Representations and Warranties .................... 10
11.2 Notices ....................................................... 11
11.3 Governing Law ................................................. 11
11.4 Headings ...................................................... 11
11.5 Benefit and Assignment ........................................ 11
11.6 Severability .................................................. 12
11.7 Entire Agreement; Amendment ................................... 12
11.8 No Waiver ..................................................... 12
11.9 Consent and Power of Attorney ................................. 12
<PAGE> 3
AGREEMENT FOR CONTRIBUTION OF INTERESTS
[570 LEXINGTON AVENUE]
THIS AGREEMENT for the Contribution of Interests (this "Agreement") is
made and entered into as of April 15, 1997, by and among The Mendik Company,
L.P. ("Operating Partnership"), a Delaware limited partnership, whose general
partner as of the date hereof is The Mendik Company, Inc., a Maryland
corporation, each of the parties listed on Exhibit A annexed hereto who executes
a Partner Consent (hereinafter defined) agreeing to become a party to this
Agreement (collectively referred to herein as "Contributors") and Mendik Realty
Company, Inc. (in its capacity as a managing partner of the Partnership
(hereinafter defined), the "General Partner").
WHEREAS, it is desired to consolidate (the "Consolidation") the assets
of Vornado Realty Trust, a Maryland real estate investment trust (the "REIT"),
and interests in seven general or limited partnerships or limited liability
companies of which an affiliate of the General Partner is a general partner or
managing member, together with the assets of Mendik Realty Company, Inc and
Mendik Management Company, Inc., each a New York corporation and an affiliate of
the General Partner, with and into Operating Partnership.
WHEREAS, upon completion of and after the Consolidation, the REIT will
become and be the managing general partner of the Operating Partnership;
WHEREAS, Contributors are owners of interests (the "Contributed
Interests") (i) in 570 Lexington Investors, a New York general partnership (the
"Partnership"), which is a limited partner in 570 Lexington Associates, L.P., a
New York limited partnership ("Associates"), which in turn is a general partner
in 570 Lexington Company, L.P., a New York limited partnership ("570 Lexington")
which owns land and improvements (the "Property") known as 570 Lexington Avenue,
New York, New York, and (ii) in the case of The Mendik Partnership, L.P.
(formerly known as The Mendik Company, L.P.) ("TMP") and Mendik 570 Corp.
("Mendik 570"), in Associates; and
WHEREAS, in connection with the consummation of the Consolidation, the
parties hereto desire that Operating Partnership and, if designated by Operating
Partnership, one or more special purpose subsidiary partnerships or limited
liability companies of Operating Partnership or one or more other entities
controlled by Operating Partnership (each a "Designated Subsidiary") acquire all
of the interests in the Partnership through the contribution of such interests
to Operating Partnership and/or one or more Designated Subsidiaries upon the
terms and conditions provided herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, Operating Partnership, Contributors and
the General Partner hereby agree as follows:
<PAGE> 4
1. CONTRIBUTIONS. Upon the Closing (hereinafter defined), and subject
to the satisfaction or waiver by Operating Partnership of the conditions set
forth in Section 7 of this Agreement, Contributors shall contribute, convey and
assign to Operating Partnership (and/or Designated Subsidiary) and Operating
Partnership (and/or Designated Subsidiary) shall acquire from Contributors all
of Contributors' right, title and interest in the Contributed Interests (the
"Contributions"), including, without limitation, all of Contributors' interest
in the profits, losses, property and capital of the Partnership (or, in the case
of TMP and Mendik 570, Associates) allocable to the Contributed Interests, upon
the terms and conditions set forth in this Agreement.
2. CONSIDERATION; DISTRIBUTIONS PRIOR TO CLOSING.
(a) In full consideration for the contribution of the Contributed
Interests, Operating Partnership shall deliver to Contributors (or their
designees as provided below) at the Closing an aggregate of 76,921 units of
limited partnership interests ("Units") in the Operating Partnership, such Units
being of the classes of Units and allocated among the Contributors as set forth
on Exhibit A.
Prior to the Closing, subject to compliance with all applicable
securities laws, any Contributor that is a partnership may give notice to the
Operating Partnership to allocate all or a portion of the Units otherwise
issuable to it among its partners in a manner set forth in the notice and to
issue the Units directly to those partners, and any Contributor who holds
interests in which another person or entity has a beneficial interest may give
notice to the Operating Partnership to issue all or a portion of the Units
otherwise issuable to that Contributor to the beneficial owner of that interest.
In such event, as a condition to receiving any Units, any such partners of any
Contributor or any such beneficial holder shall execute a Partner Consent (the
"Partner Consent") in the form annexed to and made part of the Confidential
Solicitation of Consents and Private Placement Memorandum (the "Memorandum")
dated March 29, 1997 and shall make to the Operating Partnership the
representations and warranties and agreements in Section 6.7(a), (b), (c) and
(d) pursuant to an instrument reasonably satisfactory to the Operating
Partnership (in addition to the Partner Consent to be executed by the
Contributor).
(b) On the date of the Closing (the "Closing Date"), the General
Partner shall cause the Partnership to satisfy any outstanding liabilities
(including any loan by the General Partner to enable the Partnership to make
required capital contributions to Associates) and to distribute any remaining
cash to its partners.
(c) Any amounts received by the Partnership or the Operating
Partnership or its designee after the Closing Date relating to the period
through the Closing Date with respect to refunds of real estate taxes paid by
570 Lexington (after deducting any costs incurred by 570 Lexington, the
Partnership or the Operating Partnership in obtaining such refunds and less any
portion of such refunds required or, in the REIT's reasonable determination,
estimated to be required to be paid to tenants) shall be promptly paid to the
General Partner, as agent for the Contributors and certain other parties, not
later than 10 days after the end of the
2
<PAGE> 5
month in which such amounts are collected, and the General Partner shall
promptly distribute such amounts to the Contributors.
(d) If the Operating Partnership (and/or Designated Subsidiary)
acquires any interests in Associates or 570 Lexington which causes the
Contributors to owe any tax payable as a result of the New York Real Estate
Transfer Tax imposed by Article 31 of the Tax Law, the New York City Real
Property Transfer Tax imposed by Chapter 46 of Title 11 of the Administrative
Code of the City of New York, or any other similar tax payable by reason of the
contribution of the Contributed Interests (collectively, the "Conveyance
Taxes"), the Operating Partnership agrees to pay and shall be solely responsible
for such Conveyance Taxes; provided, however, that the Contributors shall be
solely responsible for and shall indemnify, defend and hold harmless Operating
Partnership and the Partnership from and against all claims, liabilities, costs
and expenses (including attorney's fees) incurred by Operating Partnership and
the Partnership by reason of the failure of the Contributor to pay any
Conveyance Taxes that would not have been imposed but for a Contributor's
failure to satisfy any holding period or continuity requirements for qualifying
for a reduced rate of Conveyance Taxes, including the holding period
requirements with respect to certain transfers to a REIT imposed in connection
with the New York Real Estate Transfer Tax imposed by Article 31 of the Tax Law
and the New York City Real Property Transfer Tax imposed by Chapter 46 of Title
11 of the Administrative Code of the City of New York.
3. ACCEPTANCE OF CONTRIBUTIONS. Subject to the satisfaction of the
conditions listed or referred to in Section 7,Operating Partnership hereby
agrees that at the Closing it shall accept or, at its election, cause a
Designated Subsidiary to accept all or part of, the Contributions and shall
assume any and all rights, obligations and responsibilities of Contributors as
owners of the Contributed Interests that arise from and after the Closing Date.
4. CLOSING TIME AND PLACE. Unless another date or place is agreed to
by the parties, the closing of the Contributions (the "Closing") shall take
place contemporaneously with the closing of the Consolidation at the offices of
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York 10036,
or such other place and time as Operating Partnership and the General Partner
shall agree, upon the satisfaction or waiver of all conditions to the Closing
set forth in Section 7 hereof.
5. REPRESENTATIONS AND WARRANTIES OF OPERATING PARTNERSHIP. Operating
Partnership hereby represents and warrants to Contributors as follows, which
representations and warranties shall be true and correct on the Closing Date:
5.1 ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION. Operating
Partnership is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. The REIT is a real estate
investment trust duly organized, validly existing and in good standing under the
laws of the State of Maryland. Each of Operating Partnership and the REIT has
the requisite power and authority to carry on its respective business as it is
now being conducted. Each of Operating Partnership and the REIT is qualified to
do
3
<PAGE> 6
business and is in good standing in each jurisdiction in which the character of
its property owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, as the case may be.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Operating Partnership has
taken all action necessary to authorize the execution, delivery and performance
of this Agreement by Operating Partnership and no other proceedings on the part
of Operating Partnership are necessary to authorize the execution and delivery
of this Agreement and the consummation of the Contributions.
None of the execution and delivery of this Agreement by Operating
Partnership, the consummation by Operating Partnership of the Contributions or
compliance by Operating Partnership with any of the provisions hereof shall (i)
conflict with or result in any breach of any provisions of the partnership
agreement of Operating Partnership; (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Operating Partnership is a party or by which it or any of its properties or
assets may be bound; or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Operating Partnership; except in the
case of (ii) or (iii) for violations, breaches, or defaults (A) that would not
in the aggregate have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, and that shall not impair the
effectiveness of the Contributions contemplated hereby, or (B) for which waivers
or consents have been or shall be obtained prior to the Closing Date.
5.3 BINDING OBLIGATION. This Agreement has been duly and validly
executed and delivered by Operating Partnership and constitutes a valid and
binding agreement of Operating Partnership, enforceable against Operating
Partnership in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, insolvency, moratorium, or
similar laws affecting creditors' rights generally or the rights of creditors of
limited partnerships and to general principles of equity.
5.4 INSOLVENCY. There are no attachments, executions or assignments for
the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy,
or under any other debtor relief laws, contemplated by or pending or threatened
against Operating Partnership.
5.5 BROKERS. Neither Operating Partnership nor the REIT has employed or
dealt with any broker or finder, or incurred any liability therefor, in
connection with the Contributions.
5.6 VALID CONSIDERATION. The Units, when issued in accordance with this
Agreement and the Partnership Agreement of Operating Partnership, will be duly
and validly issued, and the issuance thereof will not be subject to preemptive
or other similar rights.
4
<PAGE> 7
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF CONTRIBUTORS. Each
Contributor, in his, her or its capacity as a partner of the Partnership (or, in
the case of TMP and Mendik 570, Associates), hereby represents and warrants to
and agrees with Operating Partnership with respect to his, her or its
Contributed Interests as follows, which representations and warranties shall
also be true and correct on the Closing Date:
6.1 TITLE; AUTHORITY TO ASSIGN. Contributor (i) owns good and
marketable, legal and beneficial (except for holders of beneficial interests in
the amounts payable with respect to such Contributed Interests who have no other
rights with respect to those interests) title in and to his, her or its
Contributed Interests which as of the Closing Date will be held free of any
liens, encumbrances, judgments, adverse interests, pledges or security
interests, other than pledges of partnership interests to the Partnership or the
other partners to secure a partner's obligations to meet capital calls or other
obligations as set forth in the partnership agreement of the Partnership (or, in
the case of TMP and Mendik 570, Associates) (as to which no amounts are
outstanding and no amounts will be outstanding as of the Closing Date) or
pursuant to any agreement relating to financing provided to Associates, (ii)
holds the entire right, title and interest in and to his, her or its Contributed
Interests, and (iii) has the full right, power, capacity and authority to
validly contribute and convey his, her or its Contributed Interests pursuant to
this Agreement.
6.2 NO BREACH OF PARTNERSHIP AGREEMENT. None of the execution and
delivery of this Agreement by Contributor, the consummation by Contributor of
the Contribution or compliance by Contributor with any of the provisions hereof
shall as of the Closing Date conflict with or result in any breach of any
provisions of the Partnership Agreement of the Partnership (or, in the case of
TMP and Mendik 570, Associates) or any other agreement to which Contributor is a
party.
6.3 INSOLVENCY. There are no attachments, executions or assignments
for the benefit of creditors, or voluntary or involuntary proceedings in
bankruptcy, or under any other debtor relief laws, contemplated by or pending
or, to the knowledge of Contributor, threatened against Contributor.
6.4 LITIGATION. Contributor has no knowledge of any actual or pending
litigation or proceeding by any organization, person, individual or governmental
agency against Contributor with respect to or against or potentially affecting
his, her or its Contributed Interests.
6.5 BINDING OBLIGATION, ETC. This Agreement has been duly and validly
executed and delivered by Contributor to Operating Partnership and constitutes a
legal, valid and binding agreement of Contributor, enforceable against
Contributor in accordance with its terms, except as such enforcement may be
limited by bankruptcy, conservatorship, receivership, insolvency, moratorium or
similar laws affecting creditors' rights generally and to general principles of
equity. Contributor further represents and warrants that if Contributor is a
corporation, partnership, trust or other entity, it has the power to, and is
duly authorized and otherwise duly qualified to, purchase and hold securities
such as Units and Common Shares (as hereinafter defined) and such entity has its
principal place of business as set forth on Exhibit A.
5
<PAGE> 8
6.6 BROKERS. Contributor has not employed or dealt with any broker or
finder, or incurred any liability therefor, in connection with the Contribution.
6.7 SECURITIES ACT AND OTHER REPRESENTATIONS AND AGREEMENTS.
(a) (i) Upon the issuance of Units to Contributor (or a
designee as provided in Section 2), Contributor (or designee) shall become
subject to, and shall be bound by, the terms and provisions of the Partnership
Agreement of Operating Partnership, including the terms of the power of attorney
contained in Section 15.11 thereof, as the Partnership Agreement may be amended
and restated from time to time in accordance with its terms.
(ii) Contributor or his, her or its advisor(s) have had a
reasonable opportunity to ask questions of and receive information and answers
from a person or persons acting on behalf of the Partnership and Operating
Partnership concerning the Consolidation, and, as Contributor may deem
necessary, to verify the information contained in the Memorandum, receipt of
which is acknowledged, and any other information provided to Contributor by the
Partnership or Operating Partnership and all such questions have been answered
and all such information has been provided to the full satisfaction of
Contributor.
(iii) Contributor is acquiring Units for his, her or its own
account as principal, for investment and not with a view to resale or
distribution, and the Units may not be transferred or otherwise disposed of by
Contributor otherwise than in transactions pursuant to a registration statement
filed by the Operating Partnership (which it has no obligation to file) or that
are exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable state and foreign securities
laws, and the REIT may refuse to transfer any Units as to which evidence of such
registration or exemptions from such registration satisfactory to the REIT is
not provided to it, which evidence may include the requirement of legal opinions
regarding the exemption from such registration. If the REIT elects, in its sole
discretion, to deliver to any Contributor common shares of beneficial interest
of the REIT ("Common Shares") upon redemption of any Units, the Common Shares
will be acquired for his, her or its own account as principal, for investment
and not with a view to resale or distribution, and the Common Shares may not be
transferred or otherwise disposed of by Contributor otherwise than in
transactions pursuant to any registration statement filed by the REIT with
respect to such Common Shares (which it has an obligation to file only pursuant
to the Registration Rights Agreement described in the Memorandum) or that are
exempt from the registration requirements of the Securities Act and all
applicable state and foreign securities laws, and the REIT may refuse to
transfer any Common Shares as to which evidence of such registration or
exemptions from such registration satisfactory to the REIT is not provided to
it, which evidence may include the requirement of legal opinions regarding the
exemption from such registration.
6
<PAGE> 9
(iv) Contributor (either alone or with his, her or its
advisors) has sufficient knowledge and experience in financial, tax and business
matters to enable him, her or it to evaluate the merits and risks of an
investment in Units. Contributor has the ability to bear the economic risk of
acquiring the Units. Contributor acknowledges that (1) the transactions
contemplated by this Agreement and the Memorandum involve complex tax
consequences for each Contributor and each Contributor is relying solely on the
advice of his, her or its own tax advisors in evaluating such consequences, and
(2) neither Operating Partnership nor the General Partner has made (or shall be
deemed to have made) any representations or warranties as to the tax
consequences of such transaction to any Contributor. Each Contributor remains
solely responsible for all tax matters relating to each Contributor.
(v) If needed, Contributor has discussed with his, her or
its professional, legal, tax or financial advisors the suitability of an
investment in Units or Common Shares for his, her or its particular tax and
financial situation. Nothing contained herein or in the Memorandum shall be
deemed to imply any representation by Operating Partnership or the General
Partner as to a particular tax effect that may be obtained by any Contributor.
(vi) All information that Contributor has provided to
Operating Partnership concerning himself or herself or itself and his, her or
its financial position is correct and complete as of the date hereof, and if
there should be any material change in such information prior to issuance of
Units to the Contributors, he, she or it shall immediately provide such changed
information to Operating Partnership.
(vii) Contributor has not disclosed any information contained
in the Memorandum to anyone other than his or her spouse or his, her or its
professional, legal, tax or financial advisors advising him, her or it in
connection with this investment and has not reproduced the Memorandum other than
for such use by such advisors.
(b) STATUS AS A UNITED STATES PERSON. (i) Unless otherwise
indicated on the Partner Consent, Contributor certifies that Contributor is not
a foreign person within the meaning of Section 1445 of the Internal Revenue Code
("Section 1445"). To the extent that Contributor is not a foreign person within
the meaning of Section 1445, (1) Contributor's U.S. taxpayer identification
number that has previously been provided to the Partnership is accurate, (2)
Contributor's home address (in the case of an individual) or office address (in
the case of an entity) is that address indicated on Exhibit A of this Agreement
and (3) if Contributor subsequently becomes a foreign person within the meaning
of Section 1445, Contributor shall notify Operating Partnership prior to the
Closing.
(ii) If Contributor is or prior to the Closing becomes a
foreign person within the meaning of Section 1445, Operating Partnership shall,
and is authorized to, withhold ten percent (10%) of the amount realized (as such
term is defined in Section 1001 of the Internal Revenue Code) by Contributor in
connection with the Contribution, unless Operating Partnership shall receive
from Contributor a notice of nonrecognition transfer with respect to the
Contribution by Contributor (in a form to be provided by Operating Partnership).
7
<PAGE> 10
(c) INDEMNIFICATION. Contributor hereby agrees to indemnify and
hold harmless the Partnership, the REIT, Operating Partnership, The Mendik
Company, Inc. and the General Partner and any of the employees, agents,
officers, directors and affiliated persons of the foregoing from any and all
damages, losses, costs and expenses (including reasonable attorneys' fees) which
they, or any of them, may incur by reason of a failure by Contributor to fulfill
any of its obligations under this Agreement or by reason of the breach by
Contributor of any of the representations and warranties contained herein.
(d) WAIVER AND CONTRIBUTION. Contributor understands that (i) the
Units to be issued pursuant to the Consolidation have not been registered under
the Securities Act and (ii) the failure to register such Units could result in
Contributor being granted certain rights under the Federal securities laws,
including a right to rescind Contributor's consent to the Consolidation. For the
benefit of Operating Partnership, and in consideration of Operating
Partnership's consummating the Consolidation, Contributor (x) hereby waives any
and all rights he or she now has or may hereafter be granted to rescind his or
her consent to the Consolidation on the basis that the Units issued in
connection with the Consolidation were not registered (the "Waiver") and (y)
agrees that if the Waiver is deemed void or unenforceable for any reason,
including, without limitation, under Section 14 of the Securities Act, the
entire beneficial interest in all property and amounts received by Contributor
in any action to rescind the Consolidation (regardless of whether such action
was initiated by Contributor) or otherwise received by Contributor as damages
for failure to register the Units under the Securities Act, shall be promptly
paid over and contributed by Contributor to Operating Partnership, for no
additional consideration from Operating Partnership, other than the Units
originally issued pursuant to the Consolidation.
Whenever the context shall require, all words in the male, female or
neuter gender shall be deemed to include the other genders, all singular words
shall include the plural, and all plural words shall include the singular. All
representations, covenants and agreements of Contributor set forth in this
Agreement shall survive the consummation of the Consolidation contemplated by
the Memorandum.
7. CONDITIONS TO COMPLETION. In addition to the conditions to
completion of the Consolidation set forth in the Memorandum, the obligations of
Operating Partnership to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment (or waiver by Operating Partnership)
at or prior to the Closing of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations,
warranties and covenants made by Contributors in this Agreement or in any
document delivered by any of them pursuant to this Agreement shall be true and
correct in all material respects when made and on and as of the Closing as
though such representations, warranties and covenants were made on and as of
such date.
8
<PAGE> 11
7.2 CONSENTS. Any and all consents required by the Partnership
Agreement of the Partnership (or, in the case of TMP and Mendik 570,
Associates), and any certificates, agreements, contribution and assumption
instruments and other documents necessary or advisable to evidence the
conveyance of the Contributed Interests and the admission of Operating
Partnership (or Designated Subsidiary) into the Partnership or Associates, as
the case may be, by virtue of the contribution of the Contributed Interests,
shall have been obtained.
7.3 NO ORDER OR INJUNCTION. The consummation of the Contributions
shall not have been restrained, enjoined or prohibited by any order or
injunction of any court or governmental authority of competent jurisdiction.
7.4 INSTRUMENTS OF CONVEYANCE. The Contributors shall have delivered
the instruments evidencing conveyance of their interests referred to in Section
8.1.
8. THE CLOSING.
8.1 CONTRIBUTORS' AND GENERAL PARTNER'S CLOSING DOCUMENTS. At Closing,
each Contributor shall deliver (or cause to be delivered pursuant to the Power
of Attorney referred to in Section 11.9) or the General Partner shall deliver
the following (all of which shall be duly executed and acknowledged where
required):
(a) A written document of conveyance contributing to Operating
Partnership (and/or any Designated Subsidiary) title to Contributor's
Contributed Interests, free and clear of any adverse claim or interest;
(b) Such documents and certificates as Operating Partnership
reasonably may require to establish the authority of the parties executing any
documents in connection with the Contributions including, in the case of any
Contributor that is a corporation, partnership, limited liability company or
other similar entity (other than a trust or estate), an opinion of counsel,
reasonably satisfactory to the Operating Partnership, as to the due execution
and delivery of such documents; (c) Such consents and instruments of admission
as are contemplated by Section 7.2 hereof; and
(d) Such other documents, instruments and certificates as
Operating Partnership and the General Partner, as agent for the Contributors,
reasonably agree are necessary or appropriate, including without limitation
recording and transfer forms and affidavits.
8.2 OPERATING PARTNERSHIP'S CLOSING DOCUMENTS. At Closing, Operating
Partnership shall deliver or cause to be delivered to the General Partner, as
agent for the Contributors, the following:
(a) The Units to be issued for the Contributed Interests;
9
<PAGE> 12
(b) Copies of the executed Partnership Agreement of the Operating
Partnership and the Registration Rights Agreement and Unit Redemption Agreement
referred to in Section 11.09; and
(c) Such other documents and instruments as the General Partner,
as agent for the Contributors, and Operating Partnership agree are necessary or
appropriate, including without limitation recording and transfer forms and
affidavits.
8.3 RELEASE OF SECURITY. At Closing, any security (and any related
instruments) held by the Partnership for the obligations of the Contributors to
make additional capital contributions to the Partnership shall be released (and
such related instruments shall be returned to the Contributors).
9. CLOSING COSTS. Operating Partnership shall pay or provide for the
payment of all costs associated with the closing of the contributions of the
Contributed Interests pursuant to this Agreement, as described in and subject to
the terms of the Memorandum.
10. OPERATION IN THE ORDINARY COURSE. The General Partner shall use
reasonable efforts to operate the Partnership, Associates, 570 Lexington and the
Property in the ordinary course of business between the date hereof and the
closing of the Consolidation, including making any necessary capital
expenditures and leasing expenditures consistent with past practices to maintain
the quality and value of the Property.
11. GENERAL PROVISIONS.
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. It is the express
intention and agreement of the parties hereto that the representations and
warranties of the parties set forth in this Agreement shall survive the
consummation of the Contributions and the Closing.
11.2 NOTICES. All notices, demands, requests or other communications
that may be or are required to be given or made by any party to the other
parties pursuant to this Agreement shall be in writing and shall be hand
delivered or transmitted by certified mail, express overnight mail or delivery
service, telegram, telex or facsimile transmission to the parties at the
addresses specified in Exhibit A or such other address as the addressee may
indicate by written notice to the other party.
Each notice, demand, request or communication that is given or made in
the manner described above shall be deemed sufficiently given or made for all
purposes at such time as it is delivered to the addressee (with the delivery
receipt, the affidavit of messenger or (with respect to a telex) the answer back
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
10
<PAGE> 13
11.3 GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto and any claims or disputes relating to such rights and
obligations shall be governed by and construed under the laws of the State of
New York.
11.4 HEADINGS. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
11.5 BENEFIT AND ASSIGNMENT. No Contributor shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Operating Partnership. Any purported
assignment contrary to the terms hereof shall be null, void and of no force and
effect.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns as permitted
hereunder. No person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
The Operating Partnership may designate one or more Designated
Subsidiaries to acquire all or any part of the Contributed Interests (in which
case the Designated Subsidiary shall execute a certificate at closing making the
same representations and warranties as are made by Operating Partnership and
references to Operating Partnership shall include the Designated Subsidiaries
except where the context clearly indicates otherwise).
11.6 SEVERABILITY. If any part of any provision of this Agreement or
any other agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said agreement so long as the economic and legal
substance of the Contributions is not affected in any manner materially adverse
to either party.
11.7 ENTIRE AGREEMENT; AMENDMENT. The Schedules and the Exhibits
attached hereto are hereby incorporated into the Agreement as if fully set forth
herein. This Agreement, and the Schedules and Exhibits attached hereto, together
with the Memorandum, contain the final and entire agreement between the parties
hereto with respect to the Contributions, supersede all prior oral and written
memoranda and agreements with respect to the matters contemplated herein, and
are intended to be an integration of all prior negotiations and understandings.
Contributors and Operating Partnership shall not be bound by any terms,
conditions, statements, warranties or representations, oral or written, not
contained or referred to herein or therein. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto.
11
<PAGE> 14
11.8 NO WAIVER. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege. No waiver shall be valid against any party hereto
unless made in writing and signed by the party against whom enforcement of such
waiver is sought and then only to the extent expressly specified therein.
11.9 CONSENT AND POWER OF ATTORNEY. The General Partner hereby consents
to the contribution of the Contributed Interests pursuant hereto by each of the
Contributors. Each Contributor is executing a Partner Consent pursuant to which
such Contributor (a) is executing this Agreement, and (b) is consenting to each
matter set forth therein. In addition, by executing this Agreement pursuant to
the Consent, each Contributor is constituting and appointing each of David R.
Greenbaum, John J. Silberstein and Christopher G. Bonk, individually, with full
power of substitution, the true and lawful attorney-in-fact (the "Attorney") of
such Contributor, with full power and authority in the name of and for and on
behalf of such Contributor, to execute an instrument of conveyance contributing
his, her or its Contributed Interests to Operating Partnership pursuant to the
Consolidation on the terms set forth in the Memorandum, to execute the
Partnership Agreement of Operating Partnership and Registration Rights Agreement
and a Unit Redemption Agreement (if the Contributor elects to redeem its Units
for cash immediately after the Closing) and to execute any other instruments
that the General Partner reasonably determines necessary or appropriate in
connection with the contribution of the Contributed Interests pursuant to this
Agreement and the consummation of the Consolidation.
12
<PAGE> 15
Each Contributor shall promptly notify the General Partner if any of
the representations and warranties by that partner were not true and correct
when made or become untrue at any time prior to the Closing.
IN WITNESS WHEREOF, each of the Contributors has executed a separate
Partner Consent agreeing to be bound by the terms of this Agreement and each of
Operating Partnership and the General Partner has caused this Agreement to be
duly executed and delivered on its or his behalf as of the date first above
written.
THE MENDIK COMPANY, L.P.
By: The Mendik Company, Inc., general partner
By: /s/ David R. Greenbaum
----------------------------------
Name: David R. Greenbaum
Title: President
MENDIK REALTY COMPANY, INC.
By: /s/ David R. Greenbaum
----------------------------------
Name: David R. Greenbaum
Title: President
MENDIK 570 CORP.
By: /s/ David R. Greenbaum
----------------------------------
Name: David R. Greenbaum
Title: President
[ADDITIONAL SIGNATURES OMITTED]
13
<PAGE> 16
570 LEXINGTON ASSOCIATES, L.P.
570 LEXINGTON INVESTORS
EXHIBIT A
LIST OF PARTNERS
Name Number of Units
Mendik Realty Company, Inc. 30,862
330 Madison Avenue
New York, NY 10017
Bernard H. Mendik 1,708
330 Madison Avenue
New York, NY 10017
Mendik 570 Corp. 769
330 Madison Avenue
New York, NY 10017
Laureine Knight 5,121
1000 Park Avenue
Apt. 11A
New York, NY 10028
John J. Silberstein 1,709
330 Madison Avenue
New York, NY 10017
Bernard Green 8,547
1700 Broadway
New York, NY 10019
Robert Hartevelt 2,564
40 East 66th Street
Apt. #3B
New York, NY 10021
LeRoy Partners 4,274
1995 Broadway, 17th Floor
New York, NY 10023
<PAGE> 17
<TABLE>
<CAPTION>
Name Number of Units
<S> <C>
Migdal, L. & Kalmus, E. Trustees 5,128
U/W/O J Silberstein
41 East 57th Street, 15th Floor
New York, NY 10022
Ellen Aschendorf-Shasha 855
229 Beechmont Drive
New Rochelle, NY 10804
Alfred & Hanina Shasha, Trustees 6,838
15 Cotswold Way
Scarsdale, NY 10583-3511
Robert Y. Shasha 855
229 Beechmont Drive
New Rochelle, NY 10804
Leslie Shasha-Kupchik 1,709
2000 Broadway
25C
New York, NY 10023
Christopher G. Bonk 2,564
330 Madison Avenue
New York, NY 10017
David R. Greenbaum 3,418
330 Madison Avenue
New York, NY 10017
76,921.00
=========
</TABLE>
<PAGE> 1
EXHIBIT 2.6
AGREEMENT FOR CONTRIBUTION OF INTERESTS
IN
B&B PARK AVENUE L.P.
BY AND AMONG
THE MENDIK COMPANY, L.P.,
MENDIK RELP CORPORATION
AND
THE PARTNERS OF B&B PARK AVENUE L.P.
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE UNITS TO BE ISSUED
HEREUNDER WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO UNITS MAY
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND UNLESS THE OTHER
TRANSFER RESTRICTIONS ON SUCH UNITS HAVE BEEN SATISFIED. CONTRIBUTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR OWNERSHIP
OF UNITS FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION CONTRIBUTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
Page
1.Contributions.............................................................. 2
2.Consideration; Distributions Prior to Closing.............................. 2
3.Acceptance of Contributions................................................ 3
4.Closing Time and Place..................................................... 3
5.Representations and Warranties of Operating Partnership.................... 3
5.1 Organization, Power and Authority, and Qualification.............. 3
5.2 Authority Relative to this Agreement.............................. 3
5.3 Binding Obligation................................................ 4
5.4 Insolvency........................................................ 4
5.5 Brokers........................................................... 4
5.6 Valid Consideration............................................... 4
6.Representations, Warranties and Agreements of Contributors................. 4
6.1 Title; Authority to Assign........................................ 4
6.2 No Breach of Partnership Agreement................................ 5
6.3 Insolvency........................................................ 5
6.4 Litigation........................................................ 5
6.5 Binding Obligation, etc........................................... 5
6.6 Brokers........................................................... 5
6.7 Status as a United States Person.................................. 5
6.8 Indemnification................................................... 6
7.Conditions to Completion................................................... 6
7.1 Representations, Warranties and Covenants......................... 6
7.2 Consents.......................................................... 6
7.3 No Order or Injunction............................................ 6
7.4 Instruments of Conveyance............................................. 6
8.The Closing................................................................ 7
8.1 Contributors' and General Partner's Closing Documents............. 7
8.2 Operating Partnership's Closing Documents......................... 7
9.Closing Costs.............................................................. 7
10.Operation in the Ordinary Course.......................................... 8
(i)
<PAGE> 3
11.General Provisions........................................................ 8
11.1 Survival of Representations and Warranties....................... 8
11.2 Notices.......................................................... 8
11.3 Governing Law.................................................... 8
11.4 Headings......................................................... 8
11.5 Benefit and Assignment........................................... 8
11.6 Severability..................................................... 9
11.7 Entire Agreement; Amendment...................................... 9
11.8 No Waiver........................................................ 9
11.9 Consent and Power of Attorney.................................... 9
(ii)
<PAGE> 4
AGREEMENT FOR CONTRIBUTION OF INTERESTS
[TWO PARK]
THIS AGREEMENT for the Contribution of Interests (this "Agreement") is
made and entered into as of April 15, 1997, by and among The Mendik Company,
L.P. ("Operating Partnership"), a Delaware limited partnership, whose general
partner as of the date hereof is The Mendik Company, Inc., a Maryland
corporation, each of the parties listed on Exhibit A annexed hereto agreeing to
become a party to this Agreement (collectively referred to herein as
"Contributors") and Mendik RELP Corporation, a New York corporation (in its
capacity as a general partner of the Partnership (hereinafter defined), the
"General Partner").
WHEREAS, it is desired to consolidate (the "Consolidation") the assets
of Vornado Realty Trust, a Maryland real estate investment trust (the "REIT"),
and interests in seven general or limited partnerships or limited liability
companies of which the General Partner or an affiliate is a general partner or
managing member, together with the assets of Mendik Realty Company, Inc. and
Mendik Management Company, Inc., each a New York corporation and affiliate of
the General Partner, with and into Operating Partnership.
WHEREAS, upon completion of and after the Consolidation, the REIT will
become and be the managing general partner of the Operating Partnership;
WHEREAS, Contributors are owners of interests (the "Contributed
Interests") in B&B Park Avenue L.P., a New York limited partnership (the
"Partnership"), which is a general partner in Two Park Company, a New York
general partnership ("Two Park"), which owns land and improvements (the
"Property") known as Two Park Avenue, New York, New York;
WHEREAS, in connection with the consummation of the Consolidation, the
parties hereto desire that Operating Partnership and, if designated by Operating
Partnership, one or more special purpose subsidiary partnerships or limited
liability companies of Operating Partnership or one or more other entities
controlled by Operating Partnership (each a "Designated Subsidiary") acquire all
of the interests in the Partnership through the contribution of such interests
to Operating Partnership and/or one or more Designated Subsidiaries upon the
terms and conditions provided herein;
WHEREAS, it is desired to simultaneously acquire all of the interests
in the Partnership owned by a major partner and its affiliates (together, the
"Major Partner") pursuant to an Agreement (the "Major Partner Agreement")
entered into between Major Partner and F/W Mendik REIT L.L.C., which Major
Partner Agreement may be assigned to Operating Partnership and/or a Designated
Subsidiary prior to the Closing (as hereinafter defined);
<PAGE> 5
All of the foregoing is collectively referred to as the "Transaction".
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, Operating Partnership, Contributors and
the General Partner hereby agree as follows:
1. CONTRIBUTIONS. Upon the Closing (hereinafter defined), and
subject to the satisfaction or waiver by Operating Partnership of the conditions
set forth in Section 7 of this Agreement, Contributors shall contribute, convey
and assign to Operating Partnership (and/or Designated Subsidiary) and Operating
Partnership (and/or Designated Subsidiary) shall acquire from Contributors all
of Contributors' right, title and interest in the Contributed Interests (the
"Contributions"), including, without limitation, all of Contributors' interest
in the profits, losses, property and capital of the Partnership allocable to the
Contributed Interests, upon the terms and conditions set forth in this
Agreement.
2. CONSIDERATION; DISTRIBUTIONS PRIOR TO CLOSING.
(a) In full consideration for the contribution of the
Contributed Interests, Operating Partnership shall deliver to Contributors at
the Closing 423 units of limited partnership interest ("Units") in Operating
Partnership, such Units being of the classes and allocated among the
Contributors as set forth on Exhibit A.
(b) On the date of the Closing (the "Closing Date"), the
General Partner shall cause the Partnership to satisfy any outstanding
liabilities and to distribute any remaining cash to its partners.
(c) The Operating Partnership shall cause any amounts
received by the Partnership after the Closing Date relating to the period
through the Closing Date with respect to refunds of real estate taxes paid by
Two Park (less any costs incurred by Two Park, the Partnership or the Operating
Partnership in obtaining such refunds and less any portion of such refunds
required or, in the REIT's reasonable determination, estimated to be paid to
tenants) to be paid to the General Partner, as agent for the Contributors and
certain other parties, not later than 10 days after the end of the month in
which such amounts are collected, and the General Partner shall promptly
distribute such amounts to the Contributors.
(d) If the Operating Partnership (and/or Designated
Subsidiary) acquires any interests in M/H Two Park Associates or Two Park, which
causes the Contributors to owe any tax payable as a result of the New York Real
Estate Transfer Tax imposed by Article 31 of the Tax Law, the New York City Real
Property Transfer Tax imposed by Chapter 46 of Title 11 of the Administrative
Code of the City of New York, or any other similar tax payable by reason of the
contribution of the Contributed Interests (collectively, the "Conveyance
Taxes"), the Operating Partnership agrees to pay and shall be solely responsible
for such Conveyance Taxes and for any Conveyance Taxes payable with respect to
the interests in the Partnership acquired from the Major Partner; provided,
however,
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<PAGE> 6
that the Contributors shall be solely responsible for and shall indemnify,
defend and hold harmless Operating Partnership and the Partnership from and
against all claims, liabilities, costs and expenses (including attorney's fees)
incurred by Operating Partnership and the Partnership by reason of the failure
of the Contributor to pay any Conveyance Taxes that would not have been imposed
but for a Contributor's failure to satisfy any holding period or continuity
requirements for qualifying for a reduced rate of Conveyance Taxes, including
the holding period requirements with respect to certain transfers to a REIT
imposed in connection with the New York Real Estate Transfer Tax imposed by
Article 31 of the Tax Law and the New York City Real Property Transfer Tax
imposed by Chapter 46 of Title 11 of the Administrative Code of the City of New
York.
3. ACCEPTANCE OF CONTRIBUTIONS. Subject to satisfaction of the
conditions listed or referred to in Section 7, Operating Partnership hereby
agrees that at the Closing it shall accept or, at its election, cause a
Designated Subsidiary to accept all or part of, the Contributions and shall
assume any and all rights, obligations and responsibilities of Contributors as
owners of the Contributed Interests that arise subsequent to the Closing Date.
4. CLOSING TIME AND PLACE. Unless another date or place is agreed
to by the parties, the closing of the Contributions (the "Closing") shall take
place contemporaneously with the closing of the Consolidation at the offices of
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York 10036,
or such other place and time as Operating Partnership and the General Partner
shall agree, upon the satisfaction or waiver of all conditions to the Closing
set forth in Section 7 hereof.
5. REPRESENTATIONS AND WARRANTIES OF OPERATING PARTNERSHIP.
Operating Partnership hereby represents and warrants to Contributors as follows,
which representations and warranties shall be true and correct on the Closing
Date:
5.1 ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION.
Operating Partnership is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware. The REIT is a real
estate investment trust duly organized, validly existing and in good standing
under the laws of the State of Maryland. Each of Operating Partnership and the
REIT has the requisite power and authority to carry on its respective business
as it is now being conducted. Each of Operating Partnership and the REIT is
qualified to do business and is in good standing in each jurisdiction in which
the character of its property owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not have a material adverse effect on the business or
financial condition of Operating Partnership or the REIT, as the case may be.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Operating Partnership
has taken all action necessary to authorize the execution, delivery and
performance of this Agreement by Operating Partnership and no other proceedings
on the part of Operating Partnership are
3
<PAGE> 7
necessary to authorize the execution and delivery of this Agreement and the
consummation of the Contributions.
None of the execution and delivery of this Agreement by Operating
Partnership, the consummation by Operating Partnership of the Contributions or
compliance by Operating Partnership with any of the provisions hereof shall (i)
conflict with or result in any breach of any provisions of the partnership
agreement of Operating Partnership; (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Operating Partnership is a party or by which it or any of its properties or
assets may be bound; or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Operating Partnership; except in the
case of (ii) or (iii) for violations, breaches, or defaults (A) that would not
in the aggregate have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, and that shall not impair the
effectiveness of the Contributions contemplated hereby, or (B) for which waivers
or consents have been or shall be obtained prior to the Closing Date.
5.3 BINDING OBLIGATION. This Agreement has been duly and validly
executed and delivered by Operating Partnership and constitutes a valid and
binding agreement of Operating Partnership, enforceable against Operating
Partnership in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, insolvency, moratorium, or
similar laws affecting creditors' rights generally or the rights of creditors of
limited partnerships and to general principles of equity.
5.4 INSOLVENCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against Operating Partnership.
5.5 BROKERS. Neither Operating Partnership nor the REIT has
employed or dealt with any broker or finder, or incurred any liability therefor,
in connection with the Contributions.
5.6 VALID CONSIDERATION. The Units, when issued in accordance with
this Agreement and the Partnership Agreement of Operating Partnership, will be
duly and validly issued, and the issuance thereof will not be subject to
preemptive or other similar rights.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF CONTRIBUTORS.
Each Contributor, in his, her or its capacity as a partner of the Partnership,
hereby represents and warrants to and agrees with Operating Partnership with
respect to his, her or its Contributed Interests as follows, which
representations and warranties shall also be true and correct on the Closing
Date:
4
<PAGE> 8
6.1 TITLE; AUTHORITY TO ASSIGN. Contributor (i) owns good and
marketable, legal and beneficial (except for holders of beneficial interests in
the amounts payable with respect to such Contributed Interests who have no other
rights with respect to those interests) title in and to his, her or its
Contributed Interests which as of the Closing Date will be held free of liens,
encumbrances, judgments, adverse interests, pledges or security interests, other
than pledges of partnership interests to the Partnership or the other partners
to secure a partner's obligations to meet capital calls or other obligations as
set forth in the partnership agreement of the Partnership (as to which no
amounts are outstanding and no amounts will be outstanding as of the Closing
Date), (ii) holds the entire right, title and interest in and to his, her or its
Contributed Interests, and (iii) has the full right, power, capacity and
authority to validly contribute and convey his, her or its Contributed Interests
pursuant to this Agreement.
6.2 NO BREACH OF PARTNERSHIP AGREEMENT. None of the execution and
delivery of this Agreement by Contributor, the consummation by Contributor of
the Contribution or compliance by Contributor with any of the provisions hereof
shall as of the Closing Date conflict with or result in any breach of any
provisions of the Partnership Agreement of the Partnership or any other
agreement to which Contributor is a party.
6.3 INSOLVENCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or, to the knowledge of Contributor, threatened against
Contributor.
6.4 LITIGATION. Contributor has no knowledge of any actual or
pending litigation or proceeding by any organization, person, individual or
governmental agency against Contributor with respect to or against or
potentially affecting his, her or its Contributed Interests.
6.5 BINDING OBLIGATION, ETC. This Agreement has been duly and
validly executed and delivered by Contributor to Operating Partnership and
constitutes a legal, valid and binding agreement of Contributor, enforceable
against Contributor in accordance with its terms, except as such enforcement may
be limited by bankruptcy, conservatorship, receivership, insolvency, moratorium
or similar laws affecting creditors' rights generally and to general principles
of equity.
6.6 BROKERS. Contributor has not employed or dealt with any broker
or finder, or incurred any liability therefor, in connection with the
Contribution.
6.7 STATUS AS A UNITED STATES PERSON. (i) Unless otherwise
indicated on the Partner Consent, Contributor certifies that Contributor is not
a foreign person within the meaning of Section 1445 of the Internal Revenue Code
("Section 1445"). To the extent that Contributor is not a foreign person within
the meaning of Section 1445, (1) Contributor's U.S. taxpayer identification
number that has previously been provided to the Partnership is accurate, (2)
Contributor's home address (in the case of an individual) or office address (in
the case of
5
<PAGE> 9
an entity) is that address indicated on Exhibit A of this Agreement and (3) if
Contributor subsequently becomes a foreign person within the meaning of Section
1445, Contributor shall notify Operating Partnership prior to the Closing.
(ii) If Contributor is or prior to the Closing becomes a
foreign person within the meaning of Section 1445, Operating Partnership shall,
and is authorized to, withhold ten percent (10%) of the amount realized (as such
term is defined in Section 1001 of the Internal Revenue Code) by Contributor in
connection with the Contribution, unless Operating Partnership shall receive
from Contributor a notice of nonrecognition transfer with respect to the
Contribution by Contributor (in a form to be provided by Operating Partnership).
6.8 INDEMNIFICATION. Contributor hereby agrees to indemnify and
hold harmless the Partnership, the REIT, Operating Partnership and the General
Partner and any of the employees, agents, officers, directors and affiliated
persons of the foregoing from any and all damages, losses, costs and expenses
(including reasonable attorneys' fees) which they, or any of them, may incur by
reason of a failure by Contributor to fulfill any of its obligations under this
Agreement or by reason of the breach by Contributor of any of the
representations and warranties contained herein. All representations, covenants
and agreements of Contributor set forth in this Agreement shall survive the
consummation of the Consolidation.
7. CONDITIONS TO COMPLETION. In addition to the conditions to
completion of the Consolidation set forth in the Memorandum, the obligations of
Operating Partnership to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment (or waiver by Operating Partnership)
at or prior to the Closing of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants made by Contributors in this Agreement
or in any document delivered by any of them pursuant to this Agreement shall be
true and correct in all material respects when made and on and as of the Closing
as though such representations, warranties and covenants were made on and as of
such date.
7.2 CONSENTS. Any and all consents required by the Partnership
Agreement of the Partnership, and any certificates, agreements, contribution and
assumption instruments and other documents necessary or advisable to evidence
the conveyance of the Contributed Interests and the admission of Operating
Partnership (or Designated Subsidiary) into the Partnership by virtue of the
contribution of the Contributed Interests, shall have been obtained.
7.3 NO ORDER OR INJUNCTION. The consummation of the Contributions
shall not have been restrained, enjoined or prohibited by any order or
injunction of any court or governmental authority of competent jurisdiction.
7.4 INSTRUMENTS OF CONVEYANCE. The Contributors shall have
delivered the instruments evidencing conveyance of their interests referred to
in Section 8.1.
6
<PAGE> 10
8. THE CLOSING.
8.1 CONTRIBUTORS' AND GENERAL PARTNER'S CLOSING DOCUMENTS. At
Closing, each Contributor shall deliver (or cause to be delivered pursuant to
the Power of Attorney referred to in Section 11.9) or the General Partner shall
deliver the following (all of which shall be duly executed and acknowledged
where required):
(a) A written document of conveyance contributing to
Operating Partnership (and/or any Designated Subsidiary) title to Contributor's
Contributed Interests, free and clear of any adverse claim or interest;
(b) Such documents and certificates as Operating
Partnership reasonably may require to establish the authority of the parties
executing any documents in connection with the Contributions including, in the
case of any Contributor that is a corporation, partnership, limited liability
company or other similar entity (other than a trust or estate), an opinion of
counsel, reasonably satisfactory to the Operating Partnership, as to the due
execution and delivery of such documents;
(c) Such consents and instruments of admission as are
contemplated by Section 7.2 hereof; and
(d) Such other documents, instruments and certificates as
Operating Partnership and the General Partner, as agent for the Contributors,
reasonably agree are necessary or appropriate, including without limitation
recording and transfer forms and affidavits.
8.2 OPERATING PARTNERSHIP'S CLOSING DOCUMENTS. At Closing,
Operating Partnership shall deliver or cause to be delivered to the General
Partner, as agent for the Contributors, the following:
(a) The Units to be issued for the Contributed Interests;
and
(b) Copies of the executed Partnership Agreement of the
Operating Partnership and the Registration Rights Agreement and Unit Redemption
Agreement referred to in Section 11.09; and
(c) Such other documents and instruments as the General
Partner, as agent for the Contributors, and Operating Partnership agree are
necessary or appropriate, including without limitation recording and transfer
forms and affidavits.
9. CLOSING COSTS. Operating Partnership shall pay or provide for
the payment of all other costs associated with the closing of the contributions
of the Contributed Interests pursuant to this Agreement, as described in and
subject to the terms of the Memorandum.
7
<PAGE> 11
10. OPERATION IN THE ORDINARY COURSE. The General Partner shall
use reasonable efforts to operate the Partnership, Two Park and the Property in
the ordinary course of business between the date hereof and the closing of the
Consolidation, including making any necessary capital expenditures and leasing
expenditures consistent with past practices to maintain the quality and value of
the Property.
11. GENERAL PROVISIONS.
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. It is the express
intention and agreement of the parties hereto that the representations and
warranties of the parties set forth in this Agreement shall survive the
consummation of the Contributions and the Closing.
11.2 NOTICES. All notices, demands, requests or other
communications that may be or are required to be given or made by any party to
the other parties pursuant to this Agreement shall be in writing and shall be
hand delivered or transmitted by certified mail, express overnight mail or
delivery service, telegram, telex or facsimile transmission to the parties at
the addresses specified in Exhibit A or such other address as the addressee may
indicate by written notice to the other party.
Each notice, demand, request or communication that is given or made in
the manner described above shall be deemed sufficiently given or made for all
purposes at such time as it is delivered to the addressee (with the delivery
receipt, the affidavit of messenger or (with respect to a telex) the answer back
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
11.3 GOVERNING LAW. This Agreement, the rights and obligations of
the parties hereto and any claims or disputes relating to such rights and
obligations shall be governed by and construed under the laws of the State of
New York.
11.4 HEADINGS. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
11.5 BENEFIT AND ASSIGNMENT. No Contributor shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Operating Partnership. Any purported
assignment contrary to the terms hereof shall be null, void and of no force and
effect.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns as permitted
hereunder. No person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and
8
<PAGE> 12
agreements set forth in this Agreement shall be solely for the benefit of, and
shall be enforceable only by, the parties hereto or their respective successors
and assigns as permitted hereunder.
The Operating Partnership may designate one or more Designated
Subsidiaries to acquire all or any part of the Contributed Interests (in which
case the Designated Subsidiary shall execute a certificate at closing making the
same representations and warranties as are made by Operating Partnership and
references to Operating Partnership shall include the Designated Subsidiaries
except where the context clearly indicates otherwise).
11.6 SEVERABILITY. If any part of any provision of this Agreement
or any other agreement, document or writing given pursuant to or in connection
with this Agreement shall be invalid or unenforceable under applicable law, such
part shall be ineffective to the extent of such invalidity or unenforceability
only, without in any way affecting the remaining parts of such provisions or the
remaining provisions of said agreement so long as the economic and legal
substance of the Contributions is not affected in any manner materially adverse
to either party.
11.7 ENTIRE AGREEMENT; AMENDMENT. The Schedules and the Exhibits
attached hereto are hereby incorporated into the Agreement as if fully set forth
herein. This Agreement, and the Schedules and Exhibits attached hereto, together
with the Memorandum, contain the final and entire agreement between the parties
hereto with respect to the Contributions, supersede all prior oral and written
memoranda and agreements with respect to the matters contemplated herein, and
are intended to be an integration of all prior negotiations and understandings.
Contributors and Operating Partnership shall not be bound by any terms,
conditions, statements, warranties or representations, oral or written, not
contained or referred to herein or therein. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto.
11.8 NO WAIVER. No delay or failure on the part of any party hereto
in exercising any right, power or privilege under this Agreement or under any
other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial exercise
of any such right, power or privilege shall preclude the further exercise of
such right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent expressly specified
therein.
11.9 CONSENT AND POWER OF ATTORNEY. The General Partner hereby
consents to the contribution of the Contributed Interests pursuant hereto by
each of the Contributors. Each Contributor is consenting to each matter set
forth herein. In addition, by executing this Agreement pursuant to the Consent,
each Contributor is constituting and appointing each of David R. Greenbaum, John
J. Silberstein and Christopher G. Bonk,
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<PAGE> 13
individually, with full power of substitution, the true and lawful
attorney-in-fact (the "Attorney") of such Contributor, with full power and
authority in the name of and for and on behalf of such Contributor, to execute
an instrument of conveyance contributing his, her or its Contributed Interests
to Operating Partnership pursuant to the Consolidation on the terms set forth in
the Memorandum, to execute the Partnership Agreement of Operating Partnership
and the Registration Rights Agreement and a Unit Redemption Agreement (if the
Contributor elects to redeem its Units for cash immediately after the Closing),
to execute any instruments required to be filed in connection with the
Conveyance Taxes and to execute any other instruments that the General Partner
reasonably determines necessary or appropriate in connection with the
contribution of the Contributed Interests pursuant to this Agreement and the
consummation of the Consolidation, including, without limitation, to consummate
the transactions which are the subject matter of the Major Partner Agreement.
Each Contributor shall promptly notify the General Partner if any of
the representations and warranties by that partner were not true and correct
when made or become untrue at any time prior to the Closing.
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<PAGE> 14
IN WITNESS WHEREOF, each of the Contributors agrees to be bound by the
terms of this Agreement and each of Operating Partnership, the General
Partner and Bernard H. Mendik has caused this Agreement to be duly executed and
delivered on its or his behalf as of the date first above written.
THE MENDIK COMPANY, L.P.
By: The Mendik Company, Inc., general partner
By: /s/ David R. Greenbaum
------------------------------------
Name: David R. Greenbaum
Title: President
MENDIK RELP CORPORATION
By: /s/ David R. Greenbaum
------------------------------------
Name: David R. Greenbaum
Title: President
Bernard H. Mendik
By: /s/ Bernard H. Mendik
------------------------------------
Bernard H. Mendik
11
<PAGE> 15
B&B Park Avenue L.P.
Exhibit A
List of Partners
Number of Units
Mendik RELP Corporation 423
330 Madison Avenue
New York, N.Y. 10017
Bernard H. Mendik 0
330 Madison Avenue
New York, N.Y. 10017
12
<PAGE> 1
EXHIBIT 2.7
AGREEMENT FOR CONTRIBUTION OF INTERESTS
IN
TWO PENN PLAZA ASSOCIATES L.P.
BY AND AMONG
THE MENDIK COMPANY, L.P.,
THE PARTNERS OF TWO PENN PLAZA ASSOCIATES L.P.
AND
BERNARD H. MENDIK
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE UNITS TO BE ISSUED
HEREUNDER WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO UNITS MAY
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND UNLESS THE OTHER
TRANSFER RESTRICTIONS ON SUCH UNITS HAVE BEEN SATISFIED. CONTRIBUTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR OWNERSHIP
OF UNITS FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION CONTRIBUTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
AGREEMENT FOR CONTRIBUTION OF INTERESTS
[TWO PENN PLAZA]
THIS AGREEMENT for the Contribution of Interests (this "Agreement")
is made and entered into as of April 15, 1997, by and among The Mendik Company,
L.P. ("Operating Partnership"), a Delaware limited partnership, whose general
partner as of the date hereof is The Mendik Company, Inc., a Maryland
corporation, each of the parties listed on Exhibit A annexed hereto who executes
a Partner Consent (hereinafter defined) agreeing to become a party to this
Agreement (collectively referred to herein as "Contributors") and Bernard H.
Mendik (in his capacity as a general partner of the Partnership (hereinafter
defined), the "General Partner").
WHEREAS, it is desired to consolidate (the "Consolidation") the
assets of Vornado Realty Trust, a Maryland real estate investment trust (the
"REIT"), and interests in seven general or limited partnerships or limited
liability companies of which the General Partner or an affiliate is a general
partner or managing member, together with the assets of Mendik Realty Company,
Inc. and Mendik Management Company, Inc., each a New York corporation and an
affiliate of the General Partner, with and into Operating Partnership.
WHEREAS, upon completion of and after the Consolidation, the REIT
will become and be the managing general partner of the Operating Partnership;
WHEREAS, Contributors are owners of interests (the "Contributed
Interests") in Two Penn Plaza Associates L.P., a New York limited partnership
(the "Partnership"), which Partnership owns land and improvements (the
"Property") known as Two Penn Plaza, New York, New York; and
WHEREAS, in connection with the consummation of the Consolidation,
the parties hereto desire that Operating Partnership and, if designated by
Operating Partnership, one or more special purpose subsidiary partnerships or
limited liability companies of Operating Partnership or one or more other
entities controlled by Operating Partnership (each a "Designated Subsidiary")
acquire all of the interests in the Partnership through the contribution of such
interests to Operating Partnership and/or one or more Designated Subsidiaries
upon the terms and conditions provided herein and simultaneously acquire all of
the interests in the Partnership owned by a major partner and its affiliates
(collectively, the "Major Partner") pursuant to an Agreement (the "Major Partner
Agreement") entered into between the Major Partner and FW/Mendik REIT L.L.C.,
which Major Partner Agreement shall be amended and assigned to Operating
Partnership and/or a Designated Subsidiary prior to the Closing (hereinafter
defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, Operating Partnership, Contributors and
the General Partner hereby agree as follows:
<PAGE> 3
1. CONTRIBUTIONS. Upon the Closing, and subject to the satisfaction
or waiver by Operating Partnership of the conditions set forth in Section 7 of
this Agreement, Contributors shall contribute, convey and assign to Operating
Partnership (and/or Designated Subsidiary) and Operating Partnership (and/or
Designated Subsidiary) shall acquire from Contributors all of Contributors'
right, title and interest in the Contributed Interests (the "Contributions"),
including, without limitation, all of Contributors' interest in the profits,
losses, property and capital of the Partnership allocable to the Contributed
Interests, upon the terms and conditions set forth in this Agreement.
2. CONSIDERATION; DISTRIBUTIONS PRIOR TO CLOSING.
(a) In full consideration for the contribution of the
Contributed Interests, Operating Partnership shall deliver to Contributors (or
their designees as provided below) at the Closing, an aggregate of 48,379 units
of limited partnership interests ("Units") in Operating Partnership, such Units
being allocated among the Contributors as set forth on Exhibit A.
Prior to the Closing, subject to compliance with all
applicable securities laws, any Contributor that is a partnership may give
notice to the Operating Partnership to allocate all or a portion of the Units
otherwise issuable to it among its partners in a manner set forth in the notice
and to issue the Units directly to those partners, and any Contributor who holds
interests in which another person or entity has a beneficial interest may give
notice to the Operating Partnership to issue all or a portion of the Units
otherwise issuable to that Contributor to the beneficial owner of that interest.
In such event, as a condition to receiving any Units, any such partners of any
Contributor or any such beneficial holder shall execute a Partner Consent (the
"Partner Consent") in the form annexed to and made part of the Confidential
Solicitation of Consents and Private Placement Memorandum (the "Memorandum")
dated March 29, 1997 and shall make to the Operating Partnership the
representations and warranties and agreements in Section 6.7(a), (b), (c) and
(d) pursuant to an instrument reasonably satisfactory to the Operating
Partnership (in addition to the Partner Consent to be executed by the
Contributor).
(b) On the date of the Closing (the "Closing Date"), the
General Partner shall cause the Partnership to distribute to the Major Partner
an amount (estimated at $1,600,000) and to distribute to the General Partner, as
agent for the Contributors, an amount (estimated at $800,000 based on a value of
$52 per Unit), in each case sufficient to pay the Conveyance Taxes (hereinafter
defined) payable by the Major Partner or by the Contributors pursuant to Section
9(b) hereof, as the case may be, assuming that the Contributions hereunder and
under the Major Partner Agreement are treated as "qualifying REIT transfers"
under the laws referred to in Section 9(a) hereof.
(c) The Operating Partnership shall cause the Partnership to
pay any amounts collected by the Partnership after the Closing Date relating to
the period through the
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<PAGE> 4
Closing Date with respect to refunds of real estate taxes paid by the
Partnership (after deducting any costs incurred by the Partnership or the
Operating Partnership in obtaining such refunds and less any portion of such
refunds required or, in the REIT's reasonable determination, estimated to be
required to be paid to tenants) to the General Partner, as agent for the
Contributors and certain other persons, not later than 10 days after the end of
the month in which such amounts are collected, and the General Partner shall
promptly distribute such amounts to the Contributors.
3. ACCEPTANCE OF CONTRIBUTIONS. Subject to the satisfaction of the
conditions listed or referred to in Section 7, Operating Partnership hereby
agrees that at the Closing it shall accept or, at its election, cause a
Designated Subsidiary to accept all or part of, the Contributions and shall
assume any and all rights, obligations and responsibilities of Contributors as
owners of the Contributed Interests that arise subsequent to the Closing Date.
4. CLOSING TIME AND PLACE. Unless another date or place is agreed to
by the parties, the closing of the Contributions (the "Closing") shall take
place contemporaneously with the closing of the Consolidation at the offices of
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York 10036,
or such other place and time as Operating Partnership and the General Partner
shall agree, upon the satisfaction or waiver of all conditions to the Closing
set forth in Section 7 hereof.
5. REPRESENTATIONS AND WARRANTIES OF OPERATING PARTNERSHIP.
Operating Partnership hereby represents and warrants to Contributors as follows,
which representations and warranties shall be true and correct on the Closing
Date:
5.1 ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION. Operating
Partnership is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. The REIT is a real estate
investment trust duly organized, validly existing and in good standing under the
laws of the State of Maryland. Each of Operating Partnership and the REIT has
the requisite power and authority to carry on its respective business as it is
now being conducted. Each of Operating Partnership and the REIT is qualified to
do business and is in good standing in each jurisdiction in which the character
of its property owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not have a material adverse effect on the business or financial
condition of Operating Partnership or the REIT, as the case may be.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Operating Partnership has
taken all action necessary to authorize the execution, delivery and performance
of this Agreement by Operating Partnership and no other proceedings on the part
of Operating Partnership are necessary to authorize the execution and delivery
of this Agreement and the consummation of the Contributions.
None of the execution and delivery of this Agreement by Operating
Partnership, the consummation by Operating Partnership of the Contributions or
compliance by Operating
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<PAGE> 5
Partnership with any of the provisions hereof shall (i) conflict with or result
in any breach of any provisions of the partnership agreement of Operating
Partnership; (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Operating
Partnership is a party or by which it or any of its properties or assets may be
bound; or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Operating Partnership; except in the case of (ii) or
(iii) for violations, breaches, or defaults (A) that would not in the aggregate
have a material adverse effect on the business or financial condition of
Operating Partnership or the REIT, and that shall not impair the effectiveness
of the Contributions contemplated hereby, or (B) for which waivers or consents
have been or shall be obtained prior to the Closing Date.
5.3 BINDING OBLIGATION. This Agreement has been duly and validly
executed and delivered by Operating Partnership and constitutes a valid and
binding agreement of Operating Partnership, enforceable against Operating
Partnership in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, insolvency, moratorium, or
similar laws affecting creditors' rights generally or the rights of creditors of
limited partnerships and to general principles of equity.
5.4 INSOLVENCY. There are no attachments, executions or assignments
for the benefit of creditors, or voluntary or involuntary proceedings in
bankruptcy, or under any other debtor relief laws, contemplated by or pending or
threatened against Operating Partnership.
5.5 BROKERS. Neither Operating Partnership nor the REIT has employed
or dealt with any broker or finder, or incurred any liability therefor, in
connection with the Contributions.
5.6 VALID CONSIDERATION. The Units, when issued in accordance with
this Agreement and the Partnership Agreement of Operating Partnership, will be
duly and validly issued, and the issuance thereof will not be subject to
preemptive or other similar rights.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF Contributors. Each
Contributor, in his, her or its capacity as a partner of the Partnership, hereby
represents and warrants to and agrees with Operating Partnership with respect to
his, her or its Contributed Interests as follows, which representations and
warranties shall also be true and correct on the Closing Date:
6.1 TITLE; AUTHORITY TO ASSIGN. Contributor (i) owns good and
marketable, legal and beneficial (except for holders of beneficial interests in
the amounts payable with respect to such Contributed Interests who have no other
rights with respect to those interests) title in and to his, her or its
Contributed Interests which as of the Closing Date will be held free of liens,
encumbrances, judgments, adverse interests, pledges or security interests, other
than pledges of
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<PAGE> 6
partnership interests to the Partnership or the other partners to secure a
partner's obligations to meet capital calls or other obligations as set forth in
the partnership agreement of the Partnership (as to which no amounts are
outstanding and no amounts will be outstanding as of the Closing Date), and
except as contemplated in the financing for the Partnership and (iii) has the
full right, power, capacity and authority to validly contribute and convey his,
her or its Contributed Interests pursuant to this Agreement.
6.2 NO BREACH OF PARTNERSHIP AGREEMENT. None of the execution and
delivery of this Agreement by Contributor, the consummation by Contributor of
the Contribution or compliance by Contributor with any of the provisions hereof
shall as of the Closing Date conflict with or result in any breach of any
provisions of the Partnership Agreement of the Partnership or any other
agreement to which Contributor is a party.
6.3 INSOLVENCY. There are no attachments, executions or assignments
for the benefit of creditors, or voluntary or involuntary proceedings in
bankruptcy, or under any other debtor relief laws, contemplated by or pending
or, to the knowledge of Contributor, threatened against Contributor.
6.4 LITIGATION. Contributor has no knowledge of any actual or
pending litigation or proceeding by any organization, person, individual or
governmental agency against Contributor with respect to or against or
potentially affecting his, her or its Contributed Interests.
6.5 BINDING OBLIGATION, ETC. This Agreement has been duly and
validly executed and delivered by Contributor to Operating Partnership and
constitutes a legal, valid and binding agreement of Contributor, enforceable
against Contributor in accordance with its terms, except as such enforcement may
be limited by bankruptcy, conservatorship, receivership, insolvency, moratorium
or similar laws affecting creditors' rights generally and to general principles
of equity. Contributor further represents and warrants that if Contributor is a
corporation, partnership, trust or other entity, it has the power to, and is
duly authorized and otherwise duly qualified to, purchase and hold securities
such as Units and Common Shares (as hereinafter defined) and such entity has its
principal place of business as set forth on Exhibit A.
6.6 BROKERS. Contributor has not employed or dealt with any broker
or finder, or incurred any liability therefor, in connection with the
Contribution.
6.7 SECURITIES ACT AND OTHER REPRESENTATIONS AND AGREEMENTS.
(a) (i) Upon the issuance of Units to Contributor (or a
designee as provided in Section 2), Contributor (or designee) shall become
subject to, and shall be bound by, the terms and provisions of the partnership
agreement of Operating Partnership, including the terms of the power of attorney
contained in Section 15.11 thereof, as the Partnership Agreement may be amended
and restated from time to time in accordance with its terms.
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<PAGE> 7
(ii) Contributor or his, her or its advisor(s) have
had a reasonable opportunity to ask questions of and receive information and
answers from a person or persons acting on behalf of the Partnership and
Operating Partnership concerning the Consolidation, and, as Contributor may deem
necessary, to verify the information contained in the Memorandum, receipt of
which is acknowledged, and any other information provided to Contributor by the
Partnership or Operating Partnership and all such questions have been answered
and all such information has been provided to the full satisfaction of
Contributor.
(iii) Contributor is acquiring Units for his, her or
its own account as principal, for investment and not with a view to resale or
distribution, and the Units may not be transferred or otherwise disposed of by
Contributor otherwise than in transactions pursuant to a registration statement
filed by the Operating Partnership (which it has no obligation to file) or that
are exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable state and foreign securities
laws, and the REIT may refuse to transfer any Units as to which evidence of such
registration or exemptions from such registration satisfactory to the REIT is
not provided to it, which evidence may include the requirement of legal opinions
regarding the exemption from such registration. If the REIT elects, in its sole
discretion, to deliver to any Contributor common shares of beneficial interest
of the REIT ("Common Shares") upon redemption of any Units, the Common Shares
will be acquired for his, her or its own account as principal, for investment
and not with a view to resale or distribution, and the Common Shares may not be
transferred or otherwise disposed of by Contributor otherwise than in
transactions pursuant to any registration statement filed by the REIT with
respect to such Common Shares (which it has an obligation to file only pursuant
to the Registration Rights Agreement described in the Memorandum) or that are
exempt from the registration requirements of the Securities Act and all
applicable state and foreign securities laws, and the REIT may refuse to
transfer any Common Shares as to which evidence of such registration or
exemptions from such registration satisfactory to the REIT is not provided to
it, which evidence may include the requirement of legal opinions regarding the
exemption from such registration.
(iv) Contributor (either alone or with his, her or
its advisors) has sufficient knowledge and experience in financial, tax and
business matters to enable him, her or it to evaluate the merits and risks of an
investment in the Units. Contributor has the ability to bear the economic risk
of acquiring the Units. Contributor acknowledges that (1) the transactions
contemplated by this Agreement and the Memorandum involve complex tax
consequences for each Contributor and each Contributor is relying solely on the
advice of his, her or its own tax advisors in evaluating such consequences, and
(2) neither Operating Partnership nor the General Partner has made (or shall be
deemed to have made) any representations or warranties as to the tax
consequences of such transaction to any Contributor. Each Contributor remains
solely responsible for all tax matters relating to each Contributor.
(v) If needed, Contributor has discussed with his,
her or its professional, legal, tax or financial advisors the suitability of an
investment in Units or Common
6
<PAGE> 8
Shares for his, her or its particular tax and financial situation. Nothing
contained herein or in the Memorandum shall be deemed to imply any
representation by Operating Partnership or the General Partner as to a
particular tax effect that may be obtained by any Contributor.
(vi) All information that Contributor has provided to
Operating Partnership concerning himself or herself or itself and his, her or
its financial position is correct and complete as of the date hereof, and if
there should be any material change in such information prior to issuance of
Units to the Contributors, he, she or it shall immediately provide such changed
information to Operating Partnership.
(vii) Contributor has not disclosed any information
contained in the Memorandum to anyone other than his or her spouse or his, her
or its professional, legal, tax or financial advisors advising him, her or it in
connection with this investment and has not reproduced the Memorandum other than
for such use by such advisors.
(b) Status as a United States Person. (i) Unless otherwise
indicated on the Partner Consent, Contributor certifies that Contributor is not
a foreign person within the meaning of Section 1445 of the Internal Revenue Code
("Section 1445"). To the extent that Contributor is not a foreign person within
the meaning of Section 1445, (1) Contributor's U.S. taxpayer identification
number that has previously been provided to the Partnership is accurate, (2)
Contributor's home address (in the case of an individual) or office address (in
the case of an entity) is that address indicated on Exhibit A of this Agreement
and (3) if Contributor subsequently becomes a foreign person within the meaning
of Section 1445, Contributor shall notify Operating Partnership prior to the
Closing.
(ii) If Contributor is or prior to the Closing becomes a
foreign person within the meaning of Section 1445, Operating Partnership shall,
and is authorized to, withhold ten percent (10%) of the amount realized (as such
term is defined in Section 1001 of the Internal Revenue Code) by Contributor in
connection with the Contribution, unless Operating Partnership shall receive
from Contributor a notice of nonrecognition transfer with respect to the
Contribution by Contributor (in a form to be provided by Operating Partnership).
(c) Indemnification. Contributor hereby agrees to indemnify
and hold harmless the Partnership, the REIT, Operating Partnership and the
General Partner and any of the employees, agents, officers, directors and
affiliated persons of the foregoing from any and all damages, losses, costs and
expenses (including reasonable attorneys' fees) which they, or any of them, may
incur by reason of a failure by Contributor to fulfill any of its obligations
under this Agreement or by reason of the breach by Contributor of any of the
representations and warranties contained herein.
(d) Waiver and Contribution. Contributor understands that (i)
the Units to be issued pursuant to the Consolidation have not been registered
under the Securities Act and (ii) the failure to register such Units could
result in Contributor being granted certain rights
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<PAGE> 9
under the Federal securities laws, including a right to rescind Contributor's
consent to the Consolidation. For the benefit of Operating Partnership, and in
consideration of Operating Partnership's consummating the Consolidation,
Contributor (x) hereby waives any and all rights he or she now has or may
hereafter be granted to rescind his or her consent to the Consolidation on the
basis that the Units issued in connection with the Consolidation were not
registered (the "Waiver") and (y) agrees that if the Waiver is deemed void or
unenforceable for any reason, including, without limitation, under Section 14 of
the Securities Act, the entire beneficial interest in all property and amounts
received by Contributor in any action to rescind the Consolidation (regardless
of whether such action was initiated by Contributor) or otherwise received by
Contributor as damages for failure to register the Units under the Securities
Act, shall be promptly paid over and contributed by Contributor to Operating
Partnership, for no additional consideration from Operating Partnership, other
than the Units originally issued pursuant to the Consolidation.
Whenever the context shall require, all words in the male, female or
neuter gender shall be deemed to include the other genders, all singular words
shall include the plural, and all plural words shall include the singular. All
representations, covenants and agreements of Contributor set forth in this
Agreement shall survive the consummation of the Consolidation contemplated by
the Memorandum.
7. CONDITIONS TO COMPLETION. In addition to the conditions to
completion of the Consolidation set forth in the Memorandum, the obligations of
Operating Partnership to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment (or waiver by Operating Partnership)
at or prior to the Closing of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations,
warranties and covenants made by Contributors in this Agreement or in any
document delivered by any of them pursuant to this Agreement shall be true and
correct in all material respects when made and on and as of the Closing as
though such representations, warranties and covenants were made on and as of
such date.
7.2 CONSENTS. Any and all consents required by the Partnership
Agreement of the Partnership, and any certificates, agreements, contribution and
assumption instruments and other documents necessary or advisable to evidence
the conveyance of the Contributed Interests and the admission of Operating
Partnership (or Designated Subsidiary) into the Partnership by virtue of the
contribution of the Contributed Interests, shall have been obtained.
7.3 NO ORDER OR INJUNCTION. The consummation of the Contributions
shall not have been restrained, enjoined or prohibited by any order or
injunction of any court or governmental authority of competent jurisdiction.
7.4 INSTRUMENTS OF CONVEYANCE. The Contributors shall have delivered
the instruments evidencing conveyance of their interests referred to in Section
8.1.
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<PAGE> 10
8. THE CLOSING.
8.1 CONTRIBUTORS' AND GENERAL PARTNER'S CLOSING DOCUMENTS. At
Closing, each Contributor shall deliver (or cause to be delivered pursuant to
the Power of Attorney referred to in Section 11.9) or the General Partner shall
deliver the following (all of which shall be duly executed and acknowledged
where required):
(a) A written document of conveyance contributing to Operating
Partnership (and/or any Designated Subsidiary) title to Contributor's
Contributed Interests, free and clear of any adverse claim or interest;
(b) Such documents and certificates as Operating Partnership
reasonably may require to establish the authority of the parties executing any
documents in connection with the Contributions including, in the case of any
Contributor that is a corporation, partnership, limited liability company, or
other similar entity (other than a trust or estate), an opinion of counsel,
reasonably satisfactory to the Operating Partnership, as to the due execution
and delivery of such documents;
(c) Such consents and instruments of admission as are
contemplated by Section 7.2 hereof; and
(d) Such other documents, instruments and certificates as
Operating Partnership and the General Partner, as agent for the Contributors,
reasonably agree are necessary or appropriate, including without limitation
recording and transfer forms and affidavits.
8.2 OPERATING PARTNERSHIP'S CLOSING DOCUMENTS. At Closing, Operating
Partnership shall deliver or cause to be delivered to the General Partner, as
agent for the Contributors, the following:
(a) The Units referred to in Section 2(a);
(b) Copies of the executed Partnership Agreement of the
Operating Partnership and the Registration Rights Agreement and Unit Redemption
Agreement referred to in Section 11.09; and
(c) Such other documents and instruments as the General
Partner, as agent for the Contributors, and Operating Partnership agree are
necessary or appropriate, including without limitation recording and transfer
forms and affidavits.
9. TRANSFER TAXES AND CLOSING COSTS.
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<PAGE> 11
(a) The General Partner and Operating Partnership shall join
on the Closing Date in completing, executing, delivering and verifying the
returns, affidavits and other documents required in connection with the
documentary stamps in accordance with the New York State Real Estate Transfer
Tax imposed by Article 31 of the Tax Law, the New York City Real Property
Transfer Tax imposed by Chapter 46 of Title 11 of the Administrative Code of the
City of New York, and any other tax payable by reason of the contribution of the
Contributed Interests (collectively, the "Conveyance Taxes").
(b) The Contributors hereby agree to pay and shall be solely
responsible for the Conveyance Taxes due on the conveyance of the Contributed
Interests including, but not limited to, any Conveyance Taxes imposed due to the
Contributor's failure to satisfy any holding period or continuity requirements
for qualifying for a reduced rate of Conveyance Taxes, including the holding
period requirements with respect to certain transfers to a REIT imposed in
connection with the New York Real Estate Transfer Tax imposed by Article 31 of
the Tax Law and the New York City Real Property Transfer Tax imposed by Chapter
46 of Title 11 of the Administrative Code of the City of New York. Using the
amount distributed to the General Partner pursuant to Section 2(b) hereof, the
General Partner, as agent for the Contributors, shall timely pay to the
appropriate tax collecting agency or official the amount of all Conveyance Taxes
payable by reason of the Contributors' agreement to pay the Conveyance Taxes
(assuming satisfaction of the requirements set forth in the preceding sentence).
The Contributors shall indemnify, defend and hold harmless Operating Partnership
and the Partnership from and against all claims, liabilities, costs and expenses
(including reasonable attorney's fees), incurred by Operating Partnership or the
Partnership by reason of the failure of the Contributors to pay any Conveyance
Taxes assessed or alleged to be due at any time with respect to the transfer of
the Interests to Operating Partnership, including, without limitation, all
interest and penalties thereon.
(c) Operating Partnership shall also pay or provide for the
payment of all other costs associated with the closing of the contributions of
the Contributed Interests pursuant to this Agreement, as described in and
subject to the terms of the Memorandum.
10. OPERATION IN THE ORDINARY COURSE. The General Partner shall use
reasonable efforts to operate the Partnership and the Property in the ordinary
course of business between the date hereof and the closing of the Consolidation,
including making any necessary capital expenditures and leasing expenditures
consistent with past practices to maintain the quality and value of the
Property.
11. GENERAL PROVISIONS.
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. It is the express
intention and agreement of the parties hereto that the representations and
warranties of the parties set forth in this Agreement shall survive the
consummation of the Contributions and the Closing.
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<PAGE> 12
11.2 NOTICES. All notices, demands, requests or other communications
that may be or are required to be given or made by any party to the other
parties pursuant to this Agreement shall be in writing and shall be hand
delivered or transmitted by certified mail, express overnight mail or delivery
service, telegram, telex or facsimile transmission to the parties at the
addresses specified in Exhibit A or such other address as the addressee may
indicate by written notice to the other party.
Each notice, demand, request or communication that is given or made
in the manner described above shall be deemed sufficiently given or made for all
purposes at such time as it is delivered to the addressee (with the delivery
receipt, the affidavit of messenger or (with respect to a telex) the answer back
being deemed conclusive but not exclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
11.3 GOVERNING LAW. This Agreement, the rights and obligations of
the parties hereto and any claims or disputes relating to such rights and
obligations shall be governed by and construed under the laws of the State of
New York.
11.4 HEADINGS. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
11.5 BENEFIT AND ASSIGNMENT. No Contributor shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Operating Partnership. Any purported
assignment contrary to the terms hereof shall be null, void and of no force and
effect.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns as permitted
hereunder. No person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
The Operating Partnership may designate one or more Designated
Subsidiaries to acquire all or any part of the Contributed Interests (in which
case the Designated Subsidiary shall execute a certificate at closing making the
same representations and warranties as are made by Operating Partnership and
references to Operating Partnership shall include the Designated Subsidiaries
except where the context clearly indicates otherwise).
11.6 SEVERABILITY. If any part of any provision of this Agreement or
any other agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such
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<PAGE> 13
invalidity or unenforceability only, without in any way affecting the remaining
parts of such provisions or the remaining provisions of said agreement so long
as the economic and legal substance of the Contributions is not affected in any
manner materially adverse to either party.
11.7 ENTIRE AGREEMENT; AMENDMENT. The Schedules and the Exhibits
attached hereto are hereby incorporated into the Agreement as if fully set forth
herein. This Agreement, and the Schedules and Exhibits attached hereto, together
with the Memorandum, contain the final and entire agreement between the parties
hereto with respect to the Contributions, supersede all prior oral and written
memoranda and agreements with respect to the matters contemplated herein, and
are intended to be an integration of all prior negotiations and understandings.
Contributors and Operating Partnership shall not be bound by any terms,
conditions, statements, warranties or representations, oral or written, not
contained or referred to herein or therein. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto.
11.8 NO WAIVER. No delay or failure on the part of any party hereto
in exercising any right, power or privilege under this Agreement or under any
other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial exercise
of any such right, power or privilege shall preclude the further exercise of
such right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent expressly specified
therein.
11.9 CONSENT AND POWER OF ATTORNEY. The General Partner hereby
consents to the contribution of the Contributed Interests pursuant hereto by
each of the Contributors. Each Contributor is executing a Partner Consent
pursuant to which such Contributor (a) is executing this Agreement and (b) is
consenting to each matter set forth therein. In addition, by executing this
Agreement pursuant to the Consent, each Contributor is constituting and
appointing each of David R. Greenbaum, John J. Silberstein and Christopher G.
Bonk, individually, with full power of substitution, the true and lawful
attorney-in-fact (the "Attorney") of such Contributor, with full power and
authority in the name of and for and on behalf of such Contributor, to execute
an instrument of conveyance contributing his, her or its Contributed Interests
to Operating Partnership pursuant to the Consolidation on the terms set forth in
the Memorandum, to execute the Partnership Agreement of Operating Partnership
and the Registration Rights Agreement and a Unit Redemption Agreement (if the
Contributor elects to redeem its Units for cash immediately after the Closing)
and to execute any instruments required to be filed in connection with the
Conveyance Taxes, and to execute any other instruments that the General Partner
reasonably determines necessary or appropriate in connection with the
contribution of the Contributed Interests pursuant to this Agreement and the
consummation of the Consolidation, including, without limitation, to consummate
the transactions which are the subject matter of the Major Partner Agreement.
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<PAGE> 14
Each Contributor shall promptly notify the General Partner if any of
the representations and warranties by that partner were not true and correct
when made or become untrue at any time prior to the Closing.
IN WITNESS WHEREOF, each of the Contributors has executed a separate
Partner Consent agreeing to be bound by the terms of this Agreement and each of
Operating Partnership, and the General Partner has caused this Agreement to be
duly executed and delivered on its or his behalf as of the date first above
written.
THE MENDIK COMPANY, L.P.
By: The Mendik Company, Inc., general partner
By: /s/ David R. Greenbaum
--------------------------------------------
Name: David R. Greenbaum
Title: President
/s/ Bernard H. Mendik
--------------------------------------------
Bernard H. Mendik
[ADDITIONAL SIGNATURES OMITTED]
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Two Penn Plaza Associates
Exhibit A
List of Partners
Number of
Units
---------
Penby Associates 9,674
c/o Richard Vespa
Goldschmidt & Goldschmidt
641 Lexington Avenue
New York, NY 10022-4503
Knatten, Inc.
c/o Weissbarth, Altman & Michaelson 7,742
156 West 56th Street
New York, NY 10022
Bernard H. Mendik 1,868
330 Madison Avenue
New York, NY 10017
Mendik Realty Company, Inc.
330 Madison Avenue
New York, NY 10017 29,095
------
48,379
------
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<PAGE> 1
EXHIBIT 2.8
CONTRIBUTION AGREEMENT
(TRANSFER OF 99% OF REIT MANAGEMENT ASSETS FROM MENDIK/FW LLC
TO THE OPERATING PARTNERSHIP)
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and entered
into as of April 15, 1997, by and between FW/Mendik REIT, L.L.C., a Delaware
limited liability company ("Contributor"), and The Mendik Company, L.P., a
Delaware limited partnership (the "Operating Partnership").
WHEREAS, Contributor desires to contribute to the Operating
Partnership an undivided ninety-nine percent (99%) interest in all of
Contributor's rights and obligations under the property management contracts
listed on Schedule 1 hereto (which rights were acquired by Contributor
indirectly from Mendik Realty Company, Inc., a New York corporation ("Mendik
Realty"), and which rights are exclusive of Mendik Realty's right to receive
management fees and leasing commissions that are earned as of the date hereof
but not yet paid) (the "REIT Management Assets"), in exchange for an interest in
the Operating Partnership, and the Operating Partnership desires to accept such
contribution and issue such interest to Contributor;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
1. Contribution of REIT Management Assets . Contributor hereby
contributes to the Operating Partnership, without recourse or warranty, an
undivided ninety-nine percent (99%) interest in all of Contributor's right,
title and interest in and to the REIT Management Assets (the "Contribution").
The Operating Partnership hereby accepts from Contributor the Contribution and
assumes all obligations of Contributor with respect to the REIT Management
Assets from and after the date hereof.
2. Consideration. In consideration for the REIT Management Assets,
the Operating Partnership hereby issues to Contributor a limited partner
interest in the Operating Partnership, as described in that certain Master
Consolidation Agreement dated as of March 12, 1997 among Contributor, the
Operating Partnership and certain other parties thereto.
3. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
<PAGE> 2
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered on its behalf as of the date first
above written.
FW/MENDIK REIT, L.L.C.
By: Mendik Holdings LLC
By: Mendik Holdings, Inc., Member
By: /s/ David R. Greenbaum
----------------------------
David R. Greenbaum
President
THE MENDIK COMPANY, L.P.
By: The Mendik Company, Inc., General Partner
By: /s/ David R. Greenbaum
-------------------------------------
David R. Greenbaum
President
<PAGE> 3
Schedule 1 to
Contribution Agreement
(Transfer of REIT Management Assets)
866 U.N. PLAZA
Management Agreement between 866 U.N. Plaza Associates and Mendik Realty
Company, Inc., dated as of June 1, 1978.
1740 BROADWAY
Management Agreement between 1740 Broadway Associates L.P. and Mendik
Realty Company, Inc., dated as of December 17, 1990.
TWO PENN PLAZA
Management Agreement between Two Penn Plaza Associates and Mendik Realty
Company, Inc., dated as of January 1, 1979.
11 PENN PLAZA
Real Estate Management Agreement between 393 Seventh Associates (now known as
Eleven Penn Plaza Company) and Mendik Realty Company, Inc., dated as of January
1, 1982, as amended by First Amendment to Real Estate Management Agreement ,
dated as of September 30, 1994.
<PAGE> 1
EXHIBIT 2.9
ASSIGNMENT AND ASSUMPTION AGREEMENT
(Transfer of 1% Interest in REIT Management Assets and Third-Party Management
Assets from Mendik/FW LLC to Management Corporation)
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made and
entered into as of April 15, 1997, by and between FW/Mendik REIT, L.L.C., a
Delaware limited liability company ("Assignor"), and Mendik Management Company
Inc., a New York corporation (the "Management Corporation" or "Assignee").
WHEREAS, pursuant to Contribution Agreements dated as of the date
hereof by and between Mendik Holdings LLC and Assignor, Assignor has acquired
the rights and obligations with respect to the REIT Management Assets (as
defined below) and the Third-Party Management Assets (as defined below); and
WHEREAS, Assignor desires to sell, transfer and convey to Assignee, and
Assignee desires to acquire from Assignor, all of Assignor's right and interest
in and to a one percent (1%) undivided interest in the REIT Management Assets
and to the Third-Party Management Assets, in return for the consideration
described herein;
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
1. Assignment and Assumption. Assignor hereby sells, transfers and
conveys to Assignee, its successors and its assigns, without recourse or
warranty, (i) the rights of Assignor under the property management contracts
listed on Schedule 1A hereto (the "Management Agreements") (which rights were
acquired by Acquiror indirectly from Mendik Realty Company, Inc., a New York
corporation ("Mendik Realty"), and Mendik Managing Agent Company, Inc., a New
York corporation ("Mendik Management"), and which rights are exclusive of the
right of Mendik Realty or Mendik Management, as applicable, to receive
management fees and leasing commissions under the Management Agreements that
are earned as of the date hereof but not yet paid), (ii) the rights to receive
income earned from and after the date hereof under the agreements listed on
Schedule 1B hereto and all successors thereto (which rights are exclusive of
the right of Mendik Realty or Mendik Management, as applicable, to receive
management fees and leasing commissions under such agreements that are earned
as of the date hereof but not yet paid) (the "Beneficial Interests"), (iii) on
an "as is" basis, the furniture furnishings, fixtures, machinery, equipment and
other tangible personal property, and replacements thereof, set forth on
Schedule 2 hereto (the "Property Assets" and, together with the Management
Contracts and the Beneficial Interests, the "Third-Party Management Assets")
and (iv) an undivided one percent (1%) interest in the rights of Assignor under
the property management contracts listed on Schedule 3 hereto (the "REIT
Management Assets"). Assignee hereby accepts and assumes from and after the
date hereof the obligations of Assignor with respect to the Third-Party
Management Assets and, to the
<PAGE> 2
extent of its interest in the REIT Management Assets, the obligations of
Assignor with respect to the REIT Management Assets.
2. CONSIDERATION. In consideration for an undivided 1% interests in
the REIT Management Assets and the Third-Party Management Assets, the
Management Corporation hereby issues to Assignor (i) 74 shares of voting Class
A common stock, par value $.01 per share, of the Management Corporation (the
"Voting Stock"), which, together with the one share of Voting Stock previously
issued to Bernard H. Mendik, represents 100% of the voting capital stock of
the Management Corporation, (ii) 1,425 shares of nonvoting Class B common
stock, par value $.01 per share, of the Management Corporation (the "Nonvoting
Stock"), and (iii) a promissory note in the amount of SIX MILLION DOLLARS
($6,000,000) (the "Note"). Concurrently with the execution and delivery of this
Agreement, Assignee is delivering to Assignor stock certificates representing
the Voting Stock and the Nonvoting Stock, and is executing and delivering to
Assignor the Note in the form attached hereto as EXHIBIT A. Assignee represents
and warrants that the Voting Shares and Nonvoting Shares are validly issued,
fully paid and non-assessable.
3. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
2
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered on its behalf as of the date first
above written.
FW/MENDIK REIT, L.L.C.
By: Mendik Holdings LLC
By: Mendik Holdings, Inc., Member
By: /s/ DAVID R. GREENBAUM
-----------------------
David R. Greenbaum
President
MENDIK MANAGEMENT COMPANY INC.
By: /s/ DAVID R. GREENBAUM
-------------------------------
David R. Greenbaum
President
<PAGE> 4
EXHIBIT A
PROMISSORY NOTE
$6,000,000 , 1997
FOR VALUE RECEIVED, MENDIK MANAGEMENT COMPANY, INC., a New York
corporation (the "Maker"), promises to pay to the order of FW/MENDIK REIT,
L.L.C., a Delaware limited liability company, its successors and assigns (the
"Holder"), at such place as the Holder of this Note may from time to time
designate, the principal amount of SIX MILLION DOLLARS ($6,000,000), together
with interest on the unpaid principal amount hereof from the date hereof, until
paid in full at a fixed rate of twelve (12%) per annum. An initial payment of
accrued interest in the amount of $ shall be due and payable on ,
1997, and thereafter accrued interest shall be due and payable in equal monthly
payments of $60,000 on the last day of each month, beginning on , 1997.
The entire unpaid principal balance of this Note, together with all accrued and
unpaid interest thereon, shall be due and payable in full on , 2007.
All payments hereunder shall be made in lawful money of the United States of
America.
This Note may be prepaid in whole or in part at any time or times without
premium or penalty. Each payment hereunder (including any prepayments) shall be
applied first to the payment of all interest and other amounts accrued
hereunder, and the balance of any such prepayment shall be applied to the
principal amount hereof. No prepayment shall entitle any person to be
subrogated to the rights of the Holder unless and until this Note has been paid
in full.
This Note serves as partial consideration in exchange for the business and
assets sold by the Holder to the Maker as purchaser, as set forth in the
Assignment and Assumption Agreement dated as of the date hereof among the
Maker, the Holder and certain other parties.
It shall be an event of default ("Event of Default") hereunder if Maker
shall fail to pay, when due, the principal, any interest, or any other sum
payable hereunder, and continuance of such failure for ten (10) business days
after the date on which such principal, interest or other sum is due (whether
upon maturity hereof, upon any installment payment date, upon any prepayment
date, upon acceleration, or otherwise).
Upon the occurrence of such Event of Default, the entire principal amount
hereof, and all accrued and unpaid interest thereon, and any other amounts due
hereunder or under the Agreement, shall be accelerated, and shall be
immediately due and payable, at the option of the Holder, without demand or
notice, and in addition thereto, and not in substitution therefor, the Holder
shall be entitled to exercise any one or more of the rights and remedies
provided by applicable law. Failure to exercise said option or to pursue such
other rights and remedies shall
<PAGE> 5
not constitute a waiver of such option or such other rights or
remedies or of the right to exercise any of the same in the event of
any subsequent Event of Default.
The Maker promises to pay all reasonable costs and expenses
(including without limitation reasonable attorneys' fees and
disbursements) incurred in connection with the collection hereof or
in the protection or realization of any collateral hereafter given as
security for the repayment hereof, and to perform each and every
covenant or agreement to be performed by the Maker under this Note,
the Agreement, and any other instrument evidencing or securing the
obligation represented by this Note.
Any payment on this Note coming due on a Saturday, a Sunday, or
a day which is a legal holiday in the place at which a payment is to
be made hereunder shall be made on the next succeeding day which is a
business day in such place, and any such extension of the time of
payment shall be included in the computation of interest hereunder.
Each Obligor (which term shall include the Maker and all makers,
sureties, guarantors, endorsers, and other persons assuming
obligations pursuant to this Note) under this Note hereby waives
presentment, protest, demand, notice of dishonor, and all other
notices, and all defenses and pleas on the grounds of any extension
or extensions of the time of payments or the due dates of this Note,
in whole or in part, before or after maturity, with or without
notice. No renewal or extension of this Note, no release or surrender
of any collateral given as security for this Note, no release of any
Obligor, and no delay in enforcement of this Note or in exercising
any right or power hereunder, shall affect the liability of any
Obligor. The pleading of any statute of limitations as a defense to
any demand against any Obligor is expressly waived.
No single or partial exercise by the Holder of any right
hereunder, under the Agreement, or under any other agreement given as
security for this Note or pertaining hereto, shall preclude any other
or further exercise thereof or the exercise of any other rights. No
delay or omission on the part of the Holder in exercising any right
hereunder shall operate as a waiver of such right or of any other
right under this Note.
This Note and all agreements between the Maker and the Holder
relating hereto are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration or
otherwise, shall the amount paid or agreed to be paid to the Holder
for the use, forbearance or detention of money hereunder exceed the
maximum amount permissible under applicable law. If from any
circumstance whatsoever fulfillment of any provision hereof, at the
time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso
facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstance the Holder
shall ever receive interest, or anything which might be deemed
interest under applicable law, which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied
to the reduction of the principal amount owing on account of this
Note and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of this Note, such
excess shall be refunded to the Maker. The terms and provisions of
this paragraph shall control and supersede every other provision of
this Note and all other agreements between the Maker and the Holder.
<PAGE> 6
Whenever used herein, the words "Maker" and "Holder"and "Obligor" shall
be deemed to include their respective successors and assigns.
This Note shall be governed by and construed under and in accordance
with the laws of the State of New York (but not including the choice of law
rules thereof).
IN WITNESS WHEREOF, the undersigned have duly executed this Note, or
have caused this Note to be duly executed on their behalf, as of the day and
year first hereinabove set forth.
[SEAL] MENDIK MANAGEMENT COMPANY, INC.
ATTEST:
By:
- ---------------------------------- ------------------------------------
David R. Greenbaum
President
<PAGE> 7
Schedule 1A to
Contribution Agreement
(Transfer of Third-Party Management Assets)
570 LEXINGTON AVENUE
Real Estate Management and Leasing Agreement between 570 Lexington Company, L.P.
and Mendik Realty Company, Inc., dated as of October 31, 1994.
550 AND 600 MAMARONECK AVENUE
Real Estate Management Agreement between Mendik Real Estate Limited Partnership
and Mendik Realty Company, Inc., dated as of September 4, 1986.
330-348 WEST 34TH STREET
Real Estate Management Agreement between Mendik Real Estate Limited Partnership
and Mendik Realty Company, Inc., dated as of April 23, 1987.
20 BROAD STREET
Management Agreement between 20 Broad Street Company and Mendik Realty Company,
Inc., dated as of January __, 1984.
2 PARK AVENUE
Management Agreement between Two Park Company and Mendik Realty Company Inc.,
dated as of December 22, 1986.
WESTPORT OFFICE PARK
Right to receive fees for providing management services to Westport Office Park.
330 MADISON AVENUE
Management Agreement dated as of January 1, 1997 between 330 Madison Company and
Mendik Realty Company, Inc.
<PAGE> 8
Schedule 1B to
Contribution Agreement
(Transfer of Third-Party Management Assets)
SILVERSTEIN/MENDIK PROPERTIES
Silverstein & Mendik Company Restated Partnership Agreement, dated as of
February 15, 1997 between Silverstein Properties, Inc. and Mendik Realty
Company, Inc.
909 THIRD AVENUE
Real Estate Management Agreement between 909 Third Company and Mendik Realty
Company, Inc., dated as of June 6, 1983.
100 CHURCH STREET
Real Estate Management Agreement between 100 Church Company and Mendik Realty
Company, Inc., dated as of October 15, 1985.
<PAGE> 9
Schedule 2 to
Contribution Agreement
(Transfer of Third-Party Management Assets)
[OMITTED]
<PAGE> 10
Schedule 3 to
Contribution Agreement
(Transfer of REIT Management Assets)
866 U.N. PLAZA
Management Agreement between 866 U.N. Plaza Associates and Mendik Realty
Company, Inc., dated as of June 1, 1978.
1740 BROADWAY
Management Agreement between 1740 Broadway Associates L.P. and Mendik Realty
Company, Inc., dated as of December 17, 1990.
TWO PENN PLAZA
Management Agreement between Two Penn Plaza Associates and Mendik Realty
Company, Inc., dated as of January 1, 1979.
11 PENN PLAZA
Real Estate Management Agreement between 393 Seventh Associates (now known as
Eleven Penn Plaza Company) and Mendik Realty Company, Inc., dated as of January
1, 1982, as amended by First Amendment to Real Estate Management Agreement ,
dated as of September 30, 1994.
<PAGE> 1
EXHIBIT 4.1
-----------------------------------------
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
VORNADO REALTY L.P.
-----------------------------------------
Dated as of: April 15, 1997
-----------------------------------------
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE PARTNERSHIP INTERESTS
BEING OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO
PARTNERSHIP INTEREST MAY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND
UNLESS THE OTHER TRANSFER RESTRICTIONS CONTAINED HEREIN HAVE BEEN SATISFIED.
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
DEFINED TERMS
<S> <C>
Act...............................................................................................................1
Additional Limited Partner........................................................................................1
Adjusted Capital Account..........................................................................................2
Adjusted Capital Account Deficit..................................................................................2
Adjusted Property.................................................................................................2
Adjustment Date...................................................................................................2
Affiliate.........................................................................................................2
Affiliated Transferee.............................................................................................2
Agreed Value......................................................................................................2
Agreement.........................................................................................................2
Assignee..........................................................................................................2
Bankruptcy........................................................................................................3
Book-Tax Disparities..............................................................................................3
Business Day......................................................................................................3
Capital Account...................................................................................................3
Capital Contribution..............................................................................................3
Carrying Value....................................................................................................3
Cash Amount.......................................................................................................3
Certificate.......................................................................................................3
Charter Documents.................................................................................................4
Class A Unit......................................................................................................4
Class B Unit......................................................................................................4
Class C Accumulated Amount........................................................................................4
Class C Preferential Distribution.................................................................................4
Class C Unit......................................................................................................4
Class D/E Accumulated Amount......................................................................................4
Class D/E Preferential Distribution...............................................................................4
Class D Unit......................................................................................................4
Class E Unit......................................................................................................4
Code..............................................................................................................4
Common Partnership Unit...........................................................................................4
Consent...........................................................................................................4
Consent of Certain Limited Partners...............................................................................4
Consent of the Outside Limited Partners...........................................................................5
Consolidation.....................................................................................................5
Consolidation Transaction.........................................................................................5
Contributed Property..............................................................................................5
Conversion Factor.................................................................................................5
Convertible Funding Debt..........................................................................................6
Debt..............................................................................................................6
Declaration of Trust..............................................................................................6
Deemed Partnership Interest Value.................................................................................6
Deemed Value of the Partnership Interest..........................................................................6
Depreciation......................................................................................................6
866 U.N. Plaza Associates.........................................................................................7
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
866 U.N. Plaza Property...........................................................................................7
866 U.N. Plaza Units..............................................................................................7
Effective Date....................................................................................................7
Eleven Penn Partnerships..........................................................................................7
Eleven Penn Plaza Property........................................................................................7
Eleven Penn Plaza Units...........................................................................................7
Equity Merger.....................................................................................................7
ERISA.............................................................................................................7
Exchange Act......................................................................................................7
Exchanged Property................................................................................................7
Funding Debt......................................................................................................7
Funds From Operations.............................................................................................7
FW/Mendik LLC.....................................................................................................7
General Partner...................................................................................................7
General Partner Entity............................................................................................7
General Partner Payment...........................................................................................8
General Partnership Interest......................................................................................8
Immediate Family..................................................................................................8
Incapacity........................................................................................................8
Incapacitated.....................................................................................................8
Indemnitee........................................................................................................8
IRS...............................................................................................................8
Limited Partner...................................................................................................8
Limited Partnership Interest......................................................................................8
Liquidating Event.................................................................................................8
Liquidating Transaction...........................................................................................8
Liquidator........................................................................................................9
Majority in Interest..............................................................................................9
Mendik Owner......................................................................................................9
Net Income........................................................................................................9
Net Loss..........................................................................................................9
New Securities....................................................................................................9
Non-Class D/E Units...............................................................................................9
Nonrecourse Built-in Gain.........................................................................................9
Nonrecourse Deductions............................................................................................9
Nonrecourse Liability.............................................................................................9
Notice of Redemption..............................................................................................9
Partner...........................................................................................................9
Partner Minimum Gain.............................................................................................10
Partner Nonrecourse Debt.........................................................................................10
Partner Nonrecourse Deductions...................................................................................10
Partnership......................................................................................................10
Partnership Interest.............................................................................................10
Partnership Minimum Gain.........................................................................................10
Partnership Record Date..........................................................................................10
Partnership Unit.................................................................................................10
Partnership Year.................................................................................................10
Percentage Interest..............................................................................................10
Person...........................................................................................................11
Predecessor Entity...............................................................................................11
Preference Units.................................................................................................11
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Publicly Traded..................................................................................................11
Qualified REIT Subsidiary........................................................................................11
Recapture Income.................................................................................................11
Redeeming Partner................................................................................................11
Redemption Amount................................................................................................11
Redemption Right.................................................................................................11
Regulations......................................................................................................11
REIT.............................................................................................................11
REIT Expenses....................................................................................................11
REIT Requirements................................................................................................12
Replacement Property.............................................................................................12
Residual Gain....................................................................................................12
Residual Loss....................................................................................................12
Restricted Partner...............................................................................................12
Safe Harbors.....................................................................................................12
Securities Act...................................................................................................12
704(c) Value.....................................................................................................12
Share............................................................................................................12
Shares Amount....................................................................................................12
Specified Redemption Date........................................................................................13
Stock Option Plan................................................................................................13
Subsidiary.......................................................................................................13
Substituted Limited Partner......................................................................................13
Successor Entity.................................................................................................13
Successor Partnership............................................................................................13
Tenant...........................................................................................................13
Terminating Capital Transaction..................................................................................13
Termination Transaction..........................................................................................13
Title 8..........................................................................................................13
Transferred Property.............................................................................................13
Two Penn Plaza Associates........................................................................................13
Two Penn Plaza Property..........................................................................................13
Two Penn Plaza Units.............................................................................................13
Unrealized Gain..................................................................................................13
Unrealized Loss..................................................................................................14
Valuation Date...................................................................................................14
Value............................................................................................................14
Vornado Sub......................................................................................................14
</TABLE>
<TABLE>
<CAPTION>
ARTICLE II
ORGANIZATIONAL MATTERS
<S> <C>
Section 2.1 Organization...................................................................................14
Section 2.2 Name...........................................................................................15
Section 2.3 Registered Office and Agent; Principal Office..................................................15
Section 2.4 Term...........................................................................................15
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business...........................................................................15
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
Section 3.2 Powers.........................................................................................16
Section 3.3 Partnership Only for Purposes Specified........................................................16
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 Capital Contributions of the Partners..........................................................16
Section 4.2 Issuances of Partnership Interests.............................................................17
Section 4.3 No Preemptive Rights...........................................................................20
Section 4.4 Other Contribution Provisions..................................................................20
Section 4.5 No Interest on Capital.........................................................................20
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions..............................................20
Section 5.2 Amounts Withheld...............................................................................23
Section 5.3 Distributions Upon Liquidation.................................................................23
Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests..............................23
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes.......................................................23
Section 6.2 Revisions to Allocations to Reflect Issuance of Additional Partnership Interests...............25
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management.....................................................................................26
Section 7.2 Certificate of Limited Partnership.............................................................29
Section 7.3 Title to Partnership Assets....................................................................29
Section 7.4 Reimbursement of the General Partner...........................................................30
Section 7.5 Outside Activities of the General Partner......................................................31
Section 7.6 Transactions with Affiliates...................................................................33
Section 7.7 Indemnification................................................................................33
Section 7.8 Liability of the General Partner...............................................................35
Section 7.9 Other Matters Concerning the General Partner...................................................34
Section 7.10 Reliance by Third Parties......................................................................36
Section 7.11 Restrictions on General Partner's Authority....................................................36
Section 7.12 Loans by Third Parties.........................................................................44
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability........................................................................44
Section 8.2 Management of Business.........................................................................44
Section 8.3 Outside Activities of Limited Partners.........................................................45
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
Section 8.4 Return of Capital..............................................................................45
Section 8.5 Rights of Limited Partners Relating to the Partnership.........................................45
Section 8.6 Redemption Right...............................................................................46
Section 8.7 Right of Offset................................................................................49
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.........................................................................50
Section 9.2 Fiscal Year....................................................................................50
Section 9.3 Reports........................................................................................50
ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns.....................................................................51
Section 10.2 Tax Elections..................................................................................51
Section 10.3 Tax Matters Partner............................................................................51
Section 10.4 Organizational Expenses........................................................................52
Section 10.5 Withholding....................................................................................52
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.......................................................................................53
Section 11.2 Transfers of Partnership Interests of General Partner..........................................53
Section 11.3 Limited Partners' Rights to Transfer...........................................................54
Section 11.4 Substituted Limited Partners...................................................................55
Section 11.5 Assignees......................................................................................56
Section 11.6 General Provisions.............................................................................56
Section 11.7 Payment of Incremental Tax.....................................................................57
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner.........................................................58
Section 12.2 Admission of Additional Limited Partners.......................................................58
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership..................................58
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution....................................................................................59
Section 13.2 Winding Up.....................................................................................59
Section 13.3 Compliance with Timing Requirements of Regulations.............................................60
Section 13.4 Deemed Distribution and Recontribution.........................................................61
Section 13.5 Rights of Limited Partners.....................................................................61
Section 13.6 Notice of Dissolution..........................................................................61
Section 13.7 Cancellation of Certificate of Limited Partnership............................................61
Section 13.8 Reasonable Time for Winding Up.................................................................61
Section 13.9 Waiver of Partition............................................................................61
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
Section 13.10 Liability of Liquidator........................................................................62
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments.....................................................................................62
Section 14.2 Meetings of the Partners.......................................................................63
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice...........................................................................64
Section 15.2 Titles and Captions............................................................................64
Section 15.3 Pronouns and Plurals...........................................................................64
Section 15.4 Further Action.................................................................................64
Section 15.5 Binding Effect.................................................................................64
Section 15.7 Waiver.........................................................................................65
Section 15.8 Counterparts...................................................................................65
Section 15.9 Applicable Law.................................................................................65
Section 15.10 Invalidity of Provisions.......................................................................65
Section 15.11 Power of Attorney..............................................................................65
Section 15.12 Entire Agreement...............................................................................66
Section 15.13 No Rights as Shareholders......................................................................66
</TABLE>
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<PAGE> 8
EXHIBIT A
PARTNERS AND
PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
EXHIBIT E
VALUE OF CONTRIBUTED PROPERTY
EXHIBIT F
RESTRICTED PARTNERS
EXHIBIT G
DESIGNATION OF THE PREFERENCES, CONVERSION
AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,
LIMITATIONS AS TO DISTRIBUTIONS, QUALIFICATIONS AND TERMS
AND CONDITIONS OF REDEMPTION
OF THE
SERIES A PREFERRED UNITS
EXHIBIT H
EXCLUDED UNITS
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<PAGE> 9
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
VORNADO REALTY L.P.
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
Vornado Realty L.P., dated as of April 15, 1997, is entered into by and among
Vornado Realty Trust, a Maryland real estate investment trust as the General
Partner of and a Limited Partner in the Partnership, FW/Mendik REIT, L.L.C., a
Delaware limited liability company, as a Limited Partner in the Partnership, and
The Mendik Company, Inc., a Maryland corporation, as a Limited Partner in the
Partnership, together with any other Persons who become Partners in the
Partnership as provided herein.
WHEREAS, the Partnership was formed under the name "Mendik Real Estate
Group, L.P." on October 2, 1996, and, on October 2, 1996, the Partnership
adopted an Agreement of Limited Partnership (the "Prior Agreement");
WHEREAS, on November 7, 1996, the general partner of the Partnership
changed the Partnership's name to "The Mendik Company, L.P." and, in connection
therewith, caused a certificate of Amendment to the Certificate of Limited
Partnership of the Partnership to be filed in the office of the Delaware
Secretary of State on November 8, 1996;
WHEREAS, FW/Mendik REIT, L.L.C. and The Mendik Company, Inc., the
partners of the Partnership under the Prior Agreement, have immediately prior to
the Effective Date recapitalized the Partnership;
WHEREAS, the Partnership proposes to acquire certain property and, in
connection therewith, to admit Vornado Realty Trust as an Additional Limited
Partner in the Partnership and immediately thereafter to convert the General
Partnership Interest held by The Mendik Company, Inc. to a Limited Partnership
Interest in the Partnership; and
WHEREAS, in connection with the foregoing transactions the parties
hereto have agreed to amend and restate the Prior Agreement on the terms set
forth below;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
and restate the Prior Agreement in its entirety and agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 12.2 hereof and who is shown as such on
the books and records of the Partnership.
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"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B hereto.
"Adjustment Date" has the meaning set forth in Section 4.2.B hereof.
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Affiliated Transferee" means, with respect to any Limited Partner, a
member of such Limited Partner's Immediate Family, a trust formed solely for the
benefit of such Limited Partner and/or members of such Limited Partner's
Immediate Family, or any partnership, limited liability company, joint venture,
corporation or other business entity all of the interests in which are, and
remain, directly or indirectly owned and controlled solely by such Limited
Partner and/or members of such Limited Partner's Immediate Family, and if the
Limited Partner is an entity and owned Partnership Units on the Effective Date,
Persons who, as of the Effective Date, directly or indirectly owned interests in
or were beneficiaries of such Limited Partner and continue to own such interests
(or be beneficiaries) at the time of the proposed transfers or any Affiliated
Transferee of such Persons.
"Agreed Value" means (i) in the case of any Contributed Property
contributed to the Partnership as part of or in connection with the
Consolidation, the amount set forth on Exhibit E attached hereto as the Agreed
Value of such Property; (ii) in the case of any other Contributed Property, the
704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such property is subject when contributed; and
(iii) in the case of any property distributed to a Partner by the Partnership,
the Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the regulations
thereunder.
"Agreement" means this First Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5 hereof.
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<PAGE> 11
"Bankruptcy" with respect to any Person shall be deemed to have
occurred when (a) the Person commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (b) the Person is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Person, (c) the Person executes and delivers a general
assignment for the benefit of the Person's creditors, (d) the Person files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Person in any proceeding of the
nature described in clause (b) above, (e) the Person seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Person or for all or any substantial part of the Person's properties, (f) any
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred twenty (120) days after the commencement
thereof, (g) the appointment without the Person's consent or acquiescence of a
trustee, receiver of liquidator has not been vacated or stayed within ninety
(90) days of such appointment or (h) an appointment referred to in clause (g) is
not vacated within ninety (90) days after the expiration of any such stay.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B hereto and the hypothetical balance of such Partner's Capital
Account computed as if it had been maintained, with respect to each such
Contributed Property or Adjusted Property, strictly in accordance with federal
income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereto.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 or 4.2 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and (ii)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereto, and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount, subject to Section 8.6.A(iv).
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed in the office of the Delaware Secretary of State on October 2,
1996, as amended by a Certificate of Amendment filed in Delaware on November 8,
1996, and as further amended from time to time in accordance with the terms
hereof and the Act.
"Charter Documents" has the meaning set forth in Section 7.11.D hereof.
"Class A Unit" means any Partnership Unit that is not specifically
designated by the General Partner as being of another specified class of
Partnership Units.
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<PAGE> 12
"Class B Unit" means a Partnership Unit that is specifically designated
by the General Partner as being a Class B Unit.
"Class C Accumulated Amount" has the meaning set forth in Section
4.2.D(i).
"Class C Preferential Distribution" has the meaning set forth in
Section 5.1.B.
"Class C Unit" means any Partnership Unit that is specifically
designated by the General Partner as being a Class C Unit.
"Class D/E Accumulated Amount" has the meaning set forth in Section
4.2.D(ii).
"Class D/E Preferential Distribution" has the meaning set forth in
Section 5.1.B.
"Class D Unit" means a Partnership Unit that is specifically designated
by the General Partner as being a Class D Unit.
"Class E Unit" means any Partnership Unit that is specifically
designated by the General Partner as being a Class E Unit.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Common Partnership Unit" means any Class A, Class B, Class C, Class D
and Class E Unit and any other Partnership Unit that is not a Preference Unit.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Consent of Certain Limited Partners" means Consent of the holders of
75% in the aggregate of the Two Penn Plaza Units, the Eleven Penn Plaza Units,
and the 866 U.N. Plaza Units, collectively considered as one group, provided
that:
(A) if:
(i) there has been a prior transaction involving the Two Penn
Plaza Property, the Eleven Penn Plaza Property, or the 866 U.N. Plaza
Property, as the case may be, that has been approved by the holders of
the Two Penn Plaza Units, the Eleven Penn Plaza Units, or the 866 U.N.
Plaza Units, as the case may be, pursuant to Section 7.11.C(1),
7.11.C(2) or 7.11.C(3), as applicable, and
(ii) no holder of Two Penn Plaza Units, Eleven Penn Plaza
Units, or 866 U.N. Plaza Units, as applicable with respect to a
transaction involving Two Penn Plaza, Eleven Penn Plaza or 866 U.N.
Plaza, respectively, would recognize gain for federal income tax
purposes with respect to (but only with respect to) such Partnership
Units in excess of $1.00 as a result of the sale or other disposition
of all such Partnership Units for $1.00 (that is, no Limited Partner
has a "negative capital account" with respect to such Partnership
Units),
then the "Certain Limited Partners" shall not be considered to include
the holders of such Partnership Units; and
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<PAGE> 13
(B) if any holder of Two Penn Plaza Units, Eleven Penn Plaza Units or
866 U.N. Plaza Units, as applicable, has received from the Partnership
the payment described in Section 7.11.C(7) in respect of such
Partnership Units, and the amount of such payment is, at the time that
it is made, equal to the full amount that would be payable under
Section 7.11.C(7) with respect to such Partnership Units if the Two
Penn Plaza Property, the Eleven Penn Plaza Property, or the 866 U.N.
Plaza Property, as applicable, were to have been sold on such date for
its market value, then the "Certain Limited Partners" shall not include
such holder.
"Consent of the Outside Limited Partners" means the Consent of Limited
Partners (excluding for this purpose any Limited Partnership Interests held by
the General Partner, any Person of which the General Partner owns or controls
more than fifty percent (50%) of the voting interests and any Person owning or
controlling, directly or indirectly, more than fifty percent (50%) of the
outstanding voting interests of the General Partner) holding Percentage
Interests regardless of class that are greater than fifty percent (50%) of the
aggregate Percentage Interest of all Limited Partners of all classes taken
together who are not excluded for the purposes hereof.
"Consolidation" means the transactions whereby the Partnership will
acquire all or substantially all of the interests in the assets currently owned
by the General Partner, interests in certain office properties located in
midtown Manhattan, and certain property management businesses that provide
services to those office properties and to other properties in the New York
metropolitan area, in exchange for Partnership Units, all as described in a
Master Consolidation Agreement dated as of March 12, 1997 among the General
Partner, Vornado Sub, the Partnership and the other entities named therein.
"Consolidation Transaction" has the meaning set forth in Section
7.11.C(6) hereof.
"Contributed Property" means each property or other asset contributed
to the Partnership, in such form as may be permitted by the Act, but excluding
cash contributed or deemed contributed to the Partnership. Once the Carrying
Value of a Contributed Property is adjusted pursuant to Exhibit B hereto, such
property shall no longer constitute a Contributed Property for purposes of
Exhibit B hereto, but shall be deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0; provided that in the event that the
General Partner Entity (i) declares (and the applicable record date has passed
or will have passed before a redeeming Partner would receive cash or Common
Shares in respect of the Partnership Units being redeemed) or pays a dividend on
its outstanding Shares in Shares or makes a distribution to all holders of its
outstanding Shares in Shares, (ii) subdivides its outstanding Shares or (iii)
combines its outstanding Shares into a smaller number of Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of Shares issued and outstanding on the
record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time) and the denominator of which shall be
the actual number of Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination; and provided further that in the event that an entity shall cease
to be the General Partner Entity (the "Predecessor Entity") and another entity
shall become the General Partner Entity (the "Successor Entity"), the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which is the Value of one Share of the Predecessor Entity,
determined as of the time immediately prior to when the Successor Entity becomes
the General Partner Entity, and the denominator of which is the Value of one
Share of the Successor Entity, determined as of that same date. (For purposes of
the second proviso in the preceding sentence, in the event that any shareholders
of the Predecessor Entity will receive consideration in connection with the
transaction in which the Successor Entity becomes the General Partner Entity,
the numerator in the fraction described above for determining the adjustment to
the Conversion Factor (that is, the Value of one Share of the Predecessor
Entity) shall be the sum of the greatest amount of cash and the fair market
value of any securities and other consideration that the holder of one Share in
the Predecessor Entity could have received in such transaction (determined
without regard to any provisions governing fractional shares).) Any adjustment
to the
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<PAGE> 14
Conversion Factor shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for the event giving rise
thereto; it being intended that (x) adjustments to the Conversion Factor are to
be made in order to avoid unintended dilution or anti-dilution as a result of
transactions in which Shares are issued, redeemed or exchanged without a
corresponding issuance, redemption or exchange of Partnership Units and (y) if a
Specified Redemption Date shall fall between the record date and the effective
date of any event of the type described above, that the Conversion Factor
applicable to such redemption shall be adjusted to take into account such event.
"Convertible Funding Debt" has the meaning set forth in Section 7.5.F
hereof.
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person, (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof, and (iv) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
"Declaration of Trust" means the Declaration of Trust or other similar
organizational document governing the General Partner, as amended, supplemented
or restated from time to time.
"Deemed Partnership Interest Value" means, as of any date with respect
to any class of Partnership Interests, the Deemed Value of the Partnership
Interest of such class multiplied by the applicable Partner's Percentage
Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any date with
respect to any class of Partnership Interests, (a) if the common shares of
beneficial interest (or other comparable equity interests) of the General
Partner are Publicly Traded (i) the total number of shares of beneficial
interest (or other comparable equity interest) of the General Partner
corresponding to such class of Partnership Interest (as provided for in Section
4.2.B hereof) issued and outstanding as of the close of business on such date
(excluding any treasury shares) multiplied by the Value of a share of such
beneficial interest (or other comparable equity interest) on such date divided
by (ii) the Percentage Interest of the General Partner in such class of
Partnership Interests on such date, and (b) otherwise, the aggregate Value of
such class of Partnership Interests determined as set forth in the fourth and
fifth sentences of the definition of Value.
"Depreciation" means, for each fiscal year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"866 U.N. Plaza Associates" means 866 United Nations Plaza Associates
LLC, a New York limited liability company.
"866 U.N. Plaza Property" has the meaning set forth in Section 7.11.C
hereof.
"866 U.N. Plaza Units" has the meaning set forth in Section 7.11.C
hereof.
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<PAGE> 15
"Effective Date" means the date of the closing of the Consolidation.
"Eleven Penn Partnerships" means M/F Associates, a New York limited
partnership, M/F Eleven Associates, a New York limited partnership, M/S
Associates, a New York limited partnership, and M/S Eleven Associates, a New
York limited partnership.
"Eleven Penn Plaza Property" has the meaning set forth in Section
7.11.C hereof.
"Eleven Penn Plaza Units" has the meaning set forth in Section 7.11.C
hereof.
"Equity Merger" has the meaning set forth in Section 7.11.D hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchanged Property" has the meaning set forth in Section 7.11.C
hereof.
"Funding Debt" means the incurrence of any Debt by or on behalf of the
General Partner for the purpose of providing funds to the Partnership.
"Funds From Operations" shall mean, with respect to any period, the
General Partner's "funds from operations," calculated in a manner consistent
with the calculation of such measure as it is used in the General Partner's
consolidated financial statements appearing in its most recent public filing on
Form 10-K or Form 10-Q (whichever is more recent).
"FW/Mendik LLC" means FW/Mendik REIT, L.L.C., a Delaware limited
liability company.
"General Partner" means Vornado Realty Trust, a Maryland real estate
investment trust, or its successors as general partner of the Partnership.
"General Partner Entity" means the General Partner; provided, however,
that if (i) the common shares of beneficial interest (or other comparable equity
interests) of the General Partner are at any time not Publicly Traded and (ii)
the shares of common stock (or other comparable equity interests) of an entity
that owns, directly or indirectly, fifty percent (50%) or more of the common
shares of beneficial interest (or other comparable equity interests) of the
General Partner are Publicly Traded, the term "General Partner Entity" shall
refer to such entity whose shares of common stock (or other comparable equity
securities) are Publicly Traded. If both requirements set forth in clauses (i)
and (ii) above are not satisfied, then the term "General Partner Entity" shall
mean the General Partner.
"General Partner Payment" has the meaning set forth in Section 15.14
hereof.
"General Partnership Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest. A General Partnership
Interest may be expressed as a number of Partnership Units.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parents, descendants, nephews, nieces, brothers and
sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her Person
or estate, (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter, (iii) as to any partnership which is a Partner, the
dissolution and
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<PAGE> 16
commencement of winding up of the partnership, (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership, (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee) or (vi) as
to any Partner, the Bankruptcy of such Partner.
"Indemnitee" means (i) any Person made a party to a proceeding or
threatened with being made a party to a proceeding by reason of its status as
(A) the General Partner, (B) a Limited Partner or (C) an officer of the
Partnership (or any Subsidiary or other entity in which the Partnership owns an
equity interest) or a trustee/director, officer or shareholder of the General
Partner or the General Partner Entity (or any Subsidiary or other entity in
which the General Partner owns an equity interest (so long as the General
Partner's ownership of an interest in such entity is not prohibited by Section
7.5.A) or for which the General Partner, acting on behalf of the Partnership,
requests the trustee/director, officer or shareholder to serve as a director,
officer, trustee or agent, including serving as a trustee of an employee benefit
plan) and (ii) such other Persons (including Affiliates of the General Partner,
a Limited Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended and restated from time
to time, or any Substituted Limited Partner or Additional Limited Partner, in
such Person's capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply with
the terms and provisions of this Agreement. A Limited Partnership Interest may
be expressed as a number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidating Transaction" has the meaning set forth in Section 7.11.C
hereof.
"Liquidator" has the meaning set forth in Section 13.2.A hereof.
"Majority in Interest" means Partners (excluding the General Partner)
who hold more than fifty percent (50%) of the outstanding Percentage Interests
not held by the General Partner.
"Mendik Owner" means, with respect to Bernard H. Mendik or David R.
Greenbaum, as applicable, any member of his Immediate Family and any trust
formed solely for the benefit of him and/or members of his Immediate Family, or
any partnership, limited liability company, joint venture, corporation or other
business entity all of the interests in which are, and remain, owned and
controlled solely by him and/or members of his Immediate Family.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Exhibit B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C hereto, Net Income or the resulting Net Loss,
whichever the case may be, shall be recomputed without regard to such item.
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<PAGE> 17
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been included
in the initial computation of Net Loss is subjected to the special allocation
rules in Exhibit C hereto, Net Loss or the resulting Net Income, whichever the
case may be, shall be recomputed without regard to such item.
"New Securities" means (i) any rights, options, warrants or convertible
or exchangeable securities having the right to subscribe for or purchase shares
of beneficial interest (or other comparable equity interest) of the General
Partner, excluding grants under any Stock Option Plan, or (ii) any Debt issued
by the General Partner that provides any of the rights described in clause (i).
"Non-Class D/E Units" has the meaning set forth in Section 5.1(B)(vii).
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C hereto
if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially in
the form of Exhibit D attached hereto.
"Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
continued upon the terms and conditions set forth in this Agreement, and any
successor thereto.
"Partnership Interest" means a Limited Partnership Interest or the
General Partnership Interest, as the context requires, and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Partnership Interest
may be expressed as a number of Partnership Units.
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"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner either (i) for the making of any distribution pursuant to
Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its shareholders
of some or all of its portion of such distribution received by the General
Partner if the shares of common stock (or comparable equity interests) of the
General Partner Entity are Publicly Traded, or (ii) if applicable, for
determining the Partners entitled to vote on or consent to any proposed action
for which the consent or approval of the Partners is sought pursuant to Section
14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
hereof, and includes Class A Units, Class B Units, Class C Units, Class D Units,
Class E Units and any other classes or series of Partnership Units established
after the date hereof. The number of Partnership Units outstanding and the
Percentage Interests in the Partnership represented by such Partnership Units
are set forth in Exhibit A hereto, as such Exhibit may be amended and restated
from time to time. The ownership of Partnership Units may be evidenced by a
certificate in a form approved by the General Partner.
"Partnership Year" means the fiscal year of the Partnership.
"Percentage Interest" means, as to a Partner holding a Partnership
Interest of any class issued hereunder, its interest in such class, determined
by dividing the Partnership Units of such class owned by such Partner by the
total number of Partnership Units of such class then outstanding as specified in
Exhibit A attached hereto, as such exhibit may be amended and restated from time
to time, multiplied by the aggregate Percentage Interest allocable to such class
of Partnership Interests. For such time or times as the Partnership shall at any
time have outstanding more than one class of Partnership Interests, the
Percentage Interest attributable to each class of Partnership Interests shall be
determined as set forth in Section 4.2.B hereof.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
"Predecessor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Preference Units" has the meaning set forth in Section 4.2.E.
"Publicly Traded" means listed or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market, or any
successor to any of the foregoing.
"Qualified REIT Subsidiary" means any Subsidiary of the General Partner
that is a "qualified REIT subsidiary" within the meaning Section 856(i) of the
Code. Except as otherwise specifically provided herein, a Qualified REIT
Subsidiary of the General Partner that holds as its only assets direct and/or
indirect interests in the Partnership will not be treated as an entity separate
from the General Partner.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
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"Redeeming Partner" has the meaning set forth in Section 8.6.A hereof.
"Redemption Amount" means either the Cash Amount or the Shares Amount,
as determined by the General Partner in its sole and absolute discretion;
provided that in the event that the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall be
paid only in the form of the Cash Amount unless the Redeeming Partner, in its
sole and absolute discretion, consents to payment of the Redemption Amount in
the form of the Shares Amount; provided further, the foregoing is subject to
Section 8.6.A(iv). A Redeeming Partner shall have no right, without the General
Partner's consent, in its sole and absolute discretion, to receive the
Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Expenses" shall mean (i) costs and expenses relating to the
continuity of existence of the General Partner and any Person in which the
General Partner owns an equity interest, to the extent not prohibited by Section
7.5.A (and excluding expenses relating to any Person in which the General
Partner acquired an interest with the Consent of the Outside Limited Partners,
unless the Consent of the Outside Limited Partners has been obtained to include
such expenses within the definition of "REIT Expenses"), other than the
Partnership (which Persons shall, for purposes of this definition, be included
within the definition of "General Partner"), including taxes, fees and
assessments associated therewith (other than federal, state or local income
taxes imposed upon the General Partner as a result of the General Partner's
failure to distribute to its shareholders an amount equal to its taxable
income), any and all costs, expenses or fees payable to any trustee or director
of the General Partner or such Persons, (ii) costs and expenses relating to any
offer or registration of securities by the General Partner (the proceeds of
which will be contributed or advanced to the Partnership) and all statements,
reports, fees and expenses incidental thereto, including underwriting discounts
and selling commissions applicable to any such offer of securities, (iii) costs
and expenses associated with the preparation and filing of any periodic reports
by the General Partner under federal, state or local laws or regulations,
including filings with the SEC, (iv) costs and expenses associated with
compliance by the General Partner with laws, rules and regulations promulgated
by any regulatory body, including the Securities and Exchange Commission, and
(v) all other operating or administrative costs of the General Partner incurred
in the ordinary course of its business; provided, however, that any of the
foregoing expenses that are determined by the General Partner to be expenses
relating to the ownership and operation of, or for the benefit of, the
Partnership shall be treated, subject to Section 7.4.E hereof, as reimbursable
expenses under Section 7.4.B hereof rather than as "REIT Expenses".
"REIT Requirements" has the meaning set forth in Section 5.1.A hereof.
"Replacement Property" has the meaning set forth in Section 7.11.C
hereof.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C hereto to eliminate
Book-Tax Disparities.
"Restricted Partner" means any of FW/Mendik LLC, Bernard H. Mendik,
David R. Greenbaum, any Mendik Owner and any other Person identified on Exhibit
F hereto.
"Safe Harbors" has the meaning set forth in Section 11.6.F hereof.
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"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair market value
of such property at the time of contribution as determined by the General
Partner using such reasonable method of valuation as it may adopt. Subject to
Exhibit B hereto, the General Partner shall, in its sole and absolute
discretion, use such method as it deems reasonable and appropriate to allocate
the aggregate of the 704(c) Values of Contributed Properties in a single or
integrated transaction among each separate property on a basis proportional to
their fair market values. The 704(c) Values of the Contributed Properties
contributed to the Partnership as part of or in connection with the
Consolidation are set forth on Exhibit E attached hereto.
"Share" means a share of beneficial interest (or other comparable
equity interest) of the General Partner Entity. Shares may be issued in one or
more classes or series in accordance with the terms of the Declaration of Trust
(or, if the General Partner is not the General Partner Entity, the
organizational documents of the General Partner Entity). In the event that there
is more than one class or series of Shares, the term "Shares" shall, as the
context requires, be deemed to refer to the class or series of Shares that
correspond to the class or series of Partnership Interests for which the
reference to Shares is made. When used with reference to Class A Units, Class C
Units, Class D Units or Class E Units, the term "Shares" refers to common shares
of beneficial interest (or other comparable equity interest) of the General
Partner Entity.
"Shares Amount" means a number of Shares equal to the product of the
number of Partnership Units offered for redemption by a Redeeming Partner times
the Conversion Factor; provided, that in the event the General Partner Entity
issues to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number of
Shares would be entitled to receive; and provided, further, that the Shares
Amount shall be adjusted pursuant to Section 7.5 hereof in the event that the
General Partner acquires material assets other than on behalf of the
Partnership.
"Specified Redemption Date" means the tenth Business Day after receipt
by the General Partner of a Notice of Redemption; provided, that if the Shares
are not Publicly Traded, the Specified Redemption Date means the thirtieth
Business Day after receipt by the General Partner of a Notice of Redemption.
"Stock Option Plan" means any share or stock incentive plan or similar
compensation arrangement (including, without limitation, any arrangement whereby
the Partnership or the General Partner delivers Units or shares of capital stock
of the General Partner into a "rabbi trust") of the General Partner, the
Partnership or any Affiliate of the Partnership or the General Partner, as the
context may require.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership or joint venture, or other entity of
which a majority of (i) the voting power of the voting equity securities or (ii)
the outstanding equity interests is owned, directly or indirectly, by such
Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"Successor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Successor Partnership" has the meaning set forth in Section 7.11.C
hereof.
"Tenant" means any tenant from which the General Partner derives rent,
either directly or indirectly through limited liability companies or
partnerships, including the Partnership, or through any Qualified REIT
Subsidiary.
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"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership for cash or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership for
cash.
"Termination Transaction" has the meaning set forth in Section 11.2.B
hereof.
"Title 8" means Title 8 of the Corporations and Associations Article of
the Annotated Code of Maryland.
"Transferred Property" has the meaning set forth in Section 7.11.C.
hereof.
"Two Penn Plaza Associates" means Two Penn Plaza Associates, L.P., a
New York limited partnership.
"Two Penn Plaza Property" has the meaning set forth in Section 7.11.C
hereof.
"Two Penn Plaza Units" has the meaning set forth in Section 7.11.C
hereof.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereto) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereto) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Exhibit B
hereto) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B hereto) as of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to any outstanding Shares of the General
Partner Entity that are Publicly Traded, the average of the daily market price
for the ten (10) consecutive trading days immediately preceding the date with
respect to which value must be determined or, if such day is not a Business Day,
the immediately preceding Business Day. The market price for each such trading
day shall be the closing price, regular way, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices on such
day. In the event that the outstanding Shares of the General Partner Entity are
Publicly Traded and the Shares Amount includes rights that a holder of Shares
would be entitled to receive, then the Value of such rights shall be determined
by the General Partner acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment, appropriate. In
the event that the Shares of the General Partner Entity are not Publicly Traded,
the Value of the Shares Amount per Partnership Unit offered for redemption
(which will be the Cash Amount per Partnership Unit offered for redemption
payable pursuant to Section 8.6.A hereof) means the amount that a holder of one
Partnership Unit would receive if each of the assets of the Partnership were to
be sold for its fair market value on the Specified Redemption Date, the
Partnership were to pay all of its outstanding liabilities, and the remaining
proceeds were to be distributed to the Partners in accordance with the terms of
this Agreement. Such Value shall be determined by the General Partner, acting in
good faith and based upon a commercially reasonable estimate of the amount that
would be realized by the Partnership if each asset of the Partnership (and each
asset of each partnership, limited liability company, joint venture or other
entity in which the Partnership owns a direct or indirect interest) were sold to
an unrelated purchaser in an arms' length transaction where neither the
purchaser nor the seller were under economic compulsion to enter into the
transaction (without regard to any discount in value as a result of the
Partnership's minority interest in any property or any illiquidity of the
Partnership's interest in any property). In connection with determining the
Deemed
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Value of the Partnership Interest for purposes of determining the number of
additional Partnership Units issuable upon a Capital Contribution funded by an
underwritten public offering of shares of beneficial interest (or other
comparable equity interest) of the General Partner, the Value of such shares
shall be the public offering price per share of such class of beneficial
interest (or other comparable equity interest) sold.
"Vornado Sub" means Vornado/Saddle Brook L.L.C., a Delaware limited
liability company and a wholly-owned subsidiary of the General Partner.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the Prior
Agreement. The Partners hereby continue the Partnership and amend and restate
the Prior Agreement in its entirety. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
Section 2.2 Name
The name of the Partnership is Vornado Realty L.P. The Partnership's
business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate
thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or
letters shall be included in the Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires. The
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State of
Delaware shall be located at Corporation Trust Center, 1209 Orange Street,
Wilmington, County of New Castle, Delaware 19801, and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Company. The principal office of
the Partnership shall be Vornado Realty L.P., Park 80 West, Plaza II, Saddle
Brook, New Jersey 07663, or such other place as the General Partner may from
time to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
Section 2.4 Term
The term of the Partnership commenced on October 2, 1996, the date on
which the Certificate was filed in the office of the Secretary of State of the
State of Delaware in accordance with the Act, and shall continue until December
31, 2095 (as such date may be extended by the General Partner in its sole
discretion), unless it is dissolved sooner pursuant to the provisions of Article
XIII hereof or as otherwise provided by law.
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ARTICLE III
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner Entity (or the General Partner, as applicable) at all times to
be classified as a REIT and avoid the imposition of federal income and excise
taxes on the General Partner Entity (or the General Partner, as applicable),
unless the General Partner Entity (or the General Partner, as applicable) ceases
to qualify, or is not qualified, as a REIT for any reason or reasons; (ii) to
enter into any partnership, joint venture, limited liability company or other
similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged, directly or indirectly, in any of the
foregoing; and (iii) to do anything necessary or incidental to the foregoing. In
connection with the foregoing, the Limited Partners acknowledge that the status
of the General Partner Entity (or the General Partner, as applicable) as a REIT
and the avoidance of federal income and excise taxes on the General Partner
Entity (or the General Partner, as applicable) inures to the benefit of all the
Partners and not solely the General Partner or its Affiliates. Notwithstanding
the foregoing, the Limited Partners acknowledge and agree that the General
Partner Entity (or the General Partner, as applicable) may terminate its status
as a REIT under the Code at any time to the full extent permitted under the
Declaration of Trust.
Section 3.2 Powers
The Partnership shall have full power and authority to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership,
including, without limitation, directly or through its ownership interest in
other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, that the Partnership shall not take, or refrain from taking,
any action which, in the judgment of the General Partner, in its sole and
absolute discretion, (i) could adversely affect the ability of the General
Partner Entity (or the General Partner, as applicable) to continue to qualify as
a REIT, (ii) could subject the General Partner Entity (or the General Partner,
as applicable) to any additional taxes under Section 857 or Section 4981 of the
Code or (iii) could violate any law or regulation of any governmental body or
agency having jurisdiction over the General Partner Entity (or the General
Partner, if different) or its securities, unless such action (or inaction) shall
have been specifically consented to by the General Partner in writing.
Section 3.3 Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes specified
in Section 3.1 above, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 above.
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ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 Capital Contributions of the Partners
A. Capital Contributions to the Partnership on the Effective Date. The
Mendik Company, Inc. and FW/Mendik LLC previously made Capital Contributions to
the Partnership. Immediately prior to the Effective Date, the Partnership was
recapitalized and FW/Mendik LLC was issued Class D Units as the sole
Limited Partner of the Partnership and The Mendik Company, Inc. was issued
Class D Units as the then general partner of the Partnership, which Units will
be subject to Section 4.2.D(iii). On the Effective Date and concurrently with
the execution of this Agreement: (i) the General Partner and certain other
Persons are making additional Capital Contributions to the Partnership in
connection with the Consolidation; (ii) the General Partner is being admitted to
the Partnership as a general partner; and immediately thereafter the General
Partnership Interest held by The Mendik Company, Inc. is being converted to a
Limited Partnership Interest. Thereafter, the General Partner will complete
Exhibit A hereto to reflect the Capital Contributions made by each Partner, the
number of Partnership Units (by class) held by each Partner and the Percentage
Interest in the Partnership represented by such Partnership Units. The Capital
Accounts of the Partners and the Carrying Values of the Partnership's Assets
shall be determined as of the Effective Date pursuant to Section I.D of Exhibit
B hereto to reflect the Capital Contributions made prior to and on the Effective
Date.
B. General Partnership Interest. A number of Partnership Units held by
the General Partner equal to one percent (1%) of all outstanding Partnership
Units shall be deemed to be the General Partner Partnership Units and shall be
the General Partnership Interest. All other Partnership Units held by the
General Partner shall be Limited Partnership Interests and shall be held by the
General Partner in its capacity as a Limited Partner in the Partnership.
C. Capital Contributions By Merger. To the extent the Partnership
acquires any property by the merger of any other Person into the Partnership,
Persons who receive Partnership Interests in exchange for their interests in the
Person merging into the Partnership shall become Partners and shall be deemed to
have made Capital Contributions as provided in the applicable merger agreement
and as set forth in Exhibit A hereto.
D. No Obligation to Make Additional Capital Contributions. Except as
provided in Sections 7.5 and 10.5 hereof, the Partners shall have no obligation
to make any additional Capital Contributions or provide any additional funding
to the Partnership (whether in the form of loans, repayments of loans or
otherwise). No Partner shall have any obligation to restore any deficit that may
exist in its Capital Account, either upon a liquidation of the Partnership or
otherwise.
Section 4.2 Issuances of Partnership Interests
A. General. The General Partner is hereby authorized to cause the
Partnership from time to time to issue to Partners (including the General
Partner and its Affiliates) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership) Partnership
Units or other Partnership Interests in one or more classes, or in one or more
series of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to Limited Partnership Interests, all as shall
be determined, subject to applicable Delaware law, by the General Partner in its
sole and absolute discretion, including, without limitation, (i) the allocations
of items of Partnership income, gain, loss, deduction and credit to each such
class or series of Partnership Interests, (ii) the right of each such class or
series of Partnership Interests to share in Partnership distributions and (iii)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; provided that, no such
Partnership Units or other Partnership Interests shall be issued (x) to the
General Partner unless either (a) the Partnership Interests
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are issued in connection with the grant, award or issuance of Shares or other
equity interests in the General Partner having designations, preferences and
other rights such that the economic interests attributable to such Shares or
other equity interests are substantially similar to the designations,
preferences and other rights (except voting rights) of the additional
Partnership Interests issued to the General Partner in accordance with this
Section 4.2.A, or (b) the Partnership Interests are issued to all Partners
holding Partnership Interests in the same class in proportion to their
respective Percentage Interests in such class or (c) the Partnership Interests
are issued in connection with a Termination Transaction or a transaction in
which another person is merged, combined or consolidated with or into the
General Partner and in exchange for the transfer or contribution of all or
substantially all of the assets of such other person by the General Partner to
the Partnership, or (y) to any Person in violation of Section 4.2.E. In the
event that the Partnership issues Partnership Interests pursuant to this Section
4.2.A, the General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Section 5.4, Section
6.2 and Section 8.6 hereof) as it deems necessary to reflect the issuance of
such additional Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital Contributions
for Partnership Units. Upon the acceptance of additional Capital Contributions
in exchange for Partnership Units, the Percentage Interest related thereto shall
be equal to a fraction, the numerator of which is equal to the amount of cash,
if any, plus the Agreed Value of Contributed Property, if any, contributed with
respect to such additional Partnership Units and the denominator of which is
equal to the sum of (i) the Deemed Value of the Partnership Interests for all
outstanding classes (computed as of the Business Day immediately preceding the
date on which the additional Capital Contributions are made (such contribution
date being referred to as an "Adjustment Date")) plus (ii) the aggregate amount
of additional Capital Contributions contributed to the Partnership on such
Adjustment Date in respect of such additional Partnership Units. The Percentage
Interest of each other Partner holding Partnership Interests not making a full
pro rata Capital Contribution shall be adjusted to a fraction the numerator of
which is equal to the sum of (i) the Deemed Partnership Interest Value of such
Limited Partner (computed as of the Business Day immediately preceding the
Adjustment Date) plus (ii) the amount of additional Capital Contributions (such
amount being equal to the amount of cash, if any, plus the Agreed Value of
Contributed Property, if any, so contributed), if any, made by such Partner to
the Partnership in respect of such Partnership Interest as of such Adjustment
Date and the denominator of which is equal to the sum of (i) the Deemed Value of
the Partnership Interests of all outstanding classes (computed as of the
Business Day immediately preceding such Adjustment Date) plus (ii) the aggregate
amount of the additional Capital Contributions contributed to the Partnership on
such Adjustment Date in respect of such additional Partnership Interests. For
purposes of calculating a Partner's Percentage Interest pursuant to this Section
4.2.B, cash Capital Contributions by the General Partner will be deemed to equal
the cash contributed by the General Partner plus (a) in the case of cash
contributions funded by an offering of any equity interests in or other
securities of the General Partner, the offering costs attributable to the cash
contributed to the Partnership, and (b) in the case of Partnership Units issued
pursuant to Section 7.5.E hereof, an amount equal to the difference between the
Value of the Shares sold pursuant to any Stock Option Plan and the net proceeds
of such sale.
C. Classes of Partnership Units. From and after the Effective Date,
subject to Section 4.2.A above, the Partnership shall have five classes of
Common Partnership Units entitled "Class A Units", "Class B Units", "Class C
Units", "Class D Units" and "Class E Units" and one class of Preference Units
entitled "Series A Preferred Units" which shall be issued to the Partners in
connection with the Consolidation as set forth below:
(i) the General Partner will receive Class A Units in respect
of its General Partnership Interest and will receive Class A Units and Series A
Preferred Units in respect of its Limited Partnership Interest;
(ii) initially, no Class B Units will be issued to any
Partner;
(iii) as specified on Exhibit A, certain Persons will receive
Class C Units, certain Persons will receive Class D Units and certain Persons
will receive Class E Units in respect of their Limited Partnership Interests.
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The General Partner may, in its sole and absolute discretion but subject to
Section 4.2.E, issue to newly admitted Partners Class A Units, Class B Units,
Class C Units, Class D Units, Class E Units or Partnership Units of any other
class established by the Partnership in accordance with Section 4.2.A (subject
to Section 4.2.E below) in exchange for the contribution by such Partners of
cash, real estate partnership interests, stock, notes or any other assets or
consideration; provided that any Partnership Unit that is not specifically
designated by the General Partner as being of a particular class shall be deemed
to be a Class A Unit unless the context clearly requires otherwise.
D. Conversion of Class C Units, Class D Units and Class E Units.
(i) At such time as all holders of Class A Units have received
quarterly distributions in accordance with Article V equal to $.845 per
Partnership Unit for each of four consecutive quarters (without including for
these purposes distributions, if any, made to holders of Class A Units pursuant
to Subsections 4.2.D(i) and 4.2.D(ii)), the Class C Units will be converted
automatically into Class A Units and thereafter will have the same distribution
rights as all other Class A Units. The foregoing conversion will be deemed to
have occurred as of the first day of the quarter immediately succeeding the
fourth consecutive quarter with respect to which the distributions described in
the preceding sentence are made.
At any time prior to the first distribution made in respect of
Partnership Units that were converted from Class C Units to Class A Units
pursuant to this Subsection 4.2.D(i), the General Partner may, in its sole
discretion but subject to Section 5.2.B, elect to make a one-time distribution
of the Class C Accumulated Amount, calculated as of the date of such
distribution, pro rata among those Persons who hold Class A Units; provided,
however, that the foregoing distribution right shall only be available if during
each of the preceding four (4) consecutive fiscal quarters the Partnership has
earned Funds From Operations sufficient to enable the Partnership to distribute
to holders of Class A Units on a per Partnership Unit basis (assuming a 100%
payout of Funds From Operations) at least $0.845 per Partnership Unit (which
payment must be made in a quarter prior to the quarter in which Class C Units
are converted to Class A Units pursuant to the preceding paragraph). For
purposes hereof, the "Class C Accumulated Amount" means, as of any date the
lesser of (A) $1,500,000.00 and (B)(x)the sum of all amounts previously
distributed to holders of Class C Units pursuant to Subsections 5.1.B(iv) and
5.1.B(v) during the most recently completed twelve (12) consecutive fiscal
quarters less (y) the sum of all amounts previously distributed to holders of
Class A Units (excluding Class A Units that were converted from Class C Units
prior to such distribution) during such period pursuant to Subsection 5.1.B(vi)
but not Subsection 5.1.B(vii); provided that the Class C Accumulated Amount
shall not exceed the Partnership's aggregate Funds From Operations for such
twelve quarter period less (without duplication) the distributions pursuant to
Subsections 5.1(B)(i) through (vi).
(ii) At such time as all holders of Class A Units have
received quarterly distributions in accordance with Article V in an amount at
least equal to $1.0075 per Partnership Unit for each of four consecutive
quarters (without including for these purposes distributions, if any, made to
holders of Class A Units pursuant to Subsections 4.2.D(i) and 4.2.D(ii)), the
Class D Units and the Class E Units, if any, will be converted automatically
into Class A Units and thereafter will have the same distribution rights as all
other Class A Units. The foregoing conversion will be deemed to have occurred as
of the first day of the quarter immediately succeeding the fourth consecutive
quarter with respect to which the distributions described in the preceding
sentence are made.
At any time prior to the first distribution made in respect of
Partnership Units that were converted from Class D Units or Class E Units to
Class A Units pursuant to this Subsection 5.1.D(ii), the General Partner may, in
its sole discretion but subject to Section 5.2.B, elect to make a one time
distribution of the Class D/E Accumulated Amount, calculated as of the date of
such distribution, pro rata among those Persons who hold Class A Units;
provided, however, that the foregoing distribution right shall only be available
if during each of the preceding four (4) consecutive fiscal quarters the
Partnership has earned Funds From Operations sufficient to enable the
Partnership to distribute to holders of Class A Units on a per Partnership Unit
basis (assuming a 100% payout of Funds From Operations) at least $1.0075 per
Partnership Unit. For purposes hereof, the "Class D/E Accumulated Amount" means,
as of any date the lesser of (A) $1,500,000 less any amount distributed pursuant
to Subsection 4.2.D(i) above and (B)
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(x) the sum of all amounts previously distributed to holders of Class D Units
and Class E Units pursuant to Subsections 5.1.B(ii) and (iii) during the most
recently completed twelve (12) consecutive fiscal quarters less (y) the sum of
all amounts previously distributed to holders of Class A Units (excluding Class
A Units that were converted from Class D Units or Class E Units prior to or
during such period, if any) during such period pursuant to Subsections 5.1.B(vi)
and (vii) during such period and less the Class C Accumulated Amount distributed
previously or contemporaneously therewith, provided that the maximum amount of
the Class D/E Accumulated Amount shall not exceed the Partnership's Funds From
Operations less (without duplication) distributions pursuant to Subsections
5.1.B(i) through (vii).
(iii) Immediately after the time on the Effective Date at
which this Agreement becomes effective, every Class D Unit held by any of
Mendik/FW, Christopher G. Bonk, Michael M. Downey, James D. Kuhn, John J.
Silberstein, David L. Sims, Kevin R. Wang, Mr. Mendik, Mr. Greenbaum or any
Mendik Owner with respect to either of Mr. Mendik or Mr. Greenbaum shall
automatically, and without any further payment or action of any kind by any
Person, be converted into Class C Units and thereafter shall have all of the
same distribution rights as any other Class C Unit, and the General Partner
shall reflect said conversion on Exhibit A.
E. Limitation on the Issuance of Partnership Units. The General Partner
may not, without the Consent of the Outside Limited Partners (taking into
account, for these purposes, only those Limited Partnership Interests being
issued concurrently herewith as part of the Consolidation), cause the
Partnership to issue any Limited Partnership Interests of any class ranking
senior (as to distributions or redemption or voting rights) to the Class C
Units, the Class D Units or the Class E Units (any such senior Partnership
Units, "Preference Units") unless the distribution and redemption (but not
voting) rights of such Partnership Units are substantially similar to the terms
of securities issued by the General Partner and the proceeds or other
consideration from the issuance of such securities have been contributed to the
Partnership. The foregoing limitation will expire with respect to the
Partnership Units of any such class at such time as the Partnership Units of
that class issued in connection with the Consolidation are no longer
outstanding, whether as a result of redemption, conversion to another class or
otherwise.
F. Issuance of Series A Preferred Units. In consideration of the
contribution to the Partnership on the Effective Date of the entire net proceeds
received by the General Partner from the issuance of the Series A Preferred
Shares, the General Partner shall be deemed to have made a Capital Contribution
to the Partnership in the amount of the gross proceeds of such issuance, which
is $287,500,000, and the Partnership shall be deemed simultaneously to have
distributed to the General Partner, as REIT Expenses, the amount of the
underwriters' discount and other costs incurred by the General Partner in
connection with such issuance. On the Effective Date, in consideration of the
contribution to the Partnership made by the General Partner pursuant to this
Section 4.2.F, the Partnership will issue to the General Partner, in respect of
its Limited Partnership Interest and in addition to the Class A Units issued to
the General Partner pursuant to this Section 4.2, 5,750,000 of a series of
Preference Units designated as the "Series A Preferred Units" (as defined in
Exhibit G hereto). The terms of the Series A Preferred Units are set forth in
Exhibit G attached hereto.
Section 4.3 No Preemptive Rights
Except to the extent expressly granted by the General Partner (on
behalf of the Partnership) pursuant to another agreement, no Person shall have
any preemptive, preferential or other similar right with respect to (i)
additional Capital Contributions or loans to the Partnership or (ii) issuance or
sale of any Partnership Units or other Partnership Interests.
Section 4.4 Other Contribution Provisions
In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected
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Partner as if the Partnership had compensated such Partner in cash for the fair
market value of such services, and the Partner had contributed such cash to the
capital of the Partnership.
Section 4.5 No Interest on Capital
No Partner shall be entitled to interest on its Capital Contributions
or its Capital Account.
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
A. General. Subject to Section 5.1.C, the General Partner shall have
the exclusive right and authority to declare and cause the Partnership to make
distributions as and when the General Partner deems appropriate or desirable in
its sole discretion. Notwithstanding anything to the contrary contained herein,
in no event may a Partner receive a distribution with respect to a Partnership
Unit for a quarter or shorter period if such Partner is entitled to receive a
distribution for such quarter or shorter period with respect to a Share for
which such Partnership Unit has been redeemed or exchanged. Unless otherwise
expressly provided for herein or in an agreement at the time a new class of
Partnership Interests is created in accordance with Article IV hereof, no
Partnership Interest shall be entitled to a distribution in preference to any
other Partnership Interest. For so long as the General Partner elects to qualify
as a REIT, the General Partner shall make such reasonable efforts, as determined
by it in its sole and absolute discretion and consistent with the qualification
of the General Partner Entity or the General Partner (as applicable) as a REIT,
to make distributions to the Partners in amounts such that the General Partner
will receive amounts sufficient to enable the General Partner Entity or the
General Partner (as applicable) to pay shareholder dividends that will (1)
satisfy the requirements for qualification as a REIT under the Code and the
Regulations (the "REIT Requirements") and (2) avoid any federal income or excise
tax liability for the General Partner Entity or the General Partner (as
applicable).
B. Method. When, as and if declared by the General Partner, the
Partnership will make distributions to the General Partner in any amount
necessary to enable the General Partner to pay REIT Expenses, and thereafter:
(i) first, to holders of Series A Preferred Units and any
other Preference Units in an amount equal to preferential distributions
accumulated and unpaid on such Preference Units in accordance with
their respective terms;
(ii) second, to holders of Class D Units and Class E Units
(pro rata based on the ratio of the total number of Class D Units or
Class E Units, as applicable, to the aggregate number of Class D Units
and Class E Units taken together on the Partnership Record Date) in an
amount equal to any accumulated and unpaid Class D/E Preferential
Distributions;
(iii) third, to holders of Class D Units and Class E Units
(pro rata based on the ratio of the total number of Class D Units or
Class E Units, as applicable, to the aggregate number of Class D Units
and Class E Units taken together on the Partnership Record Date) until
such holders have received with respect to the quarter for which such
distribution is made an amount per Class D Unit and Class E Unit,
respectively, determined based on a distribution rate of $1.0075 per
quarter (the "Class D/E Preferential Distribution") pro rated to take
into account the actual number of days in such period and the number of
days in the period that such Class D Units or
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Class E Units, as applicable, were outstanding; provided, however, that
if the General Partner does not distribute sufficient cash to pay the
Class D/E Preferential Distribution, then the Class D/E Preferential
Distribution will cumulate, without interest, and be payable by the
Partnership in the future pursuant to clause (ii) above;
(iv) fourth, to holders of Class C Units in an amount equal to
any accumulated and unpaid Class C Preferential Distributions;
(v) fifth, to holders of Class C Units until such holders have
received with respect to the quarter for which such distribution is
made an amount per Class C Unit to be determined based on a
distribution rate of $.845 per quarter (the "Class C Preferential
Distribution") pro rated to take into account the actual number of days
in such period and the number of days in the period that such Class C
Units were outstanding; provided, however, that if the General Partner
does not distribute sufficient cash to pay the Class C Preferential
Distribution, then the Class C Preferential Distribution will cumulate,
without interest, and be payable by the Partnership in the future
pursuant to clause (iv) above;
(vi) sixth, to the holders of Units other than Class C Units,
Class D Units and Class E Units (the "Other Units") until the holders
of such Other Units have received with respect to the quarter for which
such distribution is made an amount per Partnership Unit equal to the
amount that would have been payable to such holders under clause (v)
above if the Partnership Units held by them had been Class C Units;
provided that with respect to the distribution, if any, for the first
quarter or portion thereof ending following the Effective Date, if the
Partnership elects to distribute sufficient cash the General Partner
shall be entitled to receive a distribution at the foregoing rate for
the entire fiscal quarter to which such period relates notwithstanding
that the General Partner did not hold Class A Units for the entire
quarter;
(vii) seventh, to the holders of Partnership Units other than
Class D Units and Class E Units (the "Non-Class D/E Units") until the
holders of such Non-Class D/E Units have received with respect to the
quarter for which such distribution is made a total amount per
Partnership Unit (taking into account distributions made to such
holders of Non-Class D/E Units with respect to such quarter under
clause (v) or clause (vi) above as applicable) equal to the amount paid
per Class D Unit at such time pursuant to clause (iii) above; provided
that with respect to the distribution for the first quarter or portion
thereof ending following the Effective Date, if the Partnership elects
to distribute sufficient cash the General Partner shall be entitled to
receive a distribution at the foregoing rate for the entire fiscal
quarter to which such period relates notwithstanding that the General
Partner did not hold Class A Units for the entire quarter;
(viii) eighth, to holders of Class A Units as described in
Subsection 4.2.D(i);
(ix) ninth, to holders of Class A Units as described in
Subsection 4.2.D(ii);
(x) tenth, to all holders of Partnership Units (of all
classes), pro rata in proportion to their respective Percentage
Interest, in an amount sufficient to permit to the General Partner to
satisfy the REIT Requirements and to avoid any federal income or excise
tax liability for the General Partner Entity (or the General Partner,
as applicable);
(xi) eleventh, to the extent of remaining distribution amount,
to holders of Partnership Units in proportion to their respective
Percentage Interests.
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Each holder of Partnership Interests that are entitled to any preference in
distribution shall be entitled to a distribution in accordance with the rights
of any such class of Partnership Interests (and, within such class, pro rata in
proportion to the respective Percentage Interests on such Partnership Record
Date). Notwithstanding anything to the contrary contained herein, in no event
shall any partner receive a distribution with respect to any Common Partnership
Unit with respect to any quarter until such time as the Partnership has
distributed to the holders of the Preference Units all distributions payable
with respect to such Preference Units through the last day of such quarter, in
accordance with the instruments designating such Preference Units.
C. Minimum Distributions if General Partner Not a REIT or Not Publicly
Traded. In addition, if the General Partner Entity is not a REIT or the common
shares of beneficial interest (or other comparable equity interests) of the
General Partner Entity are not Publicly Traded, the General Partner shall use
commercially reasonable efforts (including, if appropriate, incurring
indebtedness), as determined by the General Partner in its sole discretion
exercised in good faith, to make cash distributions pursuant to Section 5.1.B
above at least annually for each taxable year of the Partnership beginning prior
to the twentieth (20th) anniversary of the Effective Date in an aggregate amount
with respect to each such taxable year at least equal to 95% of the
Partnership's taxable income for such year other than gain subject to Section
704(c) of the Code allocable to the Class A Units, with such distributions to be
made not later than 60 days after the end of such year; provided, the foregoing
shall not create any obligation on the part of the General Partner to contribute
or loan funds to the Partnership or dispose of assets. Notwithstanding Section
14.1.D.(iv), this Section 5.1.C may be amended with the Consent of Certain
Limited Partners.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 above for all purposes
under this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction shall be distributed to
the Partners in accordance with Section 13.2 hereof.
Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such revisions to this Article
V as it deems necessary to reflect the issuance of such additional Partnership
Interests.
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereto) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special allocations set forth
in Section 1 of Exhibit C hereto and Section 6.1.E below, Net Income shall be
allocated (i) first, to the General Partner to the extent that Net Losses
previously allocated to the General Partner pursuant to the last sentence of
Section 6.1.B below exceed Net
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Income previously allocated to the General Partner pursuant to this clause (i)
of Section 6.1.A,; (ii) second, to holders of Preference Units until their
aggregate allocations of Net Income under this clause (ii) equal the sum of (x)
the aggregate Net Losses allocated to them under clause (x) of Section 6.1.B and
(y) all distributions made pursuant to clause (i) of Section 5.1.B (provided
that the allocation provided for in this clause (ii) shall not apply to the
extent that distributions made pursuant to clause (i) of Section 5.1.B are
treated as or determined to be guaranteed payments under Section 707(c) of the
Code); (iii) third, to holders of Class D Units and Class E Units until their
aggregate allocations of Net Income under this clause (iii) equal the sum of (x)
the aggregate Net Losses allocated to them under clause (ix) of Section 6.1.B
and (y) all distributions made pursuant to clause (ii) of Section 5.1.B; (iv)
fourth, to holders of Class D Units and Class E Units until their aggregate
allocations of Net Income under this clause (iv) equal the sum of (x) the
aggregate Net Losses allocated to them under clause (viii) of Section 6.1.B and
(y) all distributions made pursuant to clause (iii) of Section 5.1.B with
respect to which there was not a corresponding distribution to holders of Units
other than Class D Units and Class E Units pursuant to clauses (vi) or (vii) of
Section 5.1.B; (v) fifth, to holders of Class C Units until their aggregate
allocations of Net Income under this clause (v) equal the sum of (x) the
aggregate Net Losses allocated to them under clause (vii) of Section 6.1.B and
(y) all distributions made pursuant to clause (iv) of Section 5.1.B; (vi) sixth,
to holders of Class C Units until their aggregate allocations of Net Income
under this clause (vi) equal the sum of (x) the aggregate Net Losses allocated
to them under clause (vi) of Section 6.1.B and (y) all distributions made
pursuant to clause (v) of Section 5.1.B with respect to which there was not a
corresponding distribution to holders of Units other than Class C, D or E Units
pursuant to clause (vi) of Section 5.1.B; (vii) seventh, to all holders of Units
(other than Preference Units)until the aggregate allocations of Net Income under
this clause (vii) equal the sum of (x) aggregate Net Losses allocated under
clause (v) of Section 6.1.B, (y) all distributions made pursuant to clauses (vi)
or (vii) of Section 5.1.B, and (z) all distributions made pursuant to clauses
(iii) or (v) of Section 5.1.B that were not taken into account in clauses (iv)
or (vi) of this Section 6.1.A as a result of distributions pursuant to clauses
(vi) and (vii) of Section 5.1.B; (viii) eighth, to holders of Class A Units
until their aggregate allocations of Net Income under this clause (viii) equal
the sum of (x) the aggregate Net Losses allocated to them under clause (iv) of
Section 6.1.B and (y) all distributions made pursuant to clause (viii) of
Section 5.1.B, with such Net Income to be allocated only to those holders of
Class A Units who received distributions under said clause (viii); (ix) ninth,
to holders of Class A Units until their aggregate allocations of Net Income
under this clause (ix) equal the sum of (x) the aggregate Net Losses allocated
to them under clause (iii) of Section 6.1.B and (y) all distributions made
pursuant to clause (ix) of Section 5.1.B, with such Net Income to be allocated
only to those holders of Class A Units who received distributions under said
clause (ix) of Section 5.1.B; (x) tenth, to all holders of Units (other than
Preference Units)pro rata in accordance with their Percentage Interests until
the aggregate allocations of Net Income under this clause (x) equal the sum of
(x) aggregate Net Losses allocated under clause (ii) of Section 6.1.B and (y)
all distributions made pursuant to clause (xi) of Section 5.1.B.; and (xi)
eleventh, to all holders of Units (other than Preference Units) in proportion to
their respective Percentage Interests.
B. Net Losses. After giving effect to the special allocations set forth
in Section 1 of Exhibit C hereto and Section 6.1.E below, Net Losses shall be
allocated (i) first, to all holders of Units (other than Preference Units) in
proportion to their respective Percentage Interests until the aggregate
allocations of Net Losses pursuant to this clause (i) equal the aggregate amount
of allocations of Net Income pursuant to clause (xi) of Section 6.1.A; (ii)
second, to all holders of Units (other than Preference Units)pro rata in
accordance with their Percentage Interests until the aggregate allocations of
Net Losses under this clause (ii) equal the aggregate amount of Net Income
allocated pursuant to clause (x) of Section 6.1.A; (iii) third, to holders of
Class A Units until the aggregate allocations of Net Losses pursuant to this
clause (iii) equal the aggregate amount of allocations of Net Income pursuant to
clause (ix) of Section 6.1.A.; (iv) fourth to holders of Class A Units until the
aggregate allocations of Net Losses pursuant to this clause (iii) equal the
aggregate amount of allocations of Net Income pursuant to clause (viii) of
Section 6.1.A.; (v) fifth, to all holders of Units (other than Preference Units)
until the aggregate allocation of Net Losses pursuant to this clause (v) equal
the aggregate amount of Net Income allocated pursuant to clause (vii) of Section
6.1.A; (vi) sixth, to holders of Class C Units until the aggregate allocations
of Net Losses under this clause (vi) equal the aggregate amount of Net Income
allocated pursuant to clause (vi) of Section 6.1.A; (vii) seventh, to holders of
Class C Units until the aggregate allocations of Net Losses under this clause
(vii) equal the aggregate amount of Net Income allocated pursuant to clause (v)
of Section 6.1.A; (viii) eighth, to holders of Class D Units and Class E Units
until the aggregate allocations of Net
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Losses under this clause (viii) equal the aggregate amount of Net Income
allocated pursuant to clause (iv) of Section 6.1.A; (ix) ninth, to holders of
Class D Units and Class E Units until the aggregate allocations of Net Losses
under this clause (ix) equal the aggregate amount of Net Income allocated
pursuant to clause (iii) of Section 6.1.A; (x) tenth, to holders of the
Preference Units until their aggregate allocations of Net Losses pursuant to
this clause (x) equal the aggregate amount of allocations of Net Income pursuant
to clause (ii) of Section 6.1.A (provided that the allocation provided for in
this clause (x) shall not apply to the extent that distributions made pursuant
to clause (i) of Section 5.1.B are treated as or determined to be guaranteed
payments for purposes of Section 707(c) of the Code); and (xi) thereafter, to
holders of all Units (other than Preference Units) in proportion to their
Percentage Interests; provided that, Net Losses shall not be allocated to any
Limited Partner pursuant to this Section 6.1.B to the extent that such
allocation would cause such Limited Partner to have an Adjusted Capital Account
Deficit (or increase any existing Adjusted Capital Account Deficit) at the end
of such taxable year (or portion thereof). All Net Losses in excess of the
limitations set forth in this Section 6.1.B shall be allocated to the General
Partner.
C. Allocation of Nonrecourse Debt. For purposes of Regulations Section
1.752-3(a), the Partners agree that Nonrecourse Liabilities of the Partnership
in excess of the sum of (i) the amount of Partnership Minimum Gain and (ii) the
total amount of Nonrecourse Built-in Gain shall be allocated among the Partners
in accordance with their respective Percentage Interests.
D. Recapture Income. Any gain allocated to the Partners upon the sale
or other taxable disposition of any Partnership asset shall, to the extent
possible after taking into account other required allocations of gain pursuant
to Exhibit C hereto, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
E. Cancellation of Indebtedness Income. Any cancellation of
indebtedness income required to be recognized by the Partnership with respect to
the Two Penn Plaza Property in connection with the acquisition of the Two Penn
Plaza Property by the Partnership and the restructuring of the outstanding
indebtedness with respect thereto shall be allocated solely to holders of Two
Penn Plaza Units. In the event that cancellation of indebtedness income is
recognized with respect to the property at 330 Madison Avenue as a result of
resolving the dispute with the lender under the loan outstanding upon
consummation of the Consolidation that is secured by a mortgage on such
property, holders of the Partnership Units issued with respect to M 330
Associates, a New York limited partnership, shall be specially allocated
cancellation of indebtedness income in an amount equal to their proportionate
share of the dollar amount of the discount as a result of the settlement
resulting in the recognition of such cancellation of indebtedness income.
Section 6.2 Revisions to Allocations to Reflect Issuance of Additional
Partnership Interests
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such revisions to this Article
VI as it deems necessary to reflect the terms of the issuance of such additional
Partnership Interests, including making preferential allocations to classes of
Partnership Interests that are entitled thereto.
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ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Powers of General Partner. Except as otherwise expressly provided in
this Agreement, all management powers over the business and affairs of the
Partnership are and shall be exclusively vested in the General Partner, and no
Limited Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The General
Partner may not be removed by the Limited Partners with or without cause. In
addition to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to
Sections 7.6.A, 7.6.D and 7.11 below, shall have full power and authority to do
all things deemed necessary or desirable by it, on such terms and conditions as
the General Partner in its sole discretion deems appropriate, to conduct the
business of the Partnership, to exercise all powers set forth in Section 3.2
hereof and to effectuate the purposes set forth in Section 3.1 hereof,
including, without limitation:
(1) the making of any expenditures, the lending, subject to
Section 7.6.D, or borrowing of money (including, without
limitation, making prepayments on loans and borrowing money to
permit the Partnership to make distributions to its Partners
in such amounts as are required under Section 5.1.C hereof or
will permit the General Partner Entity or the General Partner
(as applicable) (as long as the General Partner Entity or the
General Partner qualifies as a REIT) to avoid the payment of
any federal income tax (including, for this purpose, any
excise tax pursuant to Section 4981 of the Code) and to make
distributions to its shareholders sufficient to permit the
General Partner Entity or the General Partner (as applicable)
to satisfy the REIT Requirements), the assumption or guarantee
of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness
(including the securing of same by mortgage, deed of trust or
other lien or encumbrance on the Partnership's assets) and the
incurring of any obligations the General Partner deems
necessary or desirable for the conduct of the activities of
the Partnership;
(2) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, sale, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the
assets of the Partnership (including the exercise or grant of
any conversion, option, privilege or subscription right or
other right available in connection with any assets at any
time held by the Partnership) or the merger or other
combination of the Partnership with or into another entity, on
such terms as the General Partner deems proper in its sole and
absolute discretion;
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement, including, without limitation, the
financing of the conduct of the operations of the Partnership
or any of the Partnership's Subsidiaries, the lending of funds
to other Persons, subject to Section 7.6.D, and the repayment
of obligations of the Partnership and its Subsidiaries and any
other Person in which the Partnership has an equity investment
and the making of capital contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or
improvements owned by the Partnership or any
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<PAGE> 34
Subsidiary of the Partnership or any other Person in which the
Partnership has made a direct or indirect equity investment;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the
Partnership's operations or the implementation of the General
Partner's powers under this Agreement, including contracting
with contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents and the
payment of their expenses and compensation out of the
Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) the holding, managing, investing and reinvesting of cash and
other assets of the Partnership and, in connection therewith,
the opening, maintaining and closing of bank and brokerage
accounts and the drawing of checks or other orders for the
payment of moneys;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such
as "president," "vice president," "secretary" and "treasurer")
and agents, outside attorneys, accountants, consultants and
contractors of the Partnership, and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures, limited liability companies or
other relationships that it deems desirable (including,
without limitation, the acquisition of interests in, and the
contributions of property to its Subsidiaries and any other
Person in which it has an equity investment from time to
time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement,
compromise, submission to arbitration or any other form of
dispute resolution or abandonment of any claim, cause of
action, liability, debt or damages due or owing to or from the
Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitrations or other
forms of dispute resolution, the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense and the
indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(14) the determination of the fair market value of any Partnership
property distributed in kind, using such reasonable method of
valuation as the General Partner may adopt;
(15) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of
attorney, of any right, including the right to vote,
appurtenant to any assets or investment held by the
Partnership;
(16) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection
with any Subsidiary of the Partnership or any other Person in
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which the Partnership has a direct or indirect interest,
individually or jointly with any such Subsidiary or other
Person;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which
the Partnership does not have any interest pursuant to
contractual or other arrangements with such Person;
(18) the making, executing and delivering of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of
trust, security agreements, conveyances, contracts,
guarantees, warranties, indemnities, waivers, releases or
other legal instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner for the
accomplishment of any of the powers of the General Partner
under this Agreement;
(19) the distribution of cash to acquire Partnership Units held by
a Limited Partner in connection with a Limited Partner's
exercise of its Redemption Right under Section 8.6 hereof;
(20) the amendment and restatement of Exhibit A hereto to reflect
accurately at all times the Capital Contributions and
Percentage Interests of the Partners as the same are adjusted
from time to time to the extent necessary to reflect
redemptions, Capital Contributions, the issuance of
Partnership Units, the admission of any Additional Limited
Partner or any Substituted Limited Partner or otherwise, which
amendment and restatement, notwithstanding anything in this
Agreement to the contrary, shall not be deemed an amendment of
this Agreement, as long as the matter or event being reflected
in Exhibit A hereto otherwise is authorized by this Agreement;
(21) the approval and/or implementation of any merger (including a
triangular merger), consolidation or other combination between
the Partnership and another person that is not prohibited
under this Agreement, whether with or without Consent, the
terms of Section 17- 211(g) of the Act shall be applicable
such that the General Partner shall have the right to effect
any amendment to this Agreement or effect the adoption of a
new partnership agreement for a limited partnership if it is
the surviving or resulting limited partnership on the merger
or consolidation (except as may be expressly prohibited under
Section 7.11.D., Section 14.1.C, Section 14.1.D or Section
14.1.F); and
(22) the taking of any and all actions necessary or desirable in
furtherance of, in connection with or incidental to the
foregoing.
B. No Approval by Limited Partners. Except as provided in Section 7.11
below, each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement, the
Act or any applicable law, rule or regulation, to the full extent permitted
under the Act or other applicable law. The execution, delivery or performance by
the General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or implied by law
or equity.
C. Insurance. At all times from and after the date hereof, the General
Partner may cause the Partnership to obtain and maintain (i) casualty, liability
and other insurance on the properties of the Partnership, (ii) liability
insurance for the Indemnitees hereunder and (iii) such other insurance as the
General Partner, in its sole and absolute discretion, determines to be
necessary.
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D. Working Capital and Other Reserves. At all times from and after the
date hereof, the General Partner may cause the Partnership to establish and
maintain working capital reserves in such amounts as the General Partner, in its
sole and absolute discretion, deems appropriate and reasonable (both in purpose
and amount) from time to time, including upon liquidation of the Partnership
pursuant to Section 13.2 hereof.
E. No Obligations to Consider Tax Consequences of Limited Partners. In
exercising its authority under this Agreement, the General Partner may, but
shall be under no obligation to, take into account the tax consequences to any
Partner (including the General Partner) of any action taken (or not taken) by
it. The General Partner and the Partnership shall not have liability to a
Limited Partner for monetary damages or otherwise for losses sustained,
liabilities incurred or benefits not derived by such Limited Partner in
connection with such decisions, provided that the General Partner has acted in
good faith and not beyond its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
The Partnership has caused the Certificate to be filed with the
Secretary of State of Delaware. To the extent that such action is determined by
the General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate and do all
the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware and each other state, the District of Columbia or other
jurisdiction in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(4) hereof, the General Partner shall not
be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Limited Partner. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and any other state, the District of Columbia or other jurisdiction
in which the Partnership may elect to do business or own property.
Section 7.3 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
Section 7.4 Reimbursement of the General Partner
A. No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
hereof regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership shall be
responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. The General
Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related to
the management and administration of any Subsidiaries of the General Partner or
the Partnership or Affiliates of the Partnership such as auditing expenses and
filing fees);
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provided that (x), the amount of any such reimbursement shall be reduced by (i)
any interest earned by the General Partner with respect to bank accounts or
other instruments or accounts held by it as permitted in Section 7.5.A below and
(ii) any amount derived by the General Partner from any investments permitted in
Section 7.5.A below and (y) REIT Expenses shall not be treated as Partnership
expenses for purposes of this Section 7.4.B. The General Partner shall determine
in good faith the amount of expenses incurred by it related to the ownership and
operation of, or for the benefit of, the Partnership. In the event that certain
expenses are incurred for the benefit of the Partnership and other entities
(including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. Such reimbursements
shall be in addition to any reimbursement to the General Partner pursuant to
Section 10.3.C hereof and as a result of indemnification pursuant to Section 7.7
below. All payments and reimbursements hereunder shall be characterized for
federal income tax purposes as expenses of the Partnership incurred on its
behalf, and not as expenses of the General Partner.
C. Partnership Interest Issuance Expenses. The General Partner shall
also be reimbursed for all expenses it incurs relating to any issuance of
additional Partnership Interests, Debt of the Partnership or rights, options,
warrants or convertible or exchangeable securities pursuant to Article IV hereof
(including, without limitation, all costs, expenses, damages and other payments
resulting from or arising in connection with litigation related to any of the
foregoing), all of which expenses are considered by the Partners to constitute
expenses of, and for the benefit of, the Partnership.
D. Purchases of Shares by the General Partner. In the event that the
General Partner exercises its rights under the Declaration of Trust to purchase
shares or otherwise elects to purchase from its shareholders Shares in
connection with a share repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend reinvestment
or share purchase program adopted by the General Partner, any employee share
purchase plan adopted by the General Partner or any similar obligation or
arrangement undertaken by the General Partner in the future, the purchase price
paid by the General Partner for such Shares and any other expenses incurred by
the General Partner in connection with such purchase shall be considered REIT
Expenses, and the Partnership shall distribute cash to the General Partner to
offset such expenses pursuant to Section 5.1, subject to the conditions that:
(i) if such Shares subsequently are to be sold by the General Partner, the
General Partner pays to the Partnership any proceeds received by the General
Partner for such Shares (provided that a transfer of Shares for Partnership
Units pursuant to Section 8.6 hereof would not be considered a sale for such
purposes); and (ii) if such Shares are not retransferred by the General Partner
within thirty (30) days after the purchase thereof, the General Partner shall
cause the Partnership to cancel a number of Partnership Units of the appropriate
class (rounded to the nearest whole Partnership Unit) held by the General
Partner equal to the product attained by multiplying the number of such Shares
by a fraction, the numerator of which is one and the denominator of which is the
Conversion Factor.
E. Tax Treatment of Certain Reimbursements. If and to the extent that
any reimbursement made pursuant to this Section 7.4 is determined for federal
income tax purposes not to constitute a payment of expenses of the Partnership,
then such reimbursement shall be treated as a distribution pursuant to clause
(i) of Section 5.1.B. hereof.
Section 7.5 Outside Activities of the General Partner
A. General. Without the Consent of the Outside Limited Partners, except
as set forth in this Section 7.5.A, the General Partner shall not, directly or
indirectly, enter into or conduct any business other than in connection with the
ownership, acquisition and disposition of Partnership Interests as a General
Partner or Limited Partner and the management of the business of the Partnership
and such activities as are incidental to any of the foregoing. Without the
Consent of the Outside Limited Partners, the assets of the General Partner shall
be limited to Partnership Interests and permitted debt obligations of the
Partnership (as contemplated by Section 7.5.F below), so that Shares and
Partnership Units are completely fungible except as otherwise specifically
provided herein; provided, that the General Partner shall be permitted to hold
(i) interests in entities, including Qualified REIT Subsidiaries, that
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hold no material assets; (ii) interests in Qualified REIT Subsidiaries (or other
entities that are not taxed as corporations for federal income tax purposes)
that own only interests in the Partnership and/or interests in other Qualified
REIT Subsidiaries (or other entities that are not taxed as corporations for
federal income tax purposes) that either hold no assets or hold only interests
in the Partnership; (iii) assets and/or interests in entities, including
Qualified REIT Subsidiaries, that hold assets, having an aggregate value not
greater than five percent (5%) of the total market value of the General Partner
Entity (determined by reference to the value of all outstanding equity
securities of the General Partner Entity), provided that (X) the General Partner
Entity will apply the net income from such assets (other than net income derived
as a result of a Qualified REIT Subsidiary's ownership of an interest in the
Partnership) to offset REIT Expenses before utilizing the distribution
provisions of Section 5.1.B, (Y) the General Partner will contribute all net
income generated by such assets and/or interests (other than net income derived
as a result of a Qualified REIT Subsidiary's ownership of an interest in the
Partnership) to the Operating Partnership (after taking into account REIT
Expenses as described in clause (X) above), and (Z) the General Partner will use
commercially reasonable efforts to transfer such assets and interests (other
than interests in Qualified REIT Subsidiaries and the Partnership) to the
Operating Partnership or an entity controlled by the Operating Partnership as
soon as such a transfer can be made without causing the General Partner or the
Operating Partnership to incur any material expenses in connection therewith;
and (iv) such bank accounts or similar instruments or account in its own name as
it deems necessary to carry out its responsibilities and purposes as
contemplated under this Agreement and its organizational documents; and,
provided, further, that the General Partner shall be permitted to acquire,
directly or through a Qualified REIT Subsidiary (or other entities that are not
taxed as corporations for federal income tax purposes), up to a one percent (1%)
interest in any partnership or limited liability company at least ninety-nine
percent (99%) of the equity of which is owned directly or indirectly by the
Partnership. The General Partner and any of its Affiliates may acquire Limited
Partnership Interests and shall be entitled to exercise all rights of a Limited
Partner relating to such Limited Partnership Interests.
B. Repurchase of Shares. In the event the General Partner exercises its
rights under the Declaration of Trust to purchase Shares or otherwise elects to
purchase from its shareholders Shares in connection with a share repurchase or
similar program or for the purpose of delivering such Shares to satisfy an
obligation under any dividend reinvestment or share purchase program adopted by
the General Partner, any employee share purchase plan adopted by the General
Partner or any similar obligation or arrangement undertaken by the General
Partner in the future, and the General Partner does not resell said Shares
within thirty (30) days after the purchase thereof as contemplated in Section
7.4.D(i), then the General Partner shall cause the Partnership to purchase from
the General Partner (and eliminate) that number of Partnership Units of the
appropriate class equal to the product obtained by multiplying the number of
Shares purchased by the General Partner times a fraction, the numerator of which
is one and the denominator of which is the Conversion Factor, on the same terms
and for the same aggregate price that the General Partner purchased such Shares.
C. Forfeiture of Shares. In the event the Partnership or the General
Partner acquires Shares as a result of the forfeiture of such Shares under a
restricted or similar share plan, then the General Partner shall cause the
Partnership to cancel that number of Partnership Units of the appropriate class
equal to the number of Shares so acquired, and, if the Partnership acquired such
Shares, it shall transfer such Shares to the General Partner for cancellation.
D. Issuances of Shares. After the Effective Date, the General Partner
shall not grant, award, or issue any additional Shares (other than Shares issued
pursuant to Section 8.6 hereof or pursuant to a dividend or distribution
(including any share split) of Shares to all of its shareholders), other equity
securities of the General Partner, New Securities or Convertible Funding Debt
unless (i) the General Partner shall cause, pursuant to Section 4.2.A hereof,
the Partnership to issue to the General Partner Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership
having designations, preferences and other rights, all such that the economic
interests are substantially the same as those of such additional Shares, other
equity securities, New Securities or Convertible Funding Debt, as the case may
be, and (ii) the General Partner transfers to the Partnership, as an additional
Capital Contribution, the proceeds from the grant, award, or issuance of such
additional Shares, other
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equity securities, New Securities or Convertible Funding Debt, as the case may
be, or from the exercise of rights contained in such additional Shares, other
equity securities, New Securities or Convertible Funding Debt, as the case may
be. Without limiting the foregoing, the General Partner is expressly authorized
to issue additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be, for less than fair market value,
and the General Partner is expressly authorized, pursuant to Section 4.2.A
hereof, to cause the Partnership to issue to the General Partner corresponding
Partnership Interests, as long as (a) the General Partner concludes in good
faith that such issuance is in the interests of the General Partner and the
Partnership (for example, and not by way of limitation, the issuance of Shares
and corresponding Partnership Units pursuant to a share purchase plan providing
for purchases of Shares, either by employees or shareholders, at a discount from
fair market value or pursuant to employee share options that have an exercise
price that is less than the fair market value of the Shares, either at the time
of issuance or at the time of exercise) and (b) the General Partner transfers
all proceeds from any such issuance or exercise to the Partnership as an
additional Capital Contribution.
E. Stock Option Plan. If at any time or from time to time, the General
Partner sells Shares pursuant to any Stock Option Plan, the General Partner
shall transfer the net proceeds of the sale of such Shares to the Partnership as
an additional Capital Contribution in exchange for an amount of additional
Partnership Units equal to the number of Shares so sold divided by the
Conversion Factor.
F. Funding Debt. The General Partner may incur a Funding Debt,
including, without limitation, a Funding Debt that is convertible into Shares or
otherwise constitutes a class of New Securities ("Convertible Funding Debt"),
subject to the condition that the General Partner lends to the Partnership the
net proceeds of such Funding Debt; provided, that Convertible Funding Debt shall
be issued pursuant to Section 7.5.D above; and, provided, further, that the
General Partner shall not be obligated to lend the net proceeds of any Funding
Debt to the Partnership in a manner that would be inconsistent with the General
Partner's ability to remain qualified as a REIT. If the General Partner enters
into any Funding Debt, the loan to the Partnership shall be on comparable terms
and conditions, including interest rate, repayment schedule and costs and
expenses, as are applicable with respect to or incurred in connection with such
Funding Debt.
Section 7.6 Transactions with Affiliates
A. Transactions with Certain Affiliates. Except as expressly permitted
by this Agreement (other than Section 7.1.A hereof, which shall not be
considered authority for a transaction that otherwise would be prohibited by
this Section 7.6.A), the Partnership shall not, directly or indirectly, sell,
transfer or convey any property to, or purchase any property from, or borrow
funds from, or lend funds to, any Partner or any Affiliate of the Partnership or
the General Partner or the General Partner Entity that is not also a Subsidiary
of the Partnership, except pursuant to a transaction that has been approved by a
majority of the disinterested trustees (or directors) of the General Partner or
General Partner Entity (as applicable), taking into account the fiduciary duties
of the General Partner or General Partner Entity (as applicable) to the Limited
Partners.
B. Benefit Plans. The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may propose and
adopt on behalf of the Partnership employee benefit plans funded by the
Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
C. Conflict Avoidance. The General Partner is expressly authorized to
enter into, in the name and on behalf of the Partnership, a right of first
opportunity arrangement and other conflict avoidance agreements with various
Affiliates of the Partnership and General Partner on such terms as the General
Partner, in its sole and absolute discretion, believes are advisable.
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D. Limitation on Loans to the General Partner. Except with the Consent
of the Outside Limited Partners, the General Partner may not cause the
Partnership to loan money to the General Partner or to any Subsidiary or
Affiliate of the General Partner which is not also a Subsidiary or an entity in
which the Partnership owns an equity interest.
Section 7.7 Indemnification
A. General. To the maximum extent permitted by applicable law at the
time, the Partnership, without requiring a preliminary determination of the
ultimate entitlement to indemnification, shall indemnify each Indemnitee from
and against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements and other amounts arising from or in
connection with any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative incurred by the Indemnitee and
relating to the Partnership or the General Partner or the formation or the
current (and, in the case of the General Partner's right to indemnification from
the Partnership, prior) operations of, or the current (and, in the case of the
General Partner's right to indemnification from the Partnership, prior)
ownership of property by, either of them as set forth in this Agreement in which
any such Indemnitee may be involved, or is threatened to be involved, as a party
or otherwise, unless it is established by a final determination of a court of
competent jurisdiction that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceeding and either was committed in
bad faith or was the result of active and deliberate dishonesty, (ii) the
Indemnitee actually received an improper personal benefit in money, property or
services or (iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful. The
obligations of the Partnership under this Section 7.7 shall include
reimbursement of the General Partner for any indemnification or advance of
expenses by the General Partner pursuant to Title 8, the Declaration of Trust or
its Bylaws. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guarantee, contractual
obligations for any indebtedness or other obligations or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to). The General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements not inconsistent with the provisions of this Section
7.7 in favor of any Indemnitee having or potentially having liability for any
such indebtedness. The termination of any proceeding by judgment, order or
settlement does not create a presumption that the Indemnitee did not meet the
requisite standard of conduct set forth in this Section 7.7.A. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitees, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the Partnership
to fund its obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses expected to be incurred
by an Indemnitee shall be paid or reimbursed by the Partnership in advance of
the final disposition of any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative made or threatened
against an Indemnitee, in the case of any trustee/director or officer who is an
Indemnitee upon receipt by the Partnership of (i) a written affirmation by the
Indemnitee of the Indemnitee's good faith belief that the standard of conduct
necessary for indemnification by the Partnership as authorized in this Section
7.7.A has been met and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.
C. No Limitation of Rights. The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an Indemnitee or
any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
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D. Insurance. The Partnership may purchase and maintain insurance on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i) the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan, (ii) excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 7.7 and (iii) actions taken or omitted by the Indemnitee with respect to
an employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be related to the Partnership.
F. No Personal Liability for Limited Partners. In no event may an
Indemnitee subject any of the Partners to liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7, or any provision hereof,
shall be prospective only and shall not in any way affect the obligation of the
Partnership to any Indemnitee under this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or related to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
I. Indemnification Payments Not Distributions. If and to the extent any
payments to the General Partner pursuant to this Section 7.7 constitute gross
income to the General Partner (as opposed to the repayment of advances made on
behalf of the Partnership), such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.
Section 7.8 Liability of the General Partner
A. General. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its directors and officers shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
for losses sustained, liabilities incurred or benefits not derived as a result
of errors in judgment or mistakes of fact or law or of any act or omission if
the General Partner acted in good faith.
B. No Obligation to Consider Separate Interests of Limited Partners or
Shareholders. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership and the General Partner's
shareholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or Assignees or to such
shareholders) in deciding whether to cause the Partnership to take (or decline
to take) any actions and that the General Partner shall not be liable for
monetary damages or otherwise for losses sustained, liabilities incurred or
benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
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C. Actions of Agents. Subject to its obligations and duties as General
Partner set forth in Section 7.1.A above, the General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by the General Partner in good faith.
D. Effect of Amendment. Any amendment, modification or repeal of this
Section 7.8 or any provision hereof shall be prospective only and shall not in
any way affect the limitations on the General Partner's liability to the
Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. Reliance on Documents. The General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture or other paper or document believed by it in good faith to be genuine
and to have been signed or presented by the proper party or parties.
B. Reliance on Advisors. The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers and
other consultants and advisors selected by it, and any act taken or omitted to
be taken in reliance upon the opinion of such Persons as to matters which the
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall have the right, in
respect of any of its powers or obligations hereunder, to act through any of its
duly authorized officers and a duly appointed attorney or attorneys-in-fact.
Each such attorney shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and every
act and duty which is permitted or required to be done by the General Partner
hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the General
Partner Entity or the General Partner (as applicable). Notwithstanding any other
provisions of this Agreement (other than the limitations on the General
Partner's authority set forth in Sections 7.5, 7.6.A, 7.6.D, and 7.11) or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner Entity or the General Partner (as applicable) to continue to satisfy the
REIT Requirements or (ii) to allow the General Partner Entity or the General
Partner (as applicable) to avoid incurring any liability for taxes under Section
857 or 4981 of the Code, is expressly authorized under this Agreement and is
deemed approved by all of the Limited Partners.
Section 7.10 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement (other than
the limitations on the General Partner's authority set forth in Sections 7.5,
7.6.A, 7.6.D, and 7.11), any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority,
without consent or approval of any other Partner or Person, to encumber, sell or
otherwise use in any manner any and all assets of the Partnership, to enter into
any contracts on behalf of the Partnership and to take any and all actions on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if the General Partner were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives any
and all defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in
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connection with any such dealing. In no event shall any Person dealing with the
General Partner or its representatives be obligated to ascertain that the terms
of this Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the General Partner or its representatives.
Each and every certificate, document or other instrument executed on behalf of
the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership, and (iii) such certificate, document or instrument was duly
executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
Section 7.11 Restrictions on General Partner's Authority
A. Consent Required. The General Partner may not take any action in
contravention of an express prohibition or limitation of this Agreement without
the written Consent of (i) all Partners adversely affected or (ii) such lower
percentage of the Limited Partnership Interests as may be specifically provided
for under a provision of this Agreement or the Act.
B. Intentionally Omitted.
C. Required Consent of Certain Partners. (i) The General Partner may
not, directly or indirectly, cause the Partnership to take any action prohibited
by this Section 7.11.C without the requisite approval as provided in this
Section 7.11.C.
(1) For a period of twenty (20) years following the Effective
Date, the General Partner may not, directly or indirectly,
cause the Partnership to sell, exchange or otherwise dispose
of the property located at Two Penn Plaza, New York, New York
or any indirect interest (including, without limitation, any
interest of the Partnership in Two Penn Plaza REIT, Inc., and
any interest of Two Penn Plaza REIT, Inc., in Vornado Two Penn
Plaza L.L.C., whether, in either case, by liquidation, merger
or otherwise) therein (collectively, the "Two Penn Plaza
Property") (other than an involuntary sale pursuant to
foreclosure of the mortgage secured by the Two Penn Plaza
Property or otherwise, including pursuant to (x) an event
described in Section 1033 of the Code (as determined without
reference to the property, if any, into which the Two Penn
Plaza Property is converted), other than a disposition
resulting from the mere threat or imminence of a requisition
or condemnation and (y) a deed in lieu of foreclosure
(provided that the General Partner may not execute any deed in
lieu of foreclosure unless the maturity of the indebtedness
secured by the Two Penn Plaza Property has occurred, whether
by reason of acceleration or otherwise, or a proceeding in
connection with a Bankruptcy of the Partnership, the fee
owning entity or any intermediate Person between them) to any
Person without the Consent of the Partners at the time of the
proposed sale, exchange or other disposition (other than the
General Partner or the General Partner Entity or any
Subsidiary of either the General Partner or the General
Partner Entity) who hold seventy-five percent (75%) of the
Partnership Units which were issued with respect to Two Penn
Plaza Associates in the Consolidation and which remain
outstanding (whether held by the original recipient of such
Partnership Units or by a successor or transferee of the
original recipient, but not including Partnership Units, if
any, held by (I) the General Partner or the General Partner
Entity or any Subsidiary of either the General Partner or the
General Partner Entity and (II) the estate of Bernard H.
Mendik following his death) (referred to as "Two Penn Plaza
Units"). In addition, during such twenty-year period, the
General Partner may not, directly or indirectly, cause the
Partnership to repay, earlier than one year prior to its
stated maturity, any indebtedness secured by the Two Penn
Plaza Property without the Consent of Partners holding
seventy- five percent (75%) of the Two Penn Plaza Units,
unless such repayment (a) is made in connection with the
refinancing (on a basis such that the new debt would be
considered a Nonrecourse Liability, or, as contemplated and
only to the extent required by clause (2) below, a Partner
Nonrecourse Debt) of such indebtedness for an amount not less
than the principal amount of such indebtedness on the date of
such refinancing, with such refinancing indebtedness (1)
providing for the least amount of principal amortization as is
available on commercially reasonable terms and (2) permitting
(but not requiring) a guarantee of such indebtedness by the
holders of the Two Penn Plaza Units who elect to join in such
guarantee in a form and on terms consistent with the
guarantees by the holders of the Two Penn Plaza Units in
effect immediately prior to such refinancing, provided that
the opportunity to provide such guarantee is obtainable on
commercially reasonable terms, or (b) is made in connection
with an involuntary sale pursuant to foreclosure of the
mortgage secured by the Two Penn Plaza Property or otherwise,
including pursuant to a deed in lieu of foreclosure (provided
that the General Partner may not execute any deed in lieu of
foreclosure unless the maturity of the indebtedness secured by
the Two Penn Plaza Property has been accelerated) or a
proceeding in connection with a Bankruptcy of the Partnership,
the fee-owning entity or any intermediate Person between them.
During such twenty-year period, the General Partner shall use
commercially reasonable efforts during the one-year period
prior to the stated maturity of such indebtedness to cause the
Partnership to refinance (on a basis such that the new debt
would be considered a Nonrecourse Liability, or, as
contemplated and only to the extent required by clause (2)
below, a Partner Nonrecourse Debt) the indebtedness for an
amount not less than the principal amount of such indebtedness
on the date of such refinancing, provided such refinancing can
be obtained on commercially reasonable terms, with such
refinancing indebtedness (1) providing for the least amount of
principal amortization as is available on commercially
reasonable terms and (2) permitting (but not requiring) a
guarantee of such indebtedness by the holders of the Two Penn
Plaza Units who elect to join in such guarantee in a form and
on terms consistent with the guarantees by the holders of the
Two Penn Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such
guarantee is obtainable on commercially reasonable terms.
Finally, during such twenty-year period, the General Partner
shall not, without the Consent of Partners holding
seventy-
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<PAGE> 44
five percent (75%) of the Two Penn Plaza Units, incur
indebtedness secured by the Two Penn Plaza Property if, at the
time such indebtedness is incurred, the aggregate amount of
the indebtedness secured by the Two Penn Plaza Property would
exceed the greater of (i) seventy percent (70%) of the fair
market value of the Two Penn Plaza Property (or the interest
therein) securing such indebtedness or (ii) the then
outstanding indebtedness being refinanced plus all costs
(including prepayment fees, "breakage" payments and similar
costs) incurred in connection with such refinancing. All
references in this Section 7.11.C to "commercially reasonable
terms" shall be as determined by the General Partner in its
sole discretion, exercised in good faith.
(2) For a period of twenty (20) years following the Effective
Date, the General Partner may not, directly or indirectly,
cause the Partnership to sell, exchange or otherwise dispose
of the property located at Eleven Penn Plaza, New York, New
York or any indirect interest therein (collectively, the
"Eleven Penn Plaza Property") (other than an involuntary sale
pursuant to foreclosure of the mortgage secured by the Eleven
Penn Plaza Property or otherwise, including pursuant to (x) an
event described in Section 1033 of the Code (as determined
without reference to the property, if any, into which the
Eleven Penn Plaza Property is converted), other than a
disposition resulting from the mere threat or imminence of a
requisition or condemnation and (y) a deed in lieu of
foreclosure (provided that the General Partner may
not execute any deed in lieu of foreclosure unless the
maturity of the
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indebtedness secured by the Eleven Penn Plaza Property has
occurred, whether by reason of acceleration or otherwise, or a
proceeding in connection with a Bankruptcy of the Partnership,
the fee-owning entity or any intermediate Person between them)
to any Person without the Consent of the Partners at the time
of the proposed sale, exchange or other disposition who hold
seventy-five percent (75%) of the Partnership Units which were
issued with respect to the Eleven Penn Partnerships in the
Consolidation and which remain outstanding (whether held by
the original recipient of such Partnership Units or by a
successor or transferee of the original recipient, but not
including the Partnership Units, if any, held by (I) General
Partner or the General Partner Entity or any Subsidiary of
either the General Partner or the General Partner Entity and
(II) the estate of Bernard H. Mendik following his death)
(referred to as "Eleven Penn Plaza Units"). In addition,
during such twenty-year period, the General Partner may not,
directly or indirectly, cause the Partnership to repay,
earlier than one year prior to its stated maturity, any
indebtedness secured by the Eleven Penn Plaza Property without
the Consent of Partners who hold seventy-five percent (75%) of
the Eleven Penn Plaza Units, unless such repayment (a) is made
in connection with the refinancing (on a basis such that the
new debt would be considered a Nonrecourse Liability, or, as
contemplated and only to the extent required by clause (2)
below, a Partner Nonrecourse Debt) of such indebtedness for an
amount not less than the principal amount of such indebtedness
on the date of such refinancing, with such refinancing
indebtedness (1) providing for the least amount of principal
amortization as is available on commercially reasonable terms
and (2) permitting (but not requiring) a guarantee of such
indebtedness by the holders of the Eleven Penn Plaza Units who
elect to join in such guarantee in a form and on terms
consistent with the guarantees by the holders of the Eleven
Penn Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such
guarantee is obtainable on commercially reasonable terms, or
(b) is made in connection with an involuntary sale pursuant to
foreclosure of the mortgage secured by the Eleven Penn Plaza
Property or otherwise, including pursuant to a deed in lieu of
foreclosure (provided that the General Partner may not execute
any deed in lieu of foreclosure unless the maturity of the
indebtedness secured by the Eleven Penn Plaza Property has
been accelerated) or a proceeding in connection with a
Bankruptcy of the Partnership, the fee-owning entity or any
intermediate Person between them. During such twenty-year
period, the General Partner shall use commercially reasonable
efforts during the one-year period prior to the stated
maturity of such indebtedness to cause the Partnership to
refinance (on a basis such that the new debt would be
considered a Nonrecourse Liability, or, as contemplated and
only to the extent required by clause (2) below, a Partner
Nonrecourse Debt) the indebtedness for an amount not less than
the principal amount of such indebtedness on the date of such
refinancing, provided such refinancing can be obtained on
commercially reasonable terms, with such refinancing
indebtedness (1) providing for the least amount of principal
amortization as is available on commercially reasonable terms
and (2) permitting (but not requiring) a guarantee of such
indebtedness by the holders of the Eleven Penn Plaza Units who
elect to join in such guarantee in a form and on terms
consistent with the guarantees by the holders of the Eleven
Penn Plaza Units in effect immediately prior to such
refinancing, provided that the opportunity to provide such
guarantee is obtainable on commercially reasonable terms.
Finally, during such twenty-year period, the General Partner
shall not, without the Consent of Partners holding
seventy-five percent (75%) of the Eleven Penn Plaza Units,
incur indebtedness secured by the Eleven Penn Plaza Property
if, at the time such indebtedness is incurred, the aggregate
amount of the indebtedness secured by the Eleven Penn Plaza
Property would exceed the greater of (i) seventy percent (70%)
of the fair market value of the Eleven Penn Plaza Property (or
the interest therein) securing such indebtedness or (ii)
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the then outstanding indebtedness being refinanced plus all
costs (including prepayment fees, "breakage" payments and
similar costs) incurred in connection with such refinancing.
(3) For a period of twenty (20) years following the Effective
Date, the General Partner may not, directly or indirectly,
cause the Partnership to sell, exchange, or otherwise dispose
of the property located at 866 U.N. Plaza, New York, New York
or any indirect interest therein (collectively, the "866 U.N.
Plaza Property") (other than an involuntary sale pursuant to
foreclosure of the mortgage secured by the 866 U.N. Plaza
Property or otherwise, including pursuant to (x) an event
described in Section 1033 of the Code (as determined without
reference to the property, if any, into which the 866 U.N.
Plaza Property is converted), other than a disposition
resulting from the mere threat or imminence of a requisition
or condemnation and (y) a deed in lieu of foreclosure
(provided that the General Partner may not execute any deed in
lieu of foreclosure unless the maturity of the indebtedness
secured by the 866 U.N. Plaza Property has occurred, whether
by reason of acceleration or otherwise, or a proceeding in
connection with a Bankruptcy of the Partnership, the fee-
owning entity or any intermediate Person between them) to any
Person without the Consent of the Partners at the time of the
proposed sale, exchange or other disposition (other than the
General Partner or the General Partner Entity or any
Subsidiary of either of the General Partner of the General
Partner or the General Partner Entity) who hold seventy-five
percent (75%) of the Partnership Units which were issued with
respect to 866 U.N. Plaza Associates in the Consolidation and
which remain outstanding (whether held by the original
recipient of such Partnership Units or by a successor or
transferee of the original recipient, but not including
Partnership Units, if any, held by (I) the General Partner or
the General Partner Entity or any Subsidiary of either the
General Partner or the General Partner Entity and (II) the
estate of Bernard H. Mendik following his death) (referred to
as "866 U.N. Plaza Units"). In addition, during such
twenty-year period, the General Partner may not, directly or
indirectly, cause the Partnership to repay, earlier than one
year prior to its stated maturity, any indebtedness secured by
the 866 U.N. Plaza Property without the Consent of Partners
holding seventy-five percent (75%) of the 866 U.N. Plaza
Units, unless such repayment (a) is made in connection with
the refinancing (on a basis such that the new debt would be
considered a Nonrecourse Liability or, as contemplated and
only to the extent required by clause (2) below, a Partner
Nonrecourse Debt) of such indebtedness for an amount not less
than the principal amount of such indebtedness on the date of
such refinancing, with such refinancing indebtedness (1)
providing for the least amount of principal amortization as is
available on commercially reasonable terms and (2) permitting
(but not requiring) a guarantee of such indebtedness by the
holders of the 866 U.N. Plaza Units who elect to join in such
guarantee in a form and on terms consistent with the
guarantees by the holders of the 866 U.N. Plaza Units in
effect immediately prior to such refinancing, provided that
the opportunity to provide such guarantee is obtainable on
commercially reasonable terms, or (b) is made in connection
with an involuntary sale pursuant to foreclosure of the
mortgage secured by the 866 U.N. Plaza Property or otherwise,
including pursuant to a deed in lieu of foreclosure (provided
that the General Partner may not execute any deed in lieu of
foreclosure unless the maturity of the indebtedness secured by
the 866 U.N. Plaza Property has been accelerated) or a
proceeding in connection with a Bankruptcy of the Partnership,
of the fee-owning entity or any intermediate Person between
them. During such twenty-year period, the General Partner
shall use commercially reasonable efforts during the one-year
period prior to the stated maturity of such indebtedness to
cause the Partnership to refinance (on a basis such that the
new debt would be considered a Nonrecourse Liability, or, as
contemplated and only to the extent required by clause (2)
below, a Partner Nonrecourse Debt) the indebtedness for an
amount not less than the principal amount of such indebtedness
on the date of such
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<PAGE> 47
refinancing, provided such refinancing can be obtained on
commercially reasonable terms, with such refinancing
indebtedness (1) providing for the least amount of principal
amortization as is available on commercially reasonable terms
and (2) permitting (but not requiring) a guarantee of such
indebtedness by the holders of the 866 U.N. Plaza Units who
elect to join in such guarantee in a form and on terms
consistent with the guarantees by the holders of the 866 U.N.
Plaza Units in effect immediately prior to such refinancing,
provided that the opportunity to provide such guarantee is
obtainable on commercially reasonable terms. Finally, during
such twenty-year period, the General Partner shall not,
without the Consent of Partners holding seventy-five percent
(75%) of the 866 U.N. Plaza Units, incur indebtedness secured
by the 866 U.N. Plaza Property if, at the time such
indebtedness is incurred, the aggregate amount of the
indebtedness secured by the 866 U.N. Plaza Property would
exceed the greater of (i) seventy percent (70%) of the fair
market value of the 866 U.N. Plaza Property (or the interest
therein) securing such indebtedness or (ii) the then
outstanding indebtedness being refinanced plus all costs
(including prepayment fees, "breakage" payments and similar
costs) incurred in connection with such refinancing.
(4) Subparagraphs (1), (2), and (3) shall not apply to any
transaction that involves the Two Penn Plaza Property, the
Eleven Penn Plaza Property or the 866 U.N. Plaza Property, as
the case may be (which Property is referred to as the
"Exchanged Property"), if such transaction qualifies as a
like-kind exchange under Section 1031 of the Code or an
involuntary conversion under Section 1033 of the Code (other
than an involuntary conversion under Section 1033 of the Code
that is described in the second parenthetical to subparagraphs
(1), (2) or (3), as the case may be) in which no gain is
recognized by the Partnership as long as the following
conditions are satisfied: (x) in the case of a Section 1031
like-kind exchange, such exchange is not with a "related
party" within the meaning of Section 1031(f)(3) of the Code;
(y) the property received in exchange for the Exchanged
Property (referred to as the "Replacement Property") is
acquired in the same taxable year of the Partnership in which
the disposition of the Exchanged Property occurs and is
secured by nonrecourse indebtedness in an amount not less than
the outstanding principal amount of the nonrecourse
indebtedness secured by the Exchanged Property at the time of
the exchange, nor greater than the amount that would be
permitted under Sections 7.11.C(1), (2), or (3), as the case
may be (except that 70% of fair market value shall be
determined by reference to the Replacement Property and not
the Exchanged Property, with a maturity not earlier than, and
a principal amortization rate not more rapid than, the
maturity and principal amortization rate of such indebtedness
secured by the Exchanged Property, which indebtedness permits
(but does not require) a guarantee of such indebtedness by the
holders of the Two Penn Plaza Units, the Eleven Penn Plaza
Units or the 866 U.N. Plaza Units, as the case may be, who
elect to join in such guarantee in a form and on terms
consistent with the guarantees by the holders of the Two Penn
Plaza Units, the Eleven Penn Plaza Units or the 866 U.N. Plaza
Units, as the case may be, in effect immediately prior to the
time of the exchange, and (z) the Replacement Property is
thereafter treated for all purposes of the restrictions in
this Section 7.11.C as the Exchanged Property and the
indebtedness secured by such Replacement Property is subject
to the same restrictions and agreements as apply with respect
to the indebtedness secured by the Exchanged Property.
(5) Subparagraphs (1), (2), and (3) shall not apply to any
transaction that involves the Two Penn Plaza Property, the
Eleven Penn Plaza Property or the 866 U.N. Plaza Property, as
the case may be (which Property is referred to as the
"Transferred Property"), if (x) such transaction is one in
which no gain is recognized with respect to the Two Penn Plaza
Property, the Eleven Penn Plaza Property or the 866 U.N. Plaza
Property by the Partnership
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<PAGE> 48
or the holders of the Two Penn Plaza Units, the Eleven Penn
Plaza Units, or the 866 U.N. Plaza Units, as the case may be
(other than gain, if any, resulting solely because the share,
if any, of indebtedness allocable to a Partnership Unit is
reduced or eliminated), provided that (i) the amount of
indebtedness secured by the Two Penn Plaza Property, the
Eleven Penn Plaza Property or the 866 U.N. Plaza Property, as
applicable, is not decreased as a result of the transaction
and the amount of indebtedness secured by the Two Penn Plaza
Property, the Eleven Penn Plaza Property or the 866 U.N. Plaza
Property, as applicable, that is a Nonrecourse Liability or
Partner Nonrecourse Debt is not reduced, except as permitted
by the relevant provisions of Subparagraph (1), (2) or (3) of
this Section 7.11.C, and (ii) the indebtedness secured by the
Two Penn Plaza Property, the Eleven Penn Plaza Property or the
866 U.N. Plaza Property, as applicable, continues to be taken
into account in determining the Partners' basis in their
Partnership Interests under rules similar to those provided in
Section 752 of the Code and (y) the entity to which such
Transferred Property is transferred agrees, for the benefit of
the holders of the Two Penn Plaza Units, the Eleven Penn Plaza
Units or the 866 U.N. Plaza Units, as the case may be, that
all of the restrictions of this Section 7.11.C shall apply to
the Transferred Property and the indebtedness outstanding with
respect thereto in the same manner and to the extent set forth
in this Section 7.11.C and such agreement is reflected in the
partnership agreement (or other comparable governing
instrument) of the entity to which the Transferred Property is
transferred.
(6) Subparagraphs (1), (2), and (3) shall not apply to any
transaction that involves either a merger or consolidation of
the Partnership with or into another entity that qualifies as
a "partnership" for federal income tax purposes (the
"Successor Partnership") or a transfer of all or substantially
all of the assets of the Partnership to a Successor
Partnership and dissolution of the Partnership in connection
therewith (in either case, a "Consolidation Transaction") so
long as (x) no gain is recognized with respect to the Two Penn
Plaza Property, the Eleven Penn Plaza Property or the 866 U.N.
Plaza Property by the Partnership or the holders of the Two
Penn Plaza Units, the Eleven Penn Plaza Units or the 866 U.N.
Plaza Units, as the case may be, in connection with such
Consolidation Transaction (other than gain, if any, resulting
solely because the share, if any, of indebtedness allocable to
a Partnership Unit is reduced or eliminated, provided that the
amount of indebtedness secured by the Two Penn Plaza Property,
the Eleven Penn Plaza Property or the 866 U.N. Plaza Property,
as applicable, is not decreased as a result of the transaction
and the amount of indebtedness secured by the Two Penn Plaza
Property, the Eleven Penn Plaza Property or the 866 U.N. Plaza
Property, as applicable, that is a Nonrecourse Liability or
Partner Nonrecourse Debt is not reduced, except as permitted
by the relevant provisions of Subparagraph (1), (2) or (3) of
this Section 7.11.C, and (y) the Successor Partnership agrees
in writing, for the benefit of the holders of the Two Penn
Plaza Units, the Eleven Penn Plaza Units or the 866 U.N. Plaza
Units, as the case may be, that all of the restrictions of
this Section 7.11.C shall apply to the Two Penn Plaza
Property, the Eleven Penn Plaza Property and the 866 U.N.
Plaza Property and the indebtedness outstanding with respect
thereto in the same manner and to the extent set forth in this
Section 7.11.C.
(7) Subparagraphs (1), (2) and (3) shall not apply to any
transaction not otherwise described in Subparagraph (4), (5)
or (6) involving the Two Penn Plaza Property, the Eleven Penn
Plaza Property and/or the 866 U.N. Plaza Property if,
concurrently with the consummation of such transaction, the
Partnership pays to the holders of the Two Penn Plaza Units,
the Eleven Penn Plaza Units and/or the 866 U.N. Plaza Units,
as applicable, in addition to any amounts otherwise
distributable under Article V hereof, an amount equal to the
lesser of (x) the aggregate federal, state and local income
taxes payable by each holder of Two Penn
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Plaza Units, as applicable, as a result of or in connection
with such transactions, or (y) the aggregate federal, state
and local income taxes that would have been payable by such
holder (or its predecessor in interest) if the relevant
property had been sold on the Effective Date for its 704(c)
Value; provided that the amount referred to in clause (y)
shall be reduced to reflect (I) reductions in the Book/Tax
Disparity with respect to the Two Penn Plaza Property, the
Eleven Penn Plaza Property and/or the 866 U.N. Plaza Property,
as applicable, and (II) with respect to a holder who acquired
Two Penn Plaza Units, Eleven Penn Plaza Units and/or 866 U.N.
Plaza Units, as applicable, subsequent to the Effective Date,
the reduction in gain that results from such holder's having a
special inside basis under Section 743 of the Code in the Two
Penn Plaza Property, the Eleven Penn Plaza Property or the 866
U.N. Plaza Property, as applicable (by treating the special
inside basis as the basis for determining gain on the deemed
sale described in clause (y)), but, in either (I) or (II), the
gain with respect to which the tax is computed may not be so
reduced beneath the "negative basis" associated, as of the
Effective Time, with the Two Penn Plaza Units, the Eleven Penn
Plaza Units or the 866 U.N. Plaza Units, as appropriate, plus
in the case of either (x) or (y), an amount equal to the
aggregate federal, state and local income taxes payable by the
recipient thereof as the result of the receipt of the payments
provided for in this subparagraph (7) (including for this
purpose all taxes on payments hereunder intended to compensate
the recipient thereof for taxes owed by the recipient). For
purposes of the preceding sentence, (x) all income arising
from the transaction that is treated as ordinary income under
the applicable provisions of the Code and is allocated to the
holders of the Two Penn Plaza Units, the Eleven Penn Plaza
Units and/or the 866 U.N. Plaza Units, as applicable, shall be
treated as subject to federal, state and local income tax at
the effective tax rate imposed on ordinary income of New York
City residents, determined using the maximum federal, New York
State and New York City rates on ordinary income then in
effect and (y) all other income arising from the transaction
and all payments provided for in this subparagraph (7) shall
be treated as subject to federal, state and local income tax
at the effective tax rate imposed on long-term capital gains
of New York City residents, determined using the maximum
federal, New York State and New York City rates on long-term
capital gains then in effect.
If at any time prior to the twentieth (20th) anniversary of the
Effective Date, the Partnership pays the amounts described in subparagraph (7)
above in respect of any Partnership Units entitled to the benefits of Section
7.11.C(1), (2) or (3), and the amount of such payment is, at the time that it is
made, equal to the full amount that would be payable under such Sections with
respect to such Partnership Units if the Two Penn Plaza Property, the Eleven
Penn Plaza Property, or the 866 U.N. Plaza Property, as applicable, were to have
been sold on such date for its market value, then the provisions of Section
7.11.C shall thereafter cease to apply to those Partnership Units.
(ii) Nothing herein shall be deemed to require that the Partnership or
the General Partner take any action to avoid or prevent an involuntary
disposition of any property, whether pursuant to foreclosure of a mortgage
secured by such property or otherwise, including pursuant to a deed in lieu of
foreclosure or a proceeding in connection with a Bankruptcy.
(iii) Nothing herein shall prevent the sale, exchange, transfer or
other disposition of any property pursuant to the dissolution and liquidation of
the Partnership in accordance with Article XIII hereof (other than Section
13.1(v), which shall be subject to this Section 7.11.C).
D. Merger or Consolidation in Which the Partnership is Not the
Surviving Entity. In the event that the Partnership is to merge or consolidate
with or into any other entity in a transaction in which holders of Partnership
Units will receive consideration other than cash or equity securities that are
Publicly Traded (an "Equity
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Merger") and such Equity Merger would be prohibited by Section 7.11.C but for
the application of Section 7.11.C(6) (and not Section 7.1.C(4), (5) or (7)),
then, unless the Consent of Certain Limited Partners is obtained:
(i) the partnership agreement, limited liability agreement or other
operative governing documents (the "Charter Documents") of the entity
that is the surviving entity in such Equity Merger must contain
provisions that are comparable in all material respects to, or the
entity that is the surviving entity in such Equity Merger must
otherwise agree in writing, for the benefit of the holders of the Two
Penn Plaza Units, the Eleven Penn Plaza Units, and the 866 U.N. Plaza
Units, to restrictions that are comparable in all material respects to
the provisions of Section 4.2.A, Article V and Article VI (except for
differences that would be permitted pursuant to Sections 4.2, 5.1.C,
5.4, 6.2 and 14.1.B(3) if such changes were to be made to this
Agreement), Section 7.6.A, Section 7.11.A, this Section 7.11.D, Section
8.6 (and all defined terms set forth in Article I that relate to the
Redemption Right), Section 11.2, Section 13.1, Section 13.2.A(3)
(except as permitted pursuant to Sections 4.2, 5.4, 6.2 and 14.1.B(3)),
Section 14.1.C, Section 14.1.D, and Section 14.2, all as in effect
immediately prior to the Equity Merger; and
(ii) the Equity Merger shall not cause a holder of a Partnership Unit
to be a general partner or to have liability equivalent to that of a
general partner in a partnership or otherwise modify the limited
liability of a Limited Partner under this Agreement.
Section 7.12 Loans by Third Parties
The Partnership may incur Debt, or enter into similar credit,
guarantee, financing or refinancing arrangements for any purpose (including,
without limitation, in connection with any acquisition of property) with any
Person upon such terms as the General Partner determines appropriate; provided,
that the Partnership shall not incur any Debt that is recourse to the General
Partner unless, and then only to the extent that, the General Partner has
expressly agreed.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 8.3 Outside Activities of Limited Partners
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Subject to Section 7.5 hereof, and subject to any agreements
entered into pursuant to Section 7.6.C hereof and to any other agreements
entered into by a Limited Partner or its Affiliates with the Partnership or a
Subsidiary, any Limited Partner (other than the General Partner) and any
officer, director, employee, agent, trustee, Affiliate or shareholder of any
Limited Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities in direct or indirect competition
with the Partnership. Neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. None of the Limited Partners (other than the General
Partner) nor any other Person shall have any rights by virtue of this Agreement
or the partnership relationship established hereby in any business ventures of
any other Person (other than the General Partner to the extent expressly
provided herein), and such Person shall have no obligation pursuant to this
Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section
8.6 below, no Limited Partner shall be entitled to the withdrawal or return of
its Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. No
Limited Partner or Assignee shall have priority over any other Limited Partner
or Assignee either as to the return of Capital Contributions (except as
permitted by Section 4.2.A hereof) or, except to the extent provided by Exhibit
C hereto or as permitted by Sections 4.2.A, 5.1.B(i) hereof or otherwise
expressly provided in this Agreement, as to profits, losses, distributions or
credits.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.D below, each
Limited Partner shall have the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the Partnership, upon written
demand with a statement of the purpose of such demand and at such Limited
Partner's own expense:
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by the General Partner Entity
pursuant to the Exchange Act;
(2) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
and
(4) to obtain a copy of this Agreement and the Certificate
and all amendments thereto, together with copies of all
powers of attorney pursuant to which this Agreement,
the Certificate and all amendments thereto have been
executed.
B. Notice of Conversion Factor. The Partnership shall notify
each Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General Partner
Entity. The General Partner Entity shall not make any extraordinary
distributions of cash or property to its shareholders or effect a merger
(including, without limitation, a triangular merger), a sale of all or
substantially all of its assets or any other similar extraordinary transaction
without notifying the Limited Partners of its intention to make such
distribution or effect such
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merger, sale or other extraordinary transaction at least twenty (20) days prior
to the record date to determine shareholders eligible to receive such
distribution or to vote upon the approval of such merger, sale or other
extraordinary transaction (or, if no such record date is applicable, at least
twenty (20) days before consummation of such merger, sale or other extraordinary
transaction). This provision for such notice shall not be deemed (i) to permit
any transaction that otherwise is prohibited by this Agreement or requires a
Consent of the Partners or (ii) to require a Consent of the Limited Partners to
a transaction that does not otherwise require Consent under this Agreement. Each
Limited Partner agrees, as a condition to the receipt of the notice pursuant
hereto, to keep confidential the information set forth therein until such time
as the General Partner Entity has made public disclosure thereof and to use such
information during such period of confidentiality solely for purposes of
determining whether or not to exercise the Redemption Right; provided, however,
that a Limited Partner may disclose such information to its attorney, accountant
and/or financial advisor for purposes of obtaining advice with respect to such
exercise so long as such attorney, accountant and/or financial advisor agrees to
receive and hold such information subject to this confidentiality requirement.
D. Confidentiality. Notwithstanding any other provision of this
Section 8.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any information that (i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business or (ii) the Partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.
Section 8.6 Redemption Right
A. General. (i) Subject to Section 8.6.C below, on or after the
date one (1) year (or, in the case of Partnership Units owned by a Restricted
Partner on or before the Effective Date, two (2) years (subject to the terms of
the parenthetical and the proviso in Section 11.3.A(y))) after the Effective
Date (or, if later, the date of the issuance of a Partnership Unit to a Limited
Partner pursuant to Article IV hereof) which one-year (or two-year, if
applicable) period shall commence upon the issuance of such Partnership Unit
regardless of whether such Partnership Unit is designated upon issuance as a
Class A Unit, a Class B Unit, a Class C Unit, a Class D Unit, a Class E Unit or
otherwise and shall include any class A Unit issued in exchange for such
Partnership Unit pursuant to Section 4.2.D), or on or after such date prior to
the expiration of such one-year period or two-year period, as applicable, as the
General Partner, in its sole and absolute discretion, designates with respect to
any or all Partnership Units then outstanding, the holder of a Partnership Unit
(if other than the General Partner or the General Partner Entity or any
Subsidiary of either the General Partner or the General Partner Entity) shall
have the right (the "Redemption Right") to require the Partnership to redeem
such Partnership Unit on a Specified Redemption Date and at a redemption price
equal to and in the form of the Cash Amount to be paid by the Partnership. In
addition, at any time commencing on the ninety-first (91st) day after the
Effective Date and continuing until (but not after) the first anniversary of the
Effective Date, any holder of a Class E Unit shall have the right (which shall
also be deemed a Redemption Right hereunder) to require the Partnership to
redeem such Partnership Unit on a Specified Redemption Date and at a redemption
price equal to and in the form of ninety-four percent (94%) of the Cash Amount
to be paid by the Partnership. Any such Redemption Right shall be exercised
pursuant to a Notice of Redemption delivered to the Partnership (with a copy to
the General Partner) by the Limited Partner who is exercising the Redemption
Right (the "Redeeming Partner"). A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Partnership Units or, if
such Redeeming Partner holds less than one thousand (1,000) Partnership Units,
for less than all of the Partnership Units held by such Redeeming Partner.
(ii) The Redeeming Partner shall have no right with respect to any
Partnership Units so redeemed to receive any distributions paid after the
Specified Redemption Date.
(iii) The Assignee of any Limited Partner may exercise the rights of
such Limited Partner pursuant to this Section 8.6, and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and shall be
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bound by the exercise of such rights by such Limited Partner's Assignee. In
connection with any exercise of the such rights by such Assignee on behalf of
such Limited Partner, the Cash Amount shall be paid by the Partnership directly
to such Assignee and not to such Limited Partner.
(iv) In the event that the General Partner provides notice to the
Limited Partners, pursuant to Section 8.5.C hereof, the Redemption Right shall
be exercisable, subject to the one-year limitation contained in Section
8.6(a)(i) (and, for purposes of this clause (iv), the two-year limitation
imposed on Restricted Partners under this Section 8.6 shall be shortened to one
year after the Effective Date beyond the first anniversary of the Effective
Date), during the period commencing on the date on which the General Partner
provides such notice and ending on the record date to determine shareholders
eligible to receive such distribution or to vote upon the approval of such
merger, sale or other extraordinary transaction (or, if no such record date is
applicable, the date that is twenty (20) days after the date the General Partner
provides such notice pursuant to Section 8.5.C hereof). In the event that this
subparagraph (iv) applies, the Specified Redemption Date shall be the sooner of
(1) the tenth (10th) Business Day after the Partnership receives the Redemption
Notice or (2) the Business Day immediately preceding the record date to
determine shareholders eligible to receive a distribution or vote on approval;
provided that if such time determined pursuant to clause (1) or (2) above occurs
in less than ten (10) Business Days and the Partnership elects to redeem the
subject Partnership Units for cash, the Partnership will have up to ten (10)
Business Days from receipt of the Redemption Notice to deliver payment in
respect of such Partnership Units.
(v) Notwithstanding the terms of Section 8.6.A(i) or anything else in
this Agreement to the contrary, if there shall have been a merger or
consolidation of the General Partner, or a sale or all or substantially all of
the assets of the General Partner as an entirety, and in either case, in
connection therewith, the shareholders of the General Partner are obligated to
accept cash and/or debt obligations in full or partial consideration for their
Shares, then the portion of the Redemption Amount per Partnership Unit that
corresponds to the portion of Value of the total consideration receivable for
one Share multiplied by the Conversion Factor (a "Unit Equivalent") that is
required to be accepted in cash and/or debt obligations shall thereafter be an
amount of cash equal to the sum of (i) the cash payable for a Unit Equivalent on
the date of the closing of such merger, consolidation or sale and (ii) the Value
on the date of the closing of such merger, consolidation, or sale of the debt
obligations to be received with respect to a Unit Equivalent, adjusted as set
forth below (this amount of cash is referred to as the "Required Cash Payment")
(the percentage that the Required Cash Payment represents of the total
Redemption Amount with respect to a Partnership Unit, determined as of such
closing date, is referred to as the "Pro Rata Portion"). The balance of the
Redemption Amount per Partnership Unit shall be determined as provided for in
the definitions of Conversion Factor, Redemption Amount, Shares Amount, Cash
Amount and Value. In the event that the merger, consolidation or sale giving
rise to the application of this clause (v) occurs at a time when there shall be
any Persons the consent of whom is required pursuant to the definition of
"Consent of Certain Limited Partners", then the Required Cash Payment shall be
increased by a cash payment to the extent required to provide such Limited
Partner, upon the exercise of its Redemption Right with respect to a Partnership
Unit, with an Internal Rate of Return on such Required Cash Payment for the
period from the date of such merger, consolidation or sale to the date of the
redemption of the Partnership Unit, when taken together with the Pro Rata
Portion of all distributions received by such Limited Partner with respect to
such Partnership Unit from and after the effective date of the merger,
consolidation or sale equal to the Treasury Constant Yield. As used herein, the
"Treasury Constant Yield" shall mean the arithmetic mean of the rates published
as "Treasury Constant Maturities" as of 5:00 p.m., New York time, for the five
business days preceding the effective date of the merger, consolidation or sale,
as shown on the USD screen of the Telerate service (or if such service is not
available, under Section 504 in the weekly statistical release designated
H.15(519) (or any successor publication) published by the Board of Governors of
the Federal Reserve System, for "On the Run" U.S. Treasury obligations
corresponding to the twentieth anniversary of the date hereof). If no such
maturity shall so exactly correspond, yields for the two most closely
corresponding published maturities shall be calculated pursuant to the foregoing
sentence and the Treasury Constant Yield shall be interpolated or extrapolated
(as applicable) from such yields on a straight-line basis (rounding, in the case
of relevant periods, to the nearest month). As used herein, "Internal Rate of
Return" shall mean, with respect to a rate of return of the Constant Treasury
Yield, commencing on the effective date of the merger, consolidation or sale,
compounded quarterly to the extent not paid on a current basis, taking into
account the timing
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and amounts of this Pro Rata Portion of all distributions by the Partnership to
such Partner with respect to such Partnership Unit; for purposes of computing
the Internal Rate of Return, distributions to a Partner at any time during a
month shall be deemed to be made and received on the day actually made.
B. General Partner Assumption of Right. (i) If a Limited Partner
has delivered a Notice of Redemption (other than a Notice of Redemption relating
to a Class E Unit given prior to the first anniversary of the Effective Date),
the General Partner may, in its sole and absolute discretion (subject to any
limitations on ownership and transfer of Shares set forth in the Declaration of
Trust), elect to assume directly and satisfy a Redemption Right by paying to the
Redeeming Partner either the Cash Amount or the Shares Amount, as the General
Partner determines in its sole and absolute discretion (provided that payment of
the Redemption Amount in the form of Shares shall be in Shares registered under
Section 12 of the Exchange Act and listed for trading on the exchange or
national market on which the Shares are Publicly Traded, and provided, further,
that in the event that the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall be
paid only in the form of the Cash Amount unless the Redeeming Partner, in its
sole and absolute discretion, consents to payment of the Redemption Amount in
the form of the Shares Amount), on the Specified Redemption Date, whereupon the
General Partner shall acquire the Partnership Units offered for redemption by
the Redeeming Partner and shall be treated for all purposes of this Agreement as
the owner of such Partnership Units and such Partnership Units shall
automatically convert to Class A Units upon acquisition by the General Partner.
Unless the General Partner, in its sole and absolute discretion, shall exercise
its right to assume directly and satisfy the Redemption Right, the General
Partner shall not have any obligation to the Redeeming Partner or to the
Partnership with respect to the Redeeming Partner's exercise of the Redemption
Right. In the event the General Partner shall exercise its right to satisfy the
Redemption Right in the manner described in the first sentence of this Section
8.6.B and shall fully perform its obligations in connection therewith, the
Partnership shall have no right or obligation to pay any amount to the Redeeming
Partner with respect to such Redeeming Partner's exercise of the Redemption
Right, and each of the Redeeming Partner, the Partnership and the General
Partner shall, for federal income tax purposes, treat the transaction between
the General Partner and the Redeeming Partner as a sale of the Redeeming
Partner's Partnership Units to the General Partner. Nothing contained in this
Section 8.6.B shall imply any right of the General Partner to require any
Limited Partner to exercise the Redemption Right afforded to such Limited
Partner pursuant to Section 8.6.A above.
(ii) In the event that the General Partner determines to pay the
Redeeming Partner the Redemption Amount in the form of Shares, the total number
of Shares to be paid to the Redeeming Partner in exchange for the Redeeming
Partner's Partnership Units shall be the applicable Shares Amount. In the event
this amount is not a whole number of Shares, the Redeeming Partner shall be paid
(i) that number of Shares which equals the nearest whole number less than such
amount plus (ii) an amount of cash which the General Partner determines, in its
reasonable discretion, to represent the fair value of the remaining fractional
Share which would otherwise be payable to the Redeeming Partner.
(iii) Each Redeeming Partner agrees to execute such documents as
the General Partner may reasonably require in connection with the issuance of
Shares upon exercise of the Redemption Right.
C. Exceptions to Exercise of Redemption Right. Notwithstanding
the provisions of Sections 8.6.A and 8.6.B above, a Partner shall not be
entitled to exercise the Redemption Right pursuant to Section 8.6.A above if
(but only as long as) the delivery of Shares to such Partner on the Specified
Redemption Date (i) would be prohibited under the Declaration of Trust, or (ii)
as long as the Shares are Publicly Traded, would be prohibited under applicable
federal or state securities laws or regulations (assuming the General Partner
would in fact assume and satisfy the Redemption Right).
D. No Liens on Partnership Units Delivered for Redemption. Each
Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the Partnership
or the General Partner, as the case may be, free and clear of all liens, and,
notwithstanding anything contained herein to the contrary, neither the General
Partner nor the Partnership shall be under any obligation to
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acquire Partnership Units which are or may be subject to any liens. Each Limited
Partner further agrees that, in the event any state or local property transfer
tax is payable as a result of the transfer of its Partnership Units to the
Partnership or the General Partner, such Limited Partner shall assume and pay
such transfer tax.
E. Additional Partnership Interests. In the event that the
Partnership issues Partnership Interests to any Additional Limited Partner
pursuant to Article IV hereof, the General Partner shall make such amendments to
this Section 8.6 as it determines are necessary to reflect the issuance of such
Partnership Interests (including setting forth any restrictions on the exercise
of the Redemption Right with respect to such Partnership Interests).
F. Transfer Tax Limitations. Notwithstanding anything herein to
the contrary, until the first business day following the second anniversary of
the Effective Date, the Partnership and the General Partner shall have the
right, in connection with a Limited Partner's exercise of its Redemption Right:
(1) to condition the payment of the redemption price under
Section 8.6(A)(i) upon the General Partner's sole
satisfaction that any New York Real Estate Transfer Tax
and New York City Real Property Transfer Tax payable by
reason of such Limited Partner's redemption prior to
the expiration of two years following the Effective
Date shall have been paid in full or that adequate
provision has been made therefor (as determined by the
General Partner in its sole discretion); and
(2) if the General Partner elects under Section 8.6.B to
pay the Shares Amount, then such Limited Partner shall
be obligated, as a condition to the effective exercise
of the Redemption Right, to escrow with the General
Partner an amount equal to the New York Real Estate
Transfer Tax and New York City Real Property Transfer
Tax that would have been payable as of the exercise of
the Redemption Right, assuming such Limited Partner
transferred the Share Amount received on such date
prior to the expiration of two years following the
Effective Date. Such escrow may be used by the General
Partner or the Limited Partner who provided such escrow
for the payment of the taxes described in this
subparagraph (2) above, provided, in the latter event,
the General Partner shall have determined, in its good
faith discretion, that such tax will be paid. Such
escrow shall be released to the Limited Partner, to the
extent not used, after the expiration of the 2-year
period if the General Partner shall determine in its
sole discretion exercised in good faith that no such
transfer tax shall have been due and payable.
Section 8.7 Right of Offset
The General Partner shall have the right to offset any amounts
owed to the Partnership or the General Partner by any Limited Partner pursuant
to (i) any written agreement between such Limited Partner and the Partnership,
the General Partner or an Affiliate of either of them pursuant to which such
Limited Partner acquired Partnership Units or (ii) the provisions of Section
5.2, Section 8.6.F or Section 11.7 of this Agreement, against any amounts owed
to such Limited Partner by the Partnership or the General Partner hereunder,
including the right to cancel or acquire, as applicable, the Units held by such
Limited Partner, based on the Cash Amount that would be payable therefor,
assuming a redemption as of the date of cancellation or acquisition, as
applicable. In exercising the foregoing offset rights, the General partner shall
be required to give a Limited Partner, in the case of an offset against a
distribution, five (5) days prior written notice (provided, however, that if a
distribution is to be made at any time during such five day period the General
Partner may retain the distribution payable to any Limited Partner to whom such
a written notice has been given to the extent of the amount owed by such limited
Partner pending the passage of such period and upon the passage of such period
without payment of all amounts owed by the applicable Limited Partner, the
General Partner shall be entitled to the right of offset described above, it
being understood that if the Limited Partner pays in full the amount owed the
General Partner shall promptly release the retained distribution to
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such Limited Partner) and, in the case of an offset against Partnership Units
(through cancellation or acquisition), ten (10) days' prior written notice, in
each case of the amount owed (determined as of a date reasonably close to the
date of such notice) and the proposed offset and the Limited Partner has not
paid the amount owed within such period.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including, without limitation, all books and
records necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3 below. Any
records maintained by or on behalf of the Partnership in the regular course of
its business may be kept on, or be in the form of, punch cards, magnetic tape,
computer disk, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained, for financial and tax reporting purposes, on an
accrual basis in accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. Annual Reports. As soon as practicable, but in no event later
than the date on which the General Partner Entity mails its annual report to its
shareholders, the General Partner shall cause to be mailed to each Limited
Partner an annual report, as of the close of the most recently ended Partnership
Year, containing financial statements of the Partnership, or of the General
Partner Entity if such statements are prepared solely on a consolidated basis
with the Partnership, for such Partnership Year, presented in accordance with
generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner Entity.
B. Quarterly Reports. If and to the extent that the General
Partner Entity mails quarterly reports to its shareholders, as soon as
practicable, but in no event later than the date on which such reports are
mailed, the General Partner shall cause to be mailed to each Limited Partner a
report containing unaudited financial statements, as of the last day of such
quarter, of the Partnership, or of the General Partner Entity if such statements
are prepared solely on a consolidated basis with the Partnership, and such other
information as may be required by applicable law or regulation, or as the
General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
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Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code; provided, that the General Partner shall make the
election under Section 754 of the Code in accordance with applicable regulations
thereunder. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
Section 10.3 Tax Matters Partner
A. General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the IRS of the beginning of
an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number and profit interest of each of the Limited Partners and any Assignees;
provided, that such information is provided to the Partnership by the Limited
Partners.
B. Powers. The tax matters partner is authorized, but not
required:
(1) to enter into any settlement with the IRS with respect
to any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken
into account by a Partner for income tax purposes (such
administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to
as "judicial review"), and in the settlement agreement
the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i) who
(within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of the Code)
or a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item
required to be taken into account by a Partner for tax
purposes (a "final adjustment") is mailed to the tax
matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for
readjustment with the Tax Court or the filing of a
complaint for refund with the United States Claims
Court or the District Court of the United States for
the district in which the Partnership's principal place
of business is located;
(3) to intervene in any action brought by any other Partner
for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is
not allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with
respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a Partner
for tax purposes, or an item affected by such item; and
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(6) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by the
tax matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 hereof shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
or a law firm to assist the tax matters partner in discharging its duties
hereunder, as long as the compensation paid by the Partnership for such services
is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred
by it in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
recourse loan by the Partnership to such Limited Partner, which loan shall be
repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner (including, without
limitation, the right to receive distributions). Any amounts payable by a
Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in the Wall Street Journal, plus four (4) percentage points (but
not higher than the maximum lawful rate) from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
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ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. Definition. The term "transfer," when used in this Article XI
with respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign all or
any part of its General Partnership Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term "transfer" when used in this Article XI does not include
any redemption or repurchase of Partnership Units by the Partnership from a
Partner (including the General Partner) or acquisition of Partnership Units from
a Limited Partner by the General Partner pursuant to Section 8.6 hereof or
otherwise. No part of the interest of a Limited Partner shall be subject to the
claims of any creditor, any spouse for alimony or support, or to legal process,
and no part of the interest of a Limited Partner may be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for
in this Agreement.
B. General. No Partnership Interest shall be transferred, in whole
or in part, except in accordance with the terms and conditions set forth in this
Article XI. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article XI shall be null and void.
Section 11.2 Transfers of Partnership Interests of General Partner
A. Except for transfers of Partnership Units to the Partnership as
provided in Section 7.5 or Section 8.6 hereof, the General Partner may not
transfer any of its Partnership Interest (including both its General Partnership
Interest and its Limited Partnership Interest) except in connection with a
transaction described in Section 11.2.B below or as otherwise expressly
permitted under this Agreement), nor shall the General Partner withdraw as
General Partner except in connection with a transaction described in Section
11.2.B below.
B. The General Partner shall not engage in any merger (including a
triangular merger), consolidation or other combination with or into another
person, sale of all or substantially all of its assets or any reclassification,
recapitalization or change of the terms of any outstanding Common Shares (other
than a change in par value, or from par value to no par value, or as a result of
a subdivision or combination as described in the definition of "Conversion
Factor") ("Termination Transaction"), unless , in connection therewith, all
Limited Partners (other than the General Partner, the General Partner Entity and
any entities controlled by either of them) will have the right to elect to
receive, or, subject to Section 7.11.C., will receive, for each Partnership Unit
an amount of cash, securities, or other property equal to the product of the
Conversion Factor and the greatest amount of cash, securities or other property
paid to a holder of Shares, if any, corresponding to such Partnership Unit in
consideration of one such Share; provided, that if, in connection with the
Termination Transaction, a purchase, tender or exchange offer shall have first
been made to and accepted by the holders of more than fifty percent (50%) of the
outstanding Shares and a holder of Partnership Units did not receive advance
written notice (whether from the General Partner, the offeror or otherwise) of
the offer and an opportunity to redeem its Partnership Units substantially in
accordance with the provisions in Section 8.6, then such holder of Partnership
Units shall receive, or shall have the right to elect to receive, the greatest
amount of cash, securities, or other property which such holder would have
received had it exercised the Redemption Right and received Shares in exchange
for its Partnership Units immediately prior to such purchase, tender or exchange
offer and had thereupon accepted such purchase, tender or exchange offer and to
the extent required by the terms thereof applicable to all other holders of
Shares participating in the purchase, tender or exchange offer, participated in
all other phases of such Termination Transaction as well.
Section 11.3 Limited Partners' Rights to Transfer
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A. General. Subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E, 11.4 and 11.6 below, prior to the first anniversary (or, in the case of
a Restricted Partner, the second anniversary or, in the case of Bernard H.
Mendik or David R. Greenbaum only, such earlier date, if any, on which such
individual's employment with the Partnership shall be terminated without Cause,
due to a Disability or for Good Reason (as such terms are defined in the case of
Mr. Mendik in Exhibit B to the Noncompetition Agreement dated as of April 15,
1997 by and among Vornado Realty Trust, The Mendik Company, L.P. and Bernard H.
Mendik, and in the case of Mr. Greenbaum in Section 4(b), Section 4(c), and
Section 4(d) of the Employment Agreement dated as of April 15, 1997 by and among
Vornado Realty Trust, The Mendik Company, L.P. and David R. Greenbaum)) of the
Effective Date, the Limited Partnership Interest of any Partner may not be
transferred in whole or in part, directly, indirectly or beneficially, without
the prior written consent of the General Partner, which consent the General
Partner may withhold in its sole discretion; provided, however, that it is
expressly understood that subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E, 11.4 and 11.6 below each Limited Partner will be permitted to make one
or more transfers to any Affiliated Transferee of such Limited Partner.
Commencing on the first anniversary after the Effective Date (or (x) in the case
of a holder of Class E Units but only with respect to such Class E Units, the
ninety-first (91st) day after the Effective Date, and (y) in the case of a
Restricted Partner, the second anniversary after the Effective Date; provided,
however, that the Partnership Units identified on Exhibit H hereto (which
Partnership Units are beneficially owned, directly or indirectly, through a
Restricted Partner by the Persons named opposite such Partnership Units on
Exhibit H) shall not be deemed to be held by a Restricted Partner for purposes
of Section 8.6.A and this Section 11.3.A), and subject to the provisions of
Sections 11.3.C, 11.3.D, 11.3.E, 11.4 and 11.6 below, a Limited Partner (other
than the General Partner or the General Partner Entity or any Subsidiary of
either of them) may transfer all or any portion of its Limited Partnership
Interest to any person, provided such Limited Partner obtains the prior written
consent of the General Partner, which consent may be withheld only if the
General Partner determines in its sole discretion exercised in good faith that
such a transfer would cause the Partnership or any or all of the Partners other
than the Limited Partner seeking to transfer its rights as a Limited Partner to
be subject to tax liability as a result of such transfer. Any purported transfer
attempted in violation of the foregoing sentence shall be deemed void ab initio
and shall have no force or effect.
B. Incapacitated Limited Partners. If a Limited Partner is subject
to Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners for the purpose of settling or managing the estate and such
power as the Incapacitated Limited Partner possessed to transfer all or any part
of its interest in the Partnership. The Incapacity of a Limited Partner, in and
of itself, shall not dissolve or terminate the Partnership.
C. No Transfers Violating Securities Laws. The General Partner may
prohibit any transfer of Partnership Units by a Limited Partner if, in the
opinion of legal counsel to the Partnership, such transfer would require filing
of a registration statement under the Securities Act or would otherwise violate
any federal, or state securities laws or regulations applicable to the
Partnership or the Partnership Unit.
D. No Transfers Affecting Tax Status of Partnership. No transfer
of Partnership Units by a Limited Partner (including a redemption or exchange
pursuant to Section 8.6 hereof) may be made to any Person if (i) in the opinion
of legal counsel for the Partnership, it would result in the Partnership being
treated as an association taxable as a corporation for federal income tax
purposes or would result in a termination of the Partnership for federal income
tax purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners other than the General Partner or
the General Partner Entity or any Subsidiary of either the General Partner or
the General Partner Entity or pursuant to a transaction not prohibited under
Section 11.2 hereof), (ii) in the opinion of legal counsel for the Partnership,
it would adversely affect the ability of the General Partner Entity or the
General Partner (as applicable) to continue to qualify as a REIT or would
subject the General Partner Entity or the General Partner (as applicable) to any
additional taxes under Section 857 or Section 4981 of the Code or (iii) such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
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E. No Transfers to Holders of Nonrecourse Liabilities. No pledge
or transfer of any Partnership Units may be made to a lender to the Partnership
or any Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership whose loan constitutes a
Nonrecourse Liability without the consent of the General Partner, in its sole
and absolute discretion; provided, that as a condition to such consent the
lender will be required to enter into an arrangement with the Partnership and
the General Partner to exchange or redeem for the Redemption Amount any
Partnership Units in which a security interest is held simultaneously with the
time at which such lender would be deemed to be a partner in the Partnership for
purposes of allocating liabilities to such lender under Section 752 of the Code.
F. Certain Pledged Interests. Concurrently with the execution and
delivery of this Agreement, (i) to secure its obligations under the
Indemnification Agreement, dated as of April 15, 1997, among the Partnership,
FW/Mendik REIT, L.L.C. and others, FW/Mendik, L.L.C., a Limited Partner, is
pledging a portion of its limited partnership interest pursuant to a Pledge and
Security Agreement, dated as of April 15, 1997, namely, 360,577 Class C Units
represented by "Certificate Evidencing Partnership Interests in Vornado Realty
L.P., Certificate No. R - C _______"; (ii) to secure its obligations under the
letter agreement relating to certain management agreements, dated as of April
15, 1997, between FW/Mendik REIT, L.L.C. and the Partnership, FW/Mendik REIT,
L.L.C. is pledging a portion of its limited partnership interest pursuant to a
Pledge and Security Agreement, dated as of the date hereof, namely, 40,386 Class
C Units represented by "Certificate Evidencing Partnership Interests in Vornado
Realty L.P., Certificate No. R - C _____"; and (iii) to secure its obligations
under the Agreement for Contribution of Interests in Eleven Penn Plaza Company,
dated as of March 11, 1997, by and among The Mendik Company, L.P., Nicardo
Corporation, N.V., Rcay, S.A. and Bernard H. Mendik, Nicardo Corporation, N.V.
and Rcay, S.A. are pledging a portion of their limited partnership interests,
namely 147,576 Class E Units represented by "Certificate Evidencing
Partnership Interests in Vornado Realty L.P., Certificate Nos. R - E1 and R -
E3."
Section 11.4 Substituted Limited Partners
A. Consent of General Partner. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in its place without the
consent of the General Partner to the admission of a transferee of the interest
of a Limited Partner pursuant to this Section 11.4 as a Substituted Limited
Partner, which consent may be given or withheld by the General Partner in its
sole and absolute discretion. The General Partner's failure or refusal to permit
a transferee of any such interests to become a Substituted Limited Partner shall
not give rise to any cause of action against the Partnership or any Partner.
B. Rights of Substituted Limited Partner. A transferee who has
been admitted as a Substituted Limited Partner in accordance with this Article
XI shall have all the rights and powers and be subject to all the restrictions
and liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including, without limitation, the
provisions of Section 15.11 hereof and such other documents or instruments as
may be required to effect the admission).
C. Amendment and Restatement of Exhibit A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend and restate Exhibit
A hereto to reflect the name, address, Capital Account, number of Partnership
Units, and Percentage Interest of such Substituted Limited Partner and to
eliminate or adjust, if necessary, the name, address, Capital Account and
Percentage Interest of the predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does
not consent to the admission of any permitted transferee under Section 11.3
above as a Substituted Limited Partner, as described in Section 11.4 above, such
transferee shall be considered an Assignee for purposes of this Agreement,
subject, however, to Section 11.7
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hereof. An Assignee shall be entitled to all the rights of an assignee of a
limited partnership interest under the Act, including the right to receive
distributions from the Partnership and the share of Net Income, Net Losses,
gain, loss and Recapture Income attributable to the Partnership Units assigned
to such transferee, and shall have the rights granted to the Limited Partners
under Section 8.6 hereof, but shall not be deemed to be a holder of Partnership
Units for any other purpose under this Agreement, and shall not be entitled to
vote such Partnership Units in any matter presented to the Limited Partners for
a vote (such Partnership Units being deemed to have been voted on such matter in
the same proportion as all other Partnership Units held by Limited Partners are
voted). In the event any such transferee desires to make a further assignment of
any such Partnership Units, such transferee shall be subject to all the
provisions of this Article XI to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
A. Withdrawal of Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all of
such Limited Partner's Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.6 hereof.
B. Termination of Status as Limited Partner. Any Limited Partner
who shall transfer all of its Partnership Units in a transfer permitted pursuant
to this Article XI or pursuant to redemption of all of its Partnership Units
under Section 8.6 hereof shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI may
only be made on the first day of a fiscal quarter of the Partnership, unless the
General Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred during
any quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article XI or redeemed or transferred pursuant to Section 8.6
hereof, Net Income, Net Losses, each item thereof and all other items
attributable to such interest for such fiscal year shall be divided and
allocated between the transferor Partner and the transferee Partner by taking
into account their varying interests during the fiscal year in accordance with
Section 706(d) of the Code, using the interim closing of the books method
(unless the General Partner, in its sole and absolute discretion, elects to
adopt a daily, weekly, or a monthly proration period, in which event Net Income,
Net Losses, each item thereof and all other items attributable to such interest
for such fiscal year shall be prorated based upon the applicable method selected
by the General Partner). Solely for purposes of making such allocations, each of
such items for the calendar month in which the transfer or redemption occurs
shall be allocated to the Person who is a Partner as of midnight on the last day
of said month. All distributions attributable to any Partnership Unit with
respect to which the Partnership Record Date is before the date of such
transfer, assignment or redemption shall be made to the transferor Partner or
the Redeeming Partner, as the case may be, and, in the case of a transfer or
assignment other than a redemption, all distributions thereafter attributable to
such Partnership Unit shall be made to the transferee Partner.
E. Additional Restrictions. In addition to any other restrictions
on transfer herein contained, including without limitation the provisions of
this Article XI, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including pursuant to Section 8.6 hereof) be made
without the express consent of the General Partner, in its sole and absolute
discretion, (i) to any person or entity who lacks the legal right, power or
capacity to own a Partnership Interest; (ii) in violation of applicable law;
(iii) of any component portion of a Partnership Interest, such as the Capital
Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) if in the opinion of legal counsel to
the Partnership such transfer would cause a termination of the Partnership for
federal or state income tax purposes (except as a result of the redemption or
exchange for Shares of all Partnership Units held by all Limited Partners or
pursuant to a transaction not prohibited under Section 11.2 hereof); (v) if in
the opinion of counsel to the Partnership, such transfer would cause the
Partnership to cease to be classified as a partnership for federal income tax
purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners or pursuant to a transaction not
prohibited
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under Section 11.2 hereof); (vi) if such transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title I of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(c) of the Code); (vii) if such transfer
would, in the opinion of counsel to the Partnership, cause any portion of the
assets of the Partnership to constitute assets of any employee benefit plan
pursuant to Department of Labor Regulations Section 2510.1-101; (viii) if such
transfer requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws; (ix) if such transfer is
effectuated through an "established securities market" or a "secondary market"
(or the substantial equivalent thereof) within the meaning of Section 7704 of
the Code or such transfer causes the Partnership to become a "publicly traded
partnership," as such term is defined in Section 469(k)(2) or Section 7704(b) of
the Code; (x) if such transfer subjects the Partnership to regulation under the
Investment Company Act of 1940, the Investment Advisors Act of 1940 or the
Employee Retirement Income Security Act of 1974, each as amended; (xi) if the
transferee or assignee of such Partnership Interest is unable to make the
representations set forth in Section 15.15 hereof or such transfer could
otherwise adversely affect the ability of the General Partner Entity or the
General Partner (as applicable) to remain qualified as a REIT; or (xii) if in
the opinion of legal counsel for the Partnership, such transfer would adversely
affect the ability of the General Partner Entity or the General Partner (as
applicable) to continue to qualify as a REIT or subject the General Partner
Entity or the General Partner (as applicable) to any additional taxes under
Section 857 or Section 4981 of the Code.
F. Avoidance of "Publicly Traded Partnership" Status. The General
Partner shall (a) use commercially reasonable efforts (as determined by it in
its sole discretion exercised in good faith) to monitor the transfers of
interests in the Partnership to determine (i) if such interests are being traded
on an "established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code and (ii)
whether additional transfers of interests would result in the Partnership being
unable to qualify for at least one of the "safe harbors" set forth in
Regulations Section 1.7704-1 (or such other guidance subsequently published by
the IRS setting forth safe harbors under which interests will not be treated as
"readily tradable on a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe Harbors") and (b)
take such steps as it believes are commercially reasonable and appropriate (as
determined by it in its sole discretion exercised in good faith) to prevent any
trading of interests or any recognition by the Partnership of transfers made on
such markets and, except as otherwise provided herein, to insure that at least
one of the Safe Harbors is met.
Section 11.7 Payment of Incremental Tax
Notwithstanding anything herein to the contrary, until the
business day immediately following the second anniversary of the Effective Date,
no Person shall be admitted as a Substitute Limited Partner and no person shall
be considered an Assignee for purposes of this Agreement, and any transaction or
other form of conveyance or disposition of any sort whatsoever purporting to
transfer an interest in this Agreement or in the Partnership or substitute a
limited partner shall be null and void and of no force and effect unless
concurrently with such purported transfer the transferor shall establish to the
sole satisfaction of the General Partner exercised in good faith that any New
York State Transfer Tax and/or New York City Real Estate Transfer Tax payable in
connection with the purported transfer by reason of the transferor's failure to
hold for a two-year period the Partnership Units issued as of the Effective Date
shall have been paid. A Limited Partner shall be obligated to pay the transfer
taxes described above in this Section 11.7.
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ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General Partnership
Interest pursuant to Section 11.2 hereof who is proposed to be admitted as a
successor General Partner shall be admitted to the Partnership as the General
Partner, effective upon such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner's executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission.
Section 12.2 Admission of Additional Limited Partners
A. General. No Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which consent shall be given
or withheld in the General Partner's sole and absolute discretion. A Person who
makes a Capital Contribution to the Partnership in accordance with this
Agreement, including, without limitation, pursuant to Section 4.1.C hereof, or
who exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner and only upon furnishing to the General Partner (i) evidence of
acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including, without limitation, the power of
attorney granted in Section 15.11 hereof and (ii) such other documents or
instruments as may be required in the discretion of the General Partner in order
to effect such Person's admission as an Additional Limited Partner. The
admission of any Person as an Additional Limited Partner shall become effective
on the date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the General Partner to such
admission.
B. Allocations to Additional Limited Partners. If any Additional
Limited Partner is admitted to the Partnership on any day other than the first
day of a Partnership Year, then Net Income, Net Losses, each item thereof and
all other items allocable among Partners and Assignees for such Partnership Year
shall be allocated among such Additional Limited Partner and all other Partners
and Assignees by taking into account their varying interests during the
Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method (unless the General Partner, in its sole and
absolute discretion, elects to adopt a daily, weekly or monthly proration
method, in which event Net Income, Net Losses, and each item thereof would be
prorated based upon the applicable period selected by the General Partner).
Solely for purposes of making such allocations, each of such items for the
calendar month in which an admission of any Additional Limited Partner occurs
shall be allocated among all the Partners and Assignees including such
Additional Limited Partner. All distributions with respect to which the
Partnership Record Date is before the date of such admission shall be made
solely to Partners and Assignees other than the Additional Limited Partner, and
all distributions thereafter shall be made to all the Partners and Assignees
including such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership (including an amendment and restatement of
Exhibit A hereto) and, if necessary, to prepare as soon as practical an
amendment of this Agreement and, if required by law, shall prepare and file an
amendment to the Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 15.11 hereof.
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ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
(each a "Liquidating Event") :
(i) the expiration of its term as provided in Section 2.4
hereof;
(ii) an event of withdrawal of the General Partner, as
defined in the Act (other than an event of Bankruptcy), unless, within ninety
(90) days after the withdrawal a Majority in Interest of the remaining Partners
Consent in writing to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a substitute General
Partner;
(iii) an election to dissolve the Partnership made by the
General Partner, in its sole and absolute discretion, after December 31, 2046;
(iv) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(v) the sale of all or substantially all of the assets and
properties of the Partnership for cash or for marketable securities (subject to
Section 7.11.C); or
(vi) a final and nonappealable judgment is entered by a
court of competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and nonappealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to or within ninety days after of the entry of such order
or judgment a Majority in Interest of the remaining Partners Consent in writing
to continue the business of the Partnership and to the appointment, effective as
of a date prior to the date of such order or judgment, of a substitute General
Partner.
Section 13.2 Winding Up
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, in the event there
is no remaining General Partner, any Person elected by a Majority in Interest of
the Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include equity or other securities of the General Partner or any other
entity) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other
than the Partners;
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(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners;
and
(3) The balance, if any, to the Partners in accordance with
their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all
periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of Section
13.2.A above which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A above,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only if,
in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Partners, and shall be subject to such conditions
relating to the disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing the operation of
such properties at such time. The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable method of
valuation as it may adopt.
Section 13.3 Compliance with Timing Requirements of Regulations
Subject to Section 13.4 below, in the event the Partnership is
"liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
distributions shall be made pursuant to this Article XIII to the General Partner
and Limited Partners who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit
balance in its Capital Account (after giving effect to all contributions,
distributions and allocations for all taxable years, including the year during
which such liquidation occurs), such Partner shall have no obligation to make
any contribution to the capital of the Partnership with respect to such deficit,
and such deficit shall not be considered a debt owed to the Partnership or to
any other Person for any purpose whatsoever. In the discretion of the General
Partner, a pro rata portion of the distributions that would otherwise be made to
the General Partner and Limited Partners pursuant to this Article XIII may be:
(A) distributed to a trust established for the benefit of the General Partner
and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership (in which case the
assets of any such trust shall be distributed to the General Partner and Limited
Partners from time to time, in the reasonable discretion of the General Partner,
in the same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement); or (B) withheld to provide a
reasonable reserve for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Partnership, provided, that such withheld amounts shall be distributed to the
General Partner and Limited Partners as soon as practicable.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article XIII, in the
event the Partnership is deemed liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged and the Partnership's affairs shall not be wound
up. Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed
to have distributed its assets in kind
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to the General Partner and Limited Partners, who shall be deemed to have assumed
and taken such assets subject to all Partnership liabilities, all in accordance
with their respective Capital Accounts. Immediately thereafter, the General
Partner and Limited Partners shall be deemed to have recontributed the
Partnership assets in kind to the Partnership, which shall be deemed to have
assumed and taken such assets subject to all such liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited
Partner shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise expressly
provided in this Agreement, no Limited Partner shall have priority over any
other Limited Partner as to the return of its Capital Contributions,
distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that
would, but for provisions of an election or objection by one or more Partners
pursuant to Section 13.1 above, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conducts business
(as determined in the discretion of the General Partner).
Section 13.7 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 above, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
Section 13.8 Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding up of
the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 above, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
Section 13.10 Liability of Liquidator
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.11 hereof.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
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A. General. Amendments to this Agreement may be proposed only by
the General Partner. Following such proposal (except an amendment pursuant to
Section 14.1.B below), the General Partner shall submit any proposed amendment
to the Limited Partners and shall seek the written vote of the Partners on the
proposed amendment or shall call a meeting to vote thereon and to transact any
other business that it may deem appropriate. For purposes of obtaining a written
vote, the General Partner may require a response within a reasonable specified
time, but not less than fifteen (15) days, and failure to respond in such time
period shall constitute a vote which is consistent with the General Partner's
recommendation with respect to the proposal; provided, however, that in the case
of any Consent required under Section 7.11.C or 7.11.D, the General Partner
shall be required to give the Limited Partners (other than Mr. Mendik, Mr.
Greenbaum or any Mendik Owners with respect thereto) entitled to vote thereon
two (2) written requests for a response and in determining the votes cast for or
against such Consent the Partnership Units of Limited Partners (other than Mr.
Mendik, Mr. Greenbaum or any Mendik Owners with respect thereto) entitled to
vote thereon who do not respond in writing to either such request within the
time period established by the General Partner shall be deemed to have been
voted for or against the proposed Consent in the same proportion as the votes
actually received.
B. Amendments Not Requiring Limited Partner Approval. Subject to
Section 14.1.C and 14.1.D, the General Partner shall have the power, without the
Consent of the Limited Partners, to amend this Agreement as may be required to
reflect any changes to this Agreement that the General Partner deems necessary
or appropriate in its sole discretion, provided that such change does not
adversely affect or eliminate any right granted to a Limited Partner pursuant to
any of the provisions of this Agreement specified in Section 14.1.C or Section
14.1.D as requiring a particular minimum vote. The General Partner shall notify
the Limited Partners when any action under this Section 14.1.B is taken in the
next regular communication to the Limited Partners.
C. Amendments Requiring Limited Partner Approval (Excluding
General Partner). Without the Consent of the Outside Limited Partners, the
General Partner shall not amend Section 4.2.A, Section 5.1.C, Section 7.5,
Section 7.6, Section 7.8, Section 11.2, Section 13.1, this Section 14.1.C or
Section 14.2.
D. Other Amendments Requiring Certain Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended with respect to any Partner adversely affected without the
Consent of such Partner adversely affected if such amendment would (i) convert a
Limited Partner's interest in the Partnership into a general partner's interest,
(ii) modify the limited liability of a Limited Partner, (iii) amend Section
7.11.A, (iv) amend Article V, Article VI, or Section 13.2.A(3) (except as
permitted pursuant to Sections 4.2, 5.1.C, 5.4 and 6.2, (v) amend Section 8.6 or
any defined terms set forth in Article I that relate to the Redemption Right
(except as permitted in Section 8.6.E), or (vi) amend this Section 14.1.D. In
addition, any amendment to Section 7.11.C of this Agreement shall require the
following consent:
(i) In the event that the amendment to Section 7.11.C affects
the Two Penn Plaza Property or the rights of holders of Two Penn
Plaza Units, such amendment shall require the Consent of Partners
(other than the General Partner or the General Partner Entity or
any Subsidiary of either the General Partner or the General
Partner Entity) who hold seventy-five percent (75%) of the Two
Penn Plaza Units;
(ii) In the event that the amendment to Section 7.11.C affects
the Eleven Penn Plaza Property or the rights of holders of Eleven
Penn Plaza Units, such amendment shall require the Consent of
Partners (other than the General Partner or the General Partner
Entity or any Subsidiary of either the General Partner or the
General Partner Entity) who hold seventy-five percent (75%) of the
Eleven Penn Plaza Units; and
(iii) In the event that the amendment to Section 7.11.C affects
the 866 U.N. Plaza Property or the rights of holders of 866 U.N.
Plaza Units, such amendment shall require the Consent of Partners
(other than the General Partner or the General Partner Entity or
any Subsidiary of either the General
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<PAGE> 69
Partner or the General Partner Entity) who hold seventy-five
percent (75%) of the 866 U.N. Plaza Units.
E. Amendment and Restatement of Exhibit A Not An Amendment.
Notwithstanding anything in this Article XIV or elsewhere in this Agreement to
the contrary, any amendment and restatement of Exhibit A hereto by the General
Partner to reflect events or changes otherwise authorized or permitted by this
Agreement, whether pursuant to Section 7.1.A(20) hereof or otherwise, shall not
be deemed an amendment of this Agreement and may be done at any time and from
time to time, as necessary by the General Partner without the Consent of the
Limited Partners.
F. Amendment by Merger. In the event that the Partnership
participates in any merger (including a triangular merger), consolidation or
combination with another entity in a transaction not otherwise prohibited by
this Agreement and as a result of such merger, consolidation or combination this
Agreement is to be amended (or a new agreement for a limited partnership or
limited liability company, as applicable, is to be adopted for the surviving
entity) and any of the Outside Limited Partners (as defined herein in "Consent
of Outside Limited Partners") will hold equity interests in the continuing or
surviving entity, then any such amendments to this Agreement (or changes from
this Agreement reflected in the new agreement for the surviving entity) shall
require the consents provided in Section 14.1.C and Section 14.1.D.
Section 14.2 Meetings of the Partners
A. General. Meetings of the Partners may be called only by the
General Partner. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting; provided that a Partner's attendance at any meeting of Partners shall
be deemed a waiver of the foregoing notice requirement with respect to such
Partner. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.1.A above. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including Limited
Partnership Interests held by the General Partner) shall control.
B. Actions Without a Meeting. Any action required or permitted to
be taken at a meeting of the Partners may be taken without a meeting if a
written consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or Persons
to act for such Limited Partner by proxy on all matters in which a Limited
Partner is entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. Every proxy must be signed by the Limited
Partner or its attorney-in-fact. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Limited Partner executing
it, such revocation to be effective upon the Partnership's receipt of notice
thereof in writing.
D. Conduct of Meeting. Each meeting of Partners shall be conducted
by the General Partner or such other Person as the General Partner may appoint
pursuant to such rules for the conduct of the meeting as the General Partner or
such other Person deems appropriate.
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<PAGE> 70
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A hereto or such other
address as the Partners shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are
for convenience only. They shall not be deemed part of this Agreement and in no
way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections " are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors; Other Third Parties
Other than as expressly set forth herein with regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor or other third party having
dealings with the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
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<PAGE> 71
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not be affected thereby.
Section 15.11 Power of Attorney
A. General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all
certificates, documents and other instruments
(including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof)
that the General Partner or any Liquidator deems
appropriate or necessary to form, qualify or continue
the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the
limited partners have limited liability) in the State
of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property, (b)
all instruments that the General Partner or any
Liquidator deems appropriate or necessary to reflect
any amendment, change, modification or restatement of
this Agreement in accordance with its terms, (c) all
conveyances and other instruments or documents that the
General Partner or any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of
the Partnership pursuant to the terms of this
Agreement, including, without limitation, a certificate
of cancellation, (d) all instruments relating to the
admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in,
Article XI, XII or XIII hereof or the Capital
Contribution of any Partner and (e) all certificates,
documents and other instruments relating to the
determination of the rights, preferences and privileges
of Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and
absolute discretion of the General Partner or any
Liquidator, to make, evidence, give, confirm or ratify
any vote, consent, approval, agreement or other action
which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the
General Partner or any Liquidator, to effectuate the
terms or intent of this Agreement.
Nothing contained in this Section 15.11 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement except
in accordance with Article XIV hereof or as may be otherwise expressly provided
for in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or any Liquidator to act as contemplated by this Agreement in
any filing or other action by it
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<PAGE> 72
on behalf of the Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the transfer of all
or any portion of such Limited Partner's or Assignee's Partnership Units and
shall extend to such Limited Partner's or Assignee's heirs, successors, assigns
and personal representatives. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the General Partner or any
Liquidator, acting in good faith pursuant to such power of attorney; and each
such Limited Partner or Assignee hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of the General Partner or
any Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
Liquidator's request therefor, such further designation, powers of attorney and
other instruments as the General Partner or the Liquidator, as the case may be,
deems necessary to effectuate this Agreement and the purposes of the
Partnership.
Section 15.12 Entire Agreement
This Agreement and all Exhibits attached hereto (which Exhibits
are incorporated herein by reference as if fully set forth herein) contains the
entire understanding and agreement among the Partners with respect to the
subject matter hereof and supersedes any prior written oral understandings or
agreements among them with respect thereto.
Section 15.13 No Rights as Shareholders
Nothing contained in this Agreement shall be construed as
conferring upon the holders of the Partnership Units any rights whatsoever as
shareholders of the General Partner Entity or the General Partner (if
different), including, without limitation, any right to receive dividends or
other distributions made to shareholders of the General Partner Entity or the
General Partner (if different) or to vote or to consent or receive notice as
shareholders in respect to any meeting of shareholders for the election of
directors of the General Partner Entity or the General Partner (if different) or
any other matter.
Section 15.14 Limitation to Preserve REIT Status
To the extent that any amount paid or credited to the General
Partner or its officers, directors, employees or agents pursuant to Section 7.4
or Section 7.7 hereof would constitute gross income to the General Partner
Entity or the General Partner (if it is to be qualified as a REIT) for purposes
of Section 856(c)(2) or 856(c)(3) of the Code (a "General Partner Payment")
then, notwithstanding any other provision of this Agreement, the amount of such
General Partner Payments for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 5% of the
General Partner Entity's or the General Partner's (if it is to be qualified as a
REIT) total gross income (but not including the amount of any General Partner
Payments) for the fiscal year over (b) the amount of gross income (within the
meaning of Section 856(c)(2) of the Code) derived by the General Partner Entity
or the General Partner (if it is to be qualified as a REIT) from sources other
than those described in subsections (A) through (H) of Section 856(c)(2) of the
Code (but not including the amount of any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a) 25% of the
General Partner Entity's or the General Partner's (if it is to be qualified as a
REIT) total gross income (but not including the amount of any General Partner
Payments) for the fiscal year over (b) the amount of gross income (within the
meaning of Section 856(c)(3) of the Code) derived by the General Partner Entity
or the General Partner (if it is to be qualified as a REIT) from sources other
than those described in subsections (A) through (I) of Section 856(c)(3) of the
Code (but not including the amount of any General Partner Payments);
provided, however, that General Partner Payments in excess of the amounts set
forth in subparagraphs (i) and (ii) above may be made if the General Partner
Entity or the General Partner (if it is to be qualified as a REIT), as a
condition
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<PAGE> 73
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts would not adversely affect the General Partner Entity's or the General
Partner's (if it is to be qualified as a REIT) ability to qualify as a REIT. To
the extent General Partner Payments may not be made in a year due to the
foregoing limitations, such General Partner Payments shall carry over and be
treated as arising in the following year, provided, however, that such amounts
shall not carry over for more than five years, and if not paid within such five
year period, shall expire; provided, further, that (i) as General Partner
Payments are made, such payments shall be applied first to carry over amounts
outstanding, if any, and (ii) with respect to carry over amounts for more than
one Partnership Year, such payments shall be applied to the earliest Partnership
Year first.
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<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
VORNADO REALTY TRUST
By: /s/ Joseph Macnow
-----------------------------
Name: Joseph Macnow
Title: Vice President
LIMITED PARTNERS:
THE MENDIK COMPANY, INC.
By: /s/ David R. Greenbaum
-----------------------------
Name: David R. Greenbaum
Title: President
FW/MENDIK REIT, L.L.C.
By: Mendik Holdings LLC, member
By: Mendik Holdings, Inc., managing member
By: /s/ David R. Greenbaum
-----------------------------
Name: David R. Greenbaum
Title: President
EACH OF THE PERSONS LISTED ON EXHIBIT A HERETO
(not set forth above)
By: /s/ David R. Greenbaum
-----------------------------
Name: David R. Greenbaum
Title: Attorney-in-Fact
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<PAGE> 75
EXHIBIT A
VORNADO REALTY L.P.
PARTNERS AND PARTNERSHIP INTERESTS*
(as of 4/24/97)
<TABLE>
<CAPTION>
Class of Units
-----------------------------------------------------------------------------------------------
Series A Agreed Initial Percentage
Preferred Units A C D E Total Capital Account Interest
===============================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vornado Realty Trust** 5,750,000 26,547,680 32,297,680 2,039,646,880 91.5821%
The Mendik Partnership, L.P. 1,274,891 1,274,891 84,142,806 3.7781%
F/W Mendik REIT, L.L.C. 400,963 400,963 26,463,558 1.1882%
Mendik RELP Corp. 423 423 27,918 0.0013%
2750 Associates 1,273 1,273 84,018 0.0038%
Abrams, Trust U/W/O Ralph 3,622 3,622 239,052 0.0107%
Adler, Robert 1,248 1,248 82,368 0.0037%
Alpert, Vicki 2,614 2,614 172,524 0.0077%
Ambassador Construction Company, Inc. 18,211 18,211 1,201,926 0.0540%
Aschendorf-Shasha, Ellen 855 855 56,430 0.0025%
Ash, Herbert 77 77 5,082 0.0002%
Aubert, Trust FBO Lysa (Schwartz) 2,267 2,267 149,622 0.0067%
Barr, Thomas 922 922 60,852 0.0027%
Barkin, Leonard 481 481 31,746 0.0014%
Batkin, Estate of Jean 4,474 4,474 295,284 0.0133%
Batkin, Jean Trust 931 931 61,446 0.0028%
Batkin, Nancy 466 466 30,756 0.0014%
Berenson, David 517 517 34,122 0.0015%
Berenson, Joan 691 691 45,606 0.0020%
Berenson, Richard 421 421 27,786 0.0012%
Berenson, Robert 881 881 58,146 0.0026%
Bianculli, Louis 5,604 5,604 369,864 0.0166%
Bierman, Jacquin 2,688 2,688 177,408 0.0080%
Blumenthal, Joel Marie 77 77 5,082 0.0002%
Braverman, Madlyn 17,516 17,516 1,156,056 0.0519%
Carb, Sally 1,052 1,052 69,432 0.0031%
Carney, Thomas 678 678 44,748 0.0020%
Chambers, Robert 3,709 3,709 244,794 0.0110%
CHO Enterprises 2,682 2,682 177,012 0.0079%
</TABLE>
- --------------------------
* Address of Partners are maintained in the Partnership's
records.
** Directly and through the following subsidiaries: Vornado
Finance Corp., Vornado Lending Corp., Vornado Investments
Corporation, 40 East 14 Realty Associates General Partnership,
Menands Holding Corporation, National Hydrant Corporation, 825
Seventh Avenue Holding Corporation and Two Guys from Harrison,
N.Y. Inc.
A -1
<PAGE> 76
VORNADO REALTY L.P.
PARTNERS AND PARTNERSHIP INTERESTS
(as of 4/24/97)
<TABLE>
<CAPTION>
Class of Units
-------------------------------------------------------------------------------------
Series A Agreed Initial Percentage
Preferred Units A C D E Total Capital Account Interest
=====================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dembner, Shirley 39 39 2,574 0.0001%
Dembner, Shirley UGMA for Lindsey Dembner 1,731 1,731 114,246 0.0051%
Doner, Max 1,682 1,682 111,012 0.0050%
Downey, Michael 427 427 28,182 0.0013%
Dryfoos, Jacqueline 481 481 31,746 0.0014%
Dubrowski, Raymond 1,152 1,152 76,032 0.0034%
Evans, Ben 52 52 3,432 0.0002%
Field, Walter L. 840 840 55,440 0.0025%
Jesse Fierstein & Co. 1,786 1,786 117,876 0.0053%
Fischer, Alan A. 1,682 1,682 111,012 0.0050%
Freedman, Robert 2,885 2,885 190,410 0.0085%
Gershon, Estate of Murray 5,247 5,247 346,302 0.0155%
Getz, Howard 135 135 8,910 0.0004%
Getz, Sandra 3,522 3,522 232,452 0.0104%
Getz, Sandra & Howard 374 374 24,684 0.0011%
Gold, Frederica 207 207 13,662 0.0006%
Ginsberg, Benedict 466 466 30,756 0.0014%
Goldberg, Clarence 458 458 30,228 0.0014%
Goldring, Stanley 5,377 5,377 354,882 0.0159%
Goldschmidt, Beatrice 10,865 10,865 717,090 0.0322%
Goldschmidt, Charles 5,376 5,376 354,816 0.0159%
Goldschmidt, Edward 6,421 6,421 423,786 0.0190%
Goldschmidt, C. Trust U/A/D 7/11/90 4,037 4,037 266,442 0.0120%
Goldschmidt, Lawrence 60,361 60,361 3,983,826 0.1789%
Gorfinkle, Alaine 332 332 21,912 0.0010%
Gorfinkle, Lawrence 1,915 1,915 126,390 0.0057%
Green, Bernard 8,547 8,547 564,102 0.0253%
Greif, Goldie 3,362 3,362 221,892 0.0100%
Gutenberg, Bernice 328 328 21,648 0.0010%
H L Silbert trustee U/W of H A Goldman 8,097 8,097 534,402 0.0240%
Hagler, Philip 6,637 6,637 438,042 0.0197%
Harteveldt, Robert L. 2,564 2,564 169,224 0.0076%
Hirsch, Phillip J. 169 169 11,154 0.0005%
Hirsch, Judith 169 169 11,154 0.0005%
</TABLE>
A-2
<PAGE> 77
VORNADO REALTY L.P.
PARTNERS AND PARTNERSHIP INTERESTS
(as of 4/24/97)
<TABLE>
<CAPTION>
Class of Units
------------------------------------------------------------------------------------------
Series A Agreed Initial Percentage
Preferred Units A C D E Total Capital Account Interest
==========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hrusha, Alan 922 922 60,852 0.0027%
Hutner, Anne Trust F/B/O 2,305 2,305 152,130 0.0068%
Hutner, Estate of Irwin 5,667 5,667 374,022 0.0168%
INS Realty Associates 134,758 134,758 8,894,028 0.3994%
Fierstein Co. 13,735 13,735 906,510 0.0407%
Jaffe, Elizabeth 38 38 2,508 0.0001%
Jones, Hazel 1,248 1,248 82,368 0.0037%
Kaufman, Robert M. 169 169 11,154 0.0005%
Klein, Robin 1,682 1,682 111,012 0.0050%
Knatten Inc. 59,024 59,024 3,895,584 0.1749%
Knight, Laureine 5,121 5,121 337,986 0.0152%
Komaroff, Stanley 288 288 19,008 0.0009%
Kosloff, Andrea 39 39 2,574 0.0001%
Kosloff, Andrea UGMA for Adam Kosloff 1,058 1,058 69,828 0.0031%
Kosloff, Andrea UGMA for Justin Kosloff 1,058 1,058 69,828 0.0031%
Koven, Irving 5,604 5,604 369,864 0.0166%
Kowal, Myron 374 374 24,684 0.0011%
Kramer, Saul 326 326 21,516 0.0010%
Kuhn, James D. 68,712 68,712 4,534,992 0.2036%
Kuhn, Leo 451 451 29,766 0.0013%
Kurshan, Herbert 1,248 1,248 82,368 0.0037%
Lauder, Leonard 2,330 2,330 153,780 0.0069%
Lauder, Ronald 2,330 2,330 153,780 0.0069%
Leff, Joseph 1,682 1,682 111,012 0.0050%
Leff, Valerie 1,682 1,682 111,012 0.0050%
Lefkowitz, Howard 207 207 13,662 0.0006%
LeRoy Partners 4,274 4,274 282,084 0.0127%
Liroff, Harriett 6,004 6,004 396,264 0.0178%
Liroff, Richard 766 766 50,556 0.0023%
Loewengart, Irene 832 832 54,912 0.0025%
Lovitz, David 1,122 1,122 74,052 0.0033%
Maayan Partners 4,808 4,808 317,328 0.0142%
Marvin, Morton 457 457 30,162 0.0014%
Marvin, Suzanne 38 38 2,508 0.0001%
</TABLE>
A -3
<PAGE> 78
VORNADO REALTY L.P.
PARTNERS AND PARTNERSHIP INTERESTS
(as of 4/24/97)
<TABLE>
<CAPTION>
Class of Units
--------------------------------------------------------------------------------------------
Series A Agreed Initial Percentage
Preferred Units A C D E Total Capital Account Interest
============================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maynard, Jean 1,152 1,152 76,032 0.0034%
Mazer, David 3,362 3,362 221,892 0.0100%
Mazer, Richard 3,362 3,362 221,892 0.0100%
Mendik, Susan 488 488 32,208 0.0014%
Migdal, L. & Kalmus, E. Trustees u/w/o
M Silberstein 5,128 5,128 338,448 0.0152%
Mil Equities 6,667 6,667 440,022 0.0198%
Nicardo Corporation 297,629 297,629 19,643,514 0.8820%
Novick, Lawrence 77 77 5,082 0.0002%
Oestreich, David A. 19,404 19,404 1,280,664 0.0575%
Oestreich, Joan E. 19,401 19,401 1,280,466 0.0575%
Oestreich, Sophy 2,305 2,305 152,130 0.0068%
Oppenheimer, Martin J. 169 169 11,154 0.0005%
Oppenheimer, Suzanne 169 169 11,154 0.0005%
Phillips, Family Trust UWO Edith 1,682 1,682 111,012 0.0050%
Phillips, Estate of John D. 1,682 1,682 111,012 0.0050%
Plum Partners L.P. 4,808 4,808 317,328 0.0142%
Prentice Revocable Trust, 12/12/75 1,261 1,261 83,226 0.0037%
RCAY S.A. 129,385 129,385 8,539,410 0.3834%
Reichler, Richard 2,700 2,700 178,200 0.0080%
Reingold, Suzy 2,444 2,444 161,304 0.0072%
Roberts, H. Richard 19,713 19,713 1,301,058 0.0584%
Roche, Sara 1,682 1,682 111,012 0.0050%
Rolfe, Ronald 922 922 60,852 0.0027%
Rosenberg, Ilse 288 288 19,008 0.0009%
Rosenheim Revocable Living Trust of Edna 562 562 37,092 0.0017%
Rosenzveig, Abraham 1,872 1,872 123,552 0.0055%
Rubashkin, Martin 230 230 15,180 0.0007%
Rubin, Murray M. 1,682 1,682 111,012 0.0050%
Sahid, Joseph 922 922 60,852 0.0027%
Saunders, Paul 922 922 60,852 0.0027%
Saul, Andrew 10,098 10,098 666,468 0.0299%
Schacht Estate of Natalie 38 38 2,508 0.0001%
Schacht, Ronald 456 456 30,096 0.0014%
</TABLE>
A -4
<PAGE> 79
VORNADO REALTY L.P.
PARTNERS AND PARTNERSHIP INTERESTS
(as of 4/24/97)
<TABLE>
<CAPTION>
Class of Units
---------------------------------------------------------------------------------------------------
Series A Agreed Initial Percentage
Preferred Units A C D E Total Capital Account Interest
===================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Schwartz, Trust FBO Samuel 2,267 2,267 149,622 0.0067%
Schwartz, Trust FBO Carolynn 2,267 2,267 149,622 0.0067%
Shapiro, Howard 634 634 41,844 0.0019%
Shapiro, Robert I. 1,682 1,682 111,012 0.0050%
Shasha, Alfred 2,885 2,885 190,410 0.0085%
Shasha, Alfred A. & Hanina 3,742 3,742 246,972 0.0111%
Shasha, Alfred & Hanina Trustees 6,838 6,838 451,308 0.0203%
Shasha, Robert Y. 855 855 56,430 0.0025%
Shasha-Kupchick, Leslie 1,709 1,709 112,794 0.0051%
Sheridan Family Partners, L.P. 7,972 7,972 526,152 0.0236%
Shine, William 1,383 1,383 91,278 0.0041%
Silberstein, John J. 2,136 2,136 140,976 0.0063%
Sillbert, Harvey I. 8,097 8,097 534,402 0.0240%
Simons, Robert 1,682 1,682 111,012 0.0050%
Sims, David 427 427 28,182 0.0013%
Slaner, Estate of Alfred P. 17,479 17,479 1,153,614 0.0518%
Steiner, Phillip Harry 562 562 37,092 0.0017%
Steiner, Richard Harris 562 562 37,092 0.0017%
Tannenbaum, Bernard 494 494 32,604 0.0015%
Tartikoff Living Trust 1,682 1,682 111,012 0.0050%
Winik, Trust U/W/O Carolyn 1,682 1,682 111,012 0.0050%
Watt, Emily 666 666 43,956 0.0020%
Wang, Kevin 427 427 28,182 0.0013%
Weissman, Sheila 332 332 21,912 0.0010%
Williams, John 1,122 1,122 74,052 0.0033%
===================================================================================================
TOTAL 5,750,000 26,547,680 1,754,015 659,533 427,014 35,138,242 2,227,123,972 100.0000%
===================================================================================================
</TABLE>
A -5
<PAGE> 80
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a
separate Capital Account in accordance with the rules of Regulations Section
l.704-l(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions and any other deemed contributions made by such
Partner to the Partnership pursuant to this Agreement and (ii) all items of
Partnership income and gain (including income and gain exempt from tax) computed
in accordance with Section 1.B hereof and allocated to such Partner pursuant to
Section 6.1 of the Agreement and Exhibit C hereof, and decreased by (x) the
amount of cash or Agreed Value of all actual and deemed distributions of cash or
property made to such Partner pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with Section 1.B hereof
and allocated to such Partner pursuant to Section 6.1 of the Agreement and
Exhibit C hereof.
B. For purposes of computing the amount of any item of
income, gain, deduction or loss to be reflected in the Partners' Capital
Accounts, unless otherwise specified in this Agreement, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
determined in accordance with Section 703(a) of the Code (for this purpose all
items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made
without regard to any election under Section 754 of
the Code which may be made by the Partnership,
provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of
the distribution of property by the Partnership to a
Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital
Accounts) shall be reflected in the Capital Accounts
of the Partners in the manner and subject to the
limitations prescribed in Regulations Section l.704-
1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact
that items described in Sections 705(a)(l)(B) or
705(a)(2)(B) of the Code are not includable in gross
income or are neither currently deductible nor
capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be
determined as if the adjusted basis of such property
as of such date of disposition were equal in amount
to the Partnership's Carrying Value with respect to
such property as of such date.
(4) In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in
computing such taxable income or loss, there shall be
taken into account Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership
Asset is adjusted pursuant to Section 1.D hereof, the
amount of any such adjustment shall be taken into
account as gain or loss from the disposition of such
asset.
(6) Any items specially allocated under Section 2 of
Exhibit C hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a
Partnership Unit shall succeed to a pro rata portion of the Capital Account of
the transferor. The Capital Accounts of such reconstituted Partnership shall be
maintained in accordance with the principles of this Exhibit B.
D. (1) Consistent with the provisions of Regulations
Section 1.704-1(b)(2)(iv)(f), and as provided in
Section 1.D(2), the Carrying Values of all
Partnership assets shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized
Loss attributable to such Partnership property, as of
the times of the adjustments provided in Section
1.D(2) hereof, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale
of each such property and allocated pursuant to
Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following
times: (a) immediately prior to the acquisition of an
additional interest in the Partnership by any new or
existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior
to the distribution by the Partnership to a Partner
of more than a de minimis amount of property as
consideration for an interest in the Partnership; and
(c) immediately prior to the liquidation of the
Partnership within the meaning of Regulations Section
1.704-l(b)(2)(ii)(g), provided, however, that
adjustments pursuant to clauses (a) and (b) above
shall be made only if the General Partner determines
that such adjustments are necessary or appropriate to
reflect the relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations Section 1.704-
l(b)(2)(iv)(e), the Carrying Value of Partnership
assets distributed in kind shall be adjusted upward
or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership
property, as of the time any such asset is
distributed.
B -1
<PAGE> 81
(4) In determining Unrealized Gain or Unrealized Loss for
purposes of this Exhibit B, the aggregate cash amount
and fair market value of all Partnership assets
(including cash or cash equivalents) shall be
determined by the General Partner using such
reasonable method of valuation as it may adopt, or in
the case of a liquidating distribution pursuant to
Article XIII of the Agreement, shall be determined
and allocated by the Liquidator using such reasonable
methods of valuation as it may adopt. The General
Partner, or the Liquidator, as the case may be, shall
allocate such aggregate fair market value among the
assets of the Partnership in such manner as it
determines in its sole and absolute discretion to
arrive at a fair market value for individual
properties.
E. The provisions of the Agreement (including this
Exhibit B and the other Exhibits to the Agreement) relating to the maintenance
of Capital Accounts are intended to comply with Regulations Section 1.704-1(b),
and shall be interpreted and applied in a manner consistent with such
Regulations. In the event the General Partner shall determine that it is prudent
to modify the manner in which the Capital Accounts, or any debits or credits
thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which
are assumed by the Partnership, the General Partner, or the Limited Partners)
are computed in order to comply with such Regulations, the General Partner may
make such modification without regard to Article XIV of the Agreement, provided
that it is not likely to have a material effect on the amounts distributable to
any Person pursuant to Article XIII of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section l.704-l(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its
Capital Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
B -2
<PAGE> 82
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this
Exhibit C, the following special allocations shall be made in the following
order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
is a net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704- 2(f) and for purposes of this Section 1.A only, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5), shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i) (4). This
Section 1.B is intended to comply with the minimum gain chargeback requirement
in such Section of the Regulations and shall be interpreted consistently
therewith. Solely for purposes of this Section 1.B, each Partner's Adjusted
Capital Account Deficit shall be determined prior to any other allocations
pursuant to Section 6.1 of the Agreement or this Exhibit with respect to such
Partnership Year, other than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulations Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or 1.704-
l(b)(2)(ii)(d)(6), and after giving effect to the allocations required under
Sections 1.A and 1.B hereof with respect to such Partnership Year, such Partner
has an Adjusted Capital Account Deficit, items of Partnership income and gain
(consisting of a pro rata portion of each item of Partnership income, including
gross income and gain for the Partnership Year) shall be specially allocated to
such Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit created by
such adjustments, allocations or distributions as quickly as possible. This
Section 1.C is intended to constitute a "qualified income offset" under
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
D. Gross Income Allocation. In the event that any Partner has
an Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to be made under the preceding paragraphs hereof
with respect to such Partnership Year), each such Partner shall be specially
allocated items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section
1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
C-1
<PAGE> 83
B. In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, and deduction shall be allocated for federal income tax purposes
among the Partners as follows:
(1) (a) In the case of a Contributed Property, such
items attributable thereto shall be
allocated among the Partners consistent with
the principles of Section 704(c) of the Code
to take into account the variation between
the 704(c) Value of such property and its
adjusted basis at the time of contribution
(taking into account Section 2.C of this
Exhibit C); and
(b) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall
be allocated among the Partners in the same
manner as its correlative item of "book"
gain or loss is allocated pursuant to
Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such
items shall
(i) first, be allocated among the Partners in a
manner consistent with the principles of Section
704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to
Exhibit B;
(ii) second, in the event such property was
originally a Contributed Property, be allocated among
the Partners in a manner consistent with Section
2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall
be allocated among the Partners in the same
manner its correlative item of "book" gain
or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this
Exhibit C.
C. To the extent Regulations promulgated pursuant to
Section 704(c) of the Code permit a Partnership to utilize alternative methods
to eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall, subject to the following, have the
authority to elect the method to be used by the Partnership and such election
shall be binding on all Partners. With respect to the Contributed Properties
transferred to the Partnership in connection with the Consolidation, the
Partnership shall elect to use the "traditional method" set forth in Treasury
Regulation Section 1.704-3(b).
C-2
<PAGE> 84
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) elects to redeem
_________ Partnership Units in Vornado Realty L.P. in accordance with the terms
of the First Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., as amended (the "Partnership Agreement"), and the Redemption Right
referred to therein, (ii) surrenders such Partnership Units and all right, title
and interest therein and (iii) directs that promptly after the Specified
Redemption Date the Cash Amount or Shares Amount (as determined by the General
Partner) deliverable upon exercise of the Redemption Right be delivered to the
address specified below, and if Shares are to be delivered, such Shares be
registered or placed in the name(s) and at the address(es) specified below. The
undersigned hereby represents, warrants, and certifies that the undersigned (a)
has marketable and unencumbered title to such Partnership Units, free and clear
of the rights of or interests of any other person or entity, (b) has the full
right, power and authority to redeem and surrender such Partnership Units as
provided herein and (c) has obtained the consent or approval of all persons or
entities, if any, having the right to consult or approve such redemption and
surrender. Capitalized terms used herein have the meanings assigned to them in
the Partnership Agreement.
Dated: _____________ Name of Limited Partner:_____________________________
________________________________________
(Signature of Limited Partner)
________________________________________
(Street Address)
________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:__________________________________
IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
Please insert social security or identifying number:
D-1
<PAGE> 85
EXHIBIT E
VALUE OF CONTRIBUTED PROPERTY
[OMITTED]
E-1
<PAGE> 86
EXHIBIT F
RESTRICTED PARTNERS
FW/Mendik REIT, L.L.C.
Bernard H. Mendik
David R. Greenbaum
Any Mendik Owner
Mendik Realty Co., Inc.
The Mendik Partnership, L.P.
Mendik 1740 Corp.
Mendik RELP Corp.
20 Broad Street Company
Mendik 570 Corp.
F-1
<PAGE> 87
EXHIBIT G
DESIGNATION OF THE PREFERENCES, CONVERSION
AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,
LIMITATIONS AS TO DISTRIBUTIONS, QUALIFICATIONS AND TERMS
AND CONDITIONS OF REDEMPTION
OF THE
SERIES A PREFERRED UNITS
1. Definitions.
In addition to those terms defined in the Agreement, the
following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in the Agreement and this
Exhibit G:
"Board of Trustees" shall mean the Board of Trustees of the
General Partner or any committee authorized by such Board of Trustees to perform
any of its responsibilities with respect to the Series A Preferred Shares.
"Unit Business Day" shall mean any day other than a Saturday,
Sunday or a day on which state or federally chartered banking institutions in
New York, New York are not required to be open.
"Common Shares" shall mean the common shares of beneficial
interest of the General Partner, par value $.04 per share.
"Conversion Price" shall mean the conversion price per Common
Share for which the Series A Preferred Shares are convertible, as such
Conversion Price may be adjusted pursuant to the terms of the Series A Preferred
Shares and the Declaration of Trust. The initial conversion price shall be
$72.75 (equivalent to a conversion rate of 0.68728 Common Shares for each Series
A Preferred Share).
"Current Market Price" of publicly traded Common Shares or any
other class of shares of beneficial interest or other security of the General
Partner or any other issuer for any day shall mean the last reported sales
price, regular way, on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such day, regular way,
in either case as reported on the New York Stock Exchange ("NYSE") or, if such
security is not listed or admitted for trading on the NYSE, on the principal
national securities exchange on which such security is listed or admitted for
trading or, if not listed or admitted for trading on any national securities
exchange, on the NASDAQ National Market or, if such security is not quoted on
such NASDAQ National Market, the average of the closing bid and asked prices on
such day in the over-the-counter market as reported by NASDAQ or, if bid and
asked prices for such security on such day shall not have been reported through
NASDAQ, the average of the bid and asked prices on such day as furnished by any
NYSE member firm regularly making a market in such security selected for such
purpose by the Chief Executive Officer of the General Partner or the Board of
Trustees.
"Distribution Payment Date" shall mean the first calendar day
of January, April, July and October, in each year, commencing on July 1, 1997;
provided, however, that if any Distribution Payment Date falls on any day other
than a Unit Business Day, the dividend payment due on such Distribution Payment
Date shall be paid on the first Unit Business Day immediately following such
Distribution Payment Date.
"Distribution Periods" shall mean quarterly distribution
periods commencing on January 1, April 1, July 1 and October 1 of each year and
ending on and including the day preceding the first day of the next succeeding
Distribution Period (other than the initial Distribution Period, which shall
commence on April 9, 1997 and end on and include June 30, 1997).
"Dividend Payment Date" shall mean a dividend payment date
with respect to the Series A Preferred Shares.
"Dividend Periods" shall mean the quarterly dividend periods
with respect to the Series A Preferred Shares.
"Fair Market Value" shall mean the average of the daily
Current Market Prices per Common Share during the five (5) consecutive Trading
Days selected by the General Partner commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex" date with respect to the issuance or distribution requiring
such computation. The term "'ex' date," when used with respect to any issuance
or distribution, means the first day on which the Common Shares trade regular
way, without the right to receive such issuance or distribution, on the exchange
or in the market, as the case may be, used to determine that day's Current
Market Price.
"Series A Preferred Shares" means the $3.25 Series A
Convertible Preferred Shares of Beneficial Interest (liquidation preference
$50.00 per share), no par value, issued by the General Partner.
"Series A Preferred Unit" means a Partnership Unit issued by
the Partnership to the General Partner in consideration of the contribution by
the General Partner to the Partnership of the entire net proceeds received by
the General Partner from the issuance of the Series A Preferred
G-1
<PAGE> 88
Shares. The Series A Partnership Units shall constitute a series of Preference
Units. The Series A Preferred Units shall have the preferences, conversion and
other rights, voting powers, restrictions, limitations as to distributions,
qualifications and terms and conditions of redemption as are set forth in this
Exhibit G. It is the intention of the General Partner, in establishing the
Series A Preferred Units, that each Series A Preferred Unit shall be
substantially the economic equivalent of a Series A Preferred Share.
"set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Partnership or the
General Partner on behalf of the Partnership in its accounting ledgers of any
accounting or bookkeeping entry which indicates, pursuant to a declaration of a
distribution by the General Partner, the allocation of funds to be so paid on
any series or class of Partnership Units; provided, however, that if any funds
for any class or series of Junior Units or any class or series of Partnership
Units ranking on a parity with the Series A Preferred Units as to the payment of
distributions are placed in a separate account of the Partnership or delivered
to a disbursing, paying or other similar agent, then "set apart for payment"
with respect to the Series A Preferred Units shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted, or if not listed or admitted
for trading on any national securities exchange, on the NASDAQ National Market,
or if such securities are not quoted on such NASDAQ National Market, in the
applicable securities market in which the securities are traded.
2. Terms of the Series A Preferred Units.
A. Number. The maximum number of authorized Series A Preferred
Units shall be 5,750,000.
B. Distributions. (i) The General Partner, in its capacity as
the holder of the then outstanding Series A Preferred Units, shall be entitled
to receive, when, as and if declared by the General Partner, distributions
payable in cash at the rate per annum of $3.25 per Series A Preferred Unit (the
"Annual Distribution Rate"). Such distributions shall be cumulative from the
Effective Date and shall be payable quarterly, when, as and if authorized and
declared by the General Partner, in arrears on Distribution Payment Dates,
commencing on the first Distribution Payment Date after the Effective Date.
Distributions are cumulative from the most recent Distribution Payment Date to
which distributions have been paid. Accrued and unpaid distribution for any past
Distribution Periods may be declared and paid at any time, without reference to
any regular Distribution Payment Date.
(ii) The amount of dividends payable for each full
Distribution Period for the Series A Preferred Units shall be computed by
dividing the Annual Distribution Rate by four. The amount of distributions
payable for the initial Distribution Period, or any other period shorter or
longer than a full Distribution Period, on the Series A Preferred Units shall be
computed on the basis of twelve 30-day months and a 360-day year. The General
Partner, in its capacity as the holder of the then outstanding Series A
Preferred Units, shall not be entitled to any distributions, whether payable in
cash, property or securities, in excess of cumulative distributions, as herein
provided, on the Series A Preferred Units. No interest, or sum of money in lieu
of interest, shall be payable in respect of any distribution payment or payments
on the Series A Preferred Units that may be in arrears.
(iii) So long as any Series A Preferred Units are outstanding,
no distributions, except as described in the immediately following sentence,
shall be declared or paid or set apart for payment on any series or class or
classes of Parity Units for any period unless full cumulative distributions have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series A Preferred
Units for all Distribution Periods terminating on or prior to the distribution
payment date on such class or series of Parity Units. When distributions are not
paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all distributions declared upon Series A Preferred Units and all
distributions declared upon any other series or class or classes of Parity Units
shall be declared ratably in proportion to the respective amounts of
distributions accumulated and unpaid on the Series A Preferred Units and such
Parity Units.
(iv) So long as any Series A Preferred Units are outstanding,
no distributions (other than distributions paid solely in Junior Units or
options, warrants or rights to subscribe for or purchase Junior Units) shall be
declared or paid or set apart for payment or other distribution declared or made
upon Junior Units, nor shall any Junior Units be redeemed, purchased or
otherwise acquired (other than a redemption, purchase or other acquisition of
Junior Units made in respect of a redemption, purchase or other acquisition of
Common Shares made for purposes of and in compliance with requirements of an
employee incentive or benefit plan of the General Partner or any subsidiary, or
as permitted under Article VI of the Declaration of Trust of the General
Partner), for any consideration (or any moneys to be paid to or made available
for a sinking fund for the redemption of any such Junior Units) by the General
Partner, directly or indirectly (except by conversion into or exchange for
Junior Units), unless in each case (a) the full cumulative distributions on all
outstanding Series A Preferred Units and any other Parity Units of the
Partnership shall have been paid or set apart for payment for all past
Distribution Periods with respect to the Series A Preferred Units and all past
distribution periods with respect to such Parity Units and (b) sufficient funds
shall have been paid or set apart for the payment of the distribution for the
current Distribution Period with respect to the Series A Preferred Units and any
Parity Units.
C. Liquidation Preference. (i) In the event of any
liquidation, dissolution or winding up of the Partnership or the General
Partner, whether voluntary or involuntary, before any payment or distribution of
the assets of the Partnership shall be made to or set apart for the holders of
Junior Units, the General Partner, in its capacity as the holder of the Series A
Preferred Units shall be entitled to receive Fifty Dollars ($50.00) per Series A
Preferred Unit (the "Liquidation Preference") plus an amount equal to all
distributions (whether or not earned or declared) accrued and unpaid thereon to
the date of final distribution to the General Partner, in its capacity as such
holder; but the General Partner, in its capacity as the holder of Series A
Preferred Units shall not be entitled to any further payment. If, upon any such
liquidation, dissolution or winding up of the Partnership or the General
Partner, the assets of the Partnership, or proceeds thereof, distributable to
the General Partner, in its capacity as the holder of Series A Preferred Units,
shall be insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any other Parity Units, then such assets, or the
proceeds thereof, shall be distributed among the General Partner, in its
capacity as the holder of such Series A Preferred Units, and the holders of any
such other Parity Units ratably in accordance with the respective amounts that
would be payable on such Series A Preferred Units and any such other Parity
Units if all amounts payable thereon were paid in full. For the purposes of this
Section C, (i) a consolidation or merger of the Partnership or the General
Partner with one or more entities, (ii) a statutory share exchange by [the
Partnership or] the General Partner and (iii) a sale or transfer of all or
substantially all of the
G-2
<PAGE> 89
Partnership's or the General Partner's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the General
Partner.
(ii) Subject to the rights of the holders of Partnership Units
of any series or class or classes of shares ranking on a parity with or prior to
the Series A Preferred Units upon any liquidation, dissolution or winding up of
the General Partner or the Partnership, after payment shall have been made in
full to the General Partner, in its capacity as the holder of the Series A
Preferred Units, as provided in this Section, any series or class or classes of
Junior Units shall, subject to any respective terms and provisions applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the General Partner, in its capacity as the holder of the
Series A Preferred Units, shall not be entitled to share therein.
D. Redemption of the Series A Preferred Units. (i)
Except in connection with the redemption of the Series A Preferred Shares by the
General Partner as permitted by Article VI of the Declaration of Trust, the
Series A Preferred Units shall not be redeemable prior to April 1, 2001. On and
after April 1, 2001, the General Partner may, at its option, cause the
Partnership to redeem the Series A Preferred Units for Class A Units, in whole
or in part, as set forth herein, subject to the provisions described below.
(ii) The Series A Preferred Units may be redeemed, in whole or
in part, at the option of the General Partner, in its capacity as the holder of
the Series A Preferred Units, at any time, provided that the General Partner
shall redeem an equivalent number of Series A Preferred Shares. Such redemption
of Series A Preferred Units shall occur substantially concurrently with the
redemption by the General Partner of such Series A Preferred Shares (the
"Redemption Date").
(iii) Upon redemption of Series A Preferred Units by the
General Partner on the Redemption Date, each Series A Preferred Unit so redeemed
shall be converted into a number of Class A Units equal to the aggregate
Liquidation Preference of the Series A Preferred Units being redeemed divided by
the Conversion Price as of the opening of business on the Redemption Date.
Upon any redemption of Series A Preferred Units, the
Partnership shall pay any accrued and unpaid distributions in arrears for any
Distribution Period ending on or prior to the Redemption Date. If the Redemption
Date falls after a Dividend Payment Record Date and prior to the corresponding
Dividend Payment Date, then the General Partner, in its capacity as the holder
of Series A Preferred Units, shall be entitled to distributions payable on the
equivalent number of Series A Preferred Units as the number of the Series A
Preferred Shares with respect to which the General Partner shall be required,
pursuant to the terms of the Declaration of Trust, to pay to the holders of
Series A Preferred Shares at the close of business on such Dividend Payment
Record Date for the Series A Preferred Shares who, pursuant to such Declaration
of Trust, are entitled to the dividend payable on such Series A Preferred Shares
on the corresponding Dividend Payment Date notwithstanding the redemption of
such Series A Preferred Shares before such Dividend Payment Date. Except as
provided above, the Partnership shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on Series A Preferred Units called for
redemption or on the Class A Units issued upon such redemption.
(iv) If full cumulative distributions on the Series A
Preferred Units and any other series or class or classes of Parity Units of the
Partnership have not been paid or declared and set apart for payment, except in
connection with a purchase, redemption or other acquisition of Series A
Preferred Shares or shares of beneficial interest ranking on a parity with such
Series A Preferred Shares as permitted under Article VI of the Declaration of
Trust, the Series A Preferred Units may not be redeemed in part and the
Partnership may not purchase, redeem or otherwise acquire Series A Preferred
Units or any Parity Units other than in exchange for Junior Units.
As promptly as practicable after the surrender of the
certificates for any such Series A Preferred Units so redeemed, such Series A
Preferred Units shall be exchanged for certificates of Class A Units and any
cash (without interest thereon) for which such Series A Preferred Units have
been redeemed. If fewer than all the Series A Preferred Units represented by any
certificate are redeemed, then new certificates representing the unredeemed
Series A Preferred Units shall be issued without cost to the holder thereof.
(vi) No fractional Partnership Unit shall be issued upon
redemption of a Series A Preferred Unit. Instead of any fractional interest in a
Class A Unit that would otherwise be deliverable upon the redemption of a Series
A Preferred Unit, the Partnership shall pay to the General Partner, in its
capacity as the holder of such Series A Preferred Units, an amount in cash
(computed to the nearest cent) based upon the Current Market Price of Common
Shares of the General Partner on the Trading Day immediately preceding the
Redemption Date.
(vii) The Partnership covenants that any Class A Unit issued
upon redemption of the Series A Preferred Units shall be validly issued, fully
paid and non-assessable.
E. Conversion.
The General Partner, in its capacity as the holder of Series A
Preferred Units, shall have the right to convert all or a portion of such Series
A Preferred Units into Class A Units, provided that an equivalent number of
Series A Preferred Shares are substantially concurrently therewith being
converted into Common Shares, as follows:
(i) Subject to and upon compliance with the provisions of this
Section E, the General Partner, in its capacity as the holder of Series A
Preferred Units shall have the right, at its option, at any time to convert such
shares into the number of fully paid and non-assessable Class A Units obtained
by dividing the aggregate Liquidation Preference of such Series A Preferred
Units by the Conversion Price (as in effect at the time and on the date provided
for in the last paragraph of paragraph (ii) of this Section E) by surrendering
such Series A Preferred Units to the Partnership to be converted, such surrender
to be made in the manner provided in paragraph (ii) of this Section E; provided,
however, that the right to convert Series A Preferred Units called for
redemption pursuant to Section D hereof shall terminate at the close of business
on the Redemption Date fixed for such redemption, unless the Partnership shall
default in making payment of the Class A Units and any cash payable upon such
redemption under Section D hereof.
G-3
<PAGE> 90
(ii) In order to exercise the conversion right, the General
Partner, in its capacity as the holder of each Series A Preferred Unit to be
converted shall surrender the certificate representing such Series A Preferred
Unit to the Partnership.
The General Partner, in its capacity as the holder of Series A
Preferred Units, shall be entitled to receive the distribution payable on such
Series A Preferred Units on a Distribution Payment Date notwithstanding the
conversion thereof following such Dividend Payment Record Date and prior to such
Dividend Payment Date. However, Series A Preferred Units surrendered for
conversion during the period between the close of business on any Dividend
Payment Record Date and the opening of business on the corresponding Dividend
Payment Date (except Series A Preferred Units converted after the issuance of a
notice of redemption of the Common Shares with respect to a Redemption Date
during such period or coinciding with such Dividend Payment Date, such Series A
Preferred Units being entitled to a distribution on the corresponding
Distribution Payment Date) must be accompanied by payment of an amount equal to
the distribution payable on such Series A Preferred Units on such Distribution
Payment Date. No such amount need be included upon surrender of Seris A
Preferred Units in respect of the equivalent number of Series A Preferred Shares
as to which a holder of Series A Preferred Shares on a Dividend Payment Record
Date who (or whose transferees) tenders any such Series A Preferred Shares to
the General Partner for conversion into Common Shares on such Dividend Payment
Date, but the distribution payable on such date on Series A Preferred Units will
be made with respect to such Series A Preferred Units. Except as provided above,
the Partnership shall make no payment or allowance for unpaid distributions,
whether or not in arrears, on converted Series A Preferred Units or for
distributions on the Class A Units issued upon such conversion.
As promptly as practicable after the surrender of certificates
for Series A Preferred Units as aforesaid, the General Partner shall receive a
certificate or certificates for the number of full Class A Units issuable upon
the conversion of such Series A Preferred Units in accordance with the
provisions of this Section E, and any fractional interest in respect of a Class
A Unit arising upon such conversion shall be settled as provided in paragraph
(iii) of this Section E.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the certificates
for Series A Preferred Units shall have been surrendered (and if applicable,
payment of an amount equal to the distribution payable on such Series A
Preferred Units) and received by the Partnership as aforesaid, and the General
Partner shall be deemed to have become the holder or holders of record of the
Class A Units represented thereby at such time on such date, and such conversion
shall be at the Conversion Price in effect at such time and on such date unless
the stock transfer books of the Partnership shall be closed on that date, in
which event such person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such partnership transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such Series A Preferred Units
shall have been surrendered and received by the General Partner.
(iii) No fractional Partnership Unit shall be issued upon
conversion of the Series A Preferred Units. Instead of any fractional interest
in a Class A Unit that would otherwise be deliverable upon the conversion of a
Series A Preferred Unit, the Partnerships shall pay to the holder of such Series
A Preferred Unit an amount in cash based upon the Current Market Price of Common
Shares of the General Partner on the Trading Day immediately preceding the date
of conversion.
(iv) The Conversion Price shall be adjusted from time to time
at the same time and in a like manner as set forth in the Declaration of Trust.
F. Ranking. Any class or series of Partnership Units
shall be deemed to rank:
(a) prior to the Series A Preferred Units, as to the payment
of distributions and as to distribution of assets upon liquidation, dissolution
or winding up of the General Partner or the Partnership, if the holders of such
class or series of Preferred Units shall be entitled to the receipt of
distributions or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the holders of
Series A Preferred Units;
(b) on a parity with the Series A Preferred Units, as to the
payment of distributions and as to the distribution of assets upon liquidation,
dissolution or winding up of the General Partner or the Partnership, whether or
not the distribution rates, distribution payment dates or redemption or
liquidation prices per Partnership Unit be different from those of the Series A
Preferred Units, if the holders of such Partnership Units of such class or
series and the Series A Preferred Units shall be entitled to the receipt of
distributions and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
distributions per Partnership Unit or liquidation preferences, without
preference or priority one over the other ("Parity Units"); and
(c) junior to the Series A Preferred Units, as to the payment
of distributions or as to the distribution of assets upon liquidation,
dissolution or winding up of the General Partner or the Partnership, if such
class or series of Partnership Units shall be Common Partnership Units or if the
General Partner, in its capacity as the holder of Series A Preferred Units,
shall be entitled to receipt of distribution or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Partnership Units of such class or series, and such
class or series of Partnership Units shall not in either case rank prior to the
Series A Preferred Units ("Junior Units").
G. Voting. Except as required by law, the General
Partner, in its capacity as the holder of the Series A Preferred Units, shall
not be entitled to vote at any meeting of the Partners or for any other purpose
or otherwise to participate in any action taken by the Partnership or the
Partners, or to receive notice of any meeting of the Partners.
So long as any Series A Preferred Units are outstanding, the General
Partner shall not authorize the creation of Partnership Units of any class or
series or any interest in the Partnership convertible into Partnership Units of
any class or series ranking prior to the Series A Preferred Units in the
distribution of assets on any liquidation, dissolution or winding up of the
General Partner or the Partnership or in the payment of distributions unless
such Partnership Units are issued to the General Partner and the distribution
and redemption (but not voting) rights of such Partnership Units are
substantially
G-4
<PAGE> 91
similar to the terms of securities issued by the General Partner and the
proceeds or other consideration from the issuance of such securities have been
or are concurrently with such issuance contributed to the Partnership.
H. Restrictions on Ownership and Transfer. The Series A
Preferred Units shall be owned and held solely by the General Partner.
I. General. (I) The rights of the General Partner, in
its capacity as the holder of the Series A Preferred Units, are in addition to
and not in limitation on any other rights or authority of the General Partner,
in any other capacity, under the Agreement. In addition, nothing contained in
this Exhibit G shall be deemed to limit or otherwise restrict any rights or
authority of the General Partner under the Agreement, other than in its capacity
as the holder of the Series A Preferred Units.
(ii) Anything herein contained to the contrary
notwithstanding, the General Partner shall take all steps that it determines are
necessary or appropriate (including modifying the foregoing terms of the Series
A Preferred Units) to ensure that the Series A Preferred Units (including,
without limitation the redemption and conversion terms thereof) permit the
General Partner to satisfy its obligations (including, without limitation, its
obligations to make dividends payments on, and to issue Common Shares upon
redemption or conversion of, the Series A Preferred Shares) with respect to the
Series A Preferred Shares, it being the intention that the terms of the Series A
Preferred Units shall be substantially similar to the terms of the Series A
Preferred Shares.
G-5
<PAGE> 92
EXHIBIT H
EXCLUDED UNITS
[OMITTED]
H-1
<PAGE> 1
Exhibit 10.1
CREDIT AGREEMENT
dated as of April 15, 1997
among
VORNADO REALTY L.P.
as Borrower,
VORNADO REALTY TRUST,
as General Partner,
UNION BANK OF SWITZERLAND
(New York Branch),
as Bank,
and
UNION BANK OF SWITZERLAND
(New York Branch),
as Administrative Agent
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS; ETC...................................... 1
Section 1.01 Definitions........................................... 1
Section 1.02 Accounting Terms...................................... 13
Section 1.03 Computation of Time Periods........................... 13
Section 1.04 Rules of Construction................................. 13
ARTICLE II. THE LOANS............................................. 13
Section 2.01 The Loans............................................. 13
Section 2.02 Purpose .............................................. 14
Section 2.03 Notice and Manner of Borrowing........................ 14
Section 2.04 Interest Periods; Renewals............................ 14
Section 2.05 Interest.............................................. 15
Section 2.06 Notes .............................................. 15
Section 2.07 Prepayments........................................... 16
Section 2.08 Method of Payment..................................... 16
Section 2.09 Conversions or Continuation of Loans.................. 16
Section 2.10 Minimum Amounts....................................... 17
Section 2.11 Certain Notices Regarding Conversions and
Continuations of Loans.............................. 17
Section 2.12 Late Payment Premium.................................. 17
Section 2.13 Extension of Maturity................................. 17
ARTICLE III. YIELD PROTECTION;
ILLEGALITY; ETC....................................... 18
Section 3.01 Additional Costs...................................... 18
Section 3.02 Limitation on Types of Loans.......................... 19
Section 3.03 Illegality............................................ 19
Section 3.04 Treatment of Affected Loans........................... 20
Section 3.05 Certain Compensation.................................. 20
Section 3.06 Capital Adequacy...................................... 21
Section 3.07 Substitution of Banks................................. 21
ARTICLE IV. CONDITIONS PRECEDENT.................................. 23
Section 4.01 Conditions Precedent to the Loans..................... 23
ARTICLE V. REPRESENTATIONS AND WARRANTIES........................ 25
Section 5.01 Existence............................................. 25
Section 5.02 Corporate/Partnership Powers.......................... 26
Section 5.03 Power of Officers..................................... 26
Section 5.04 Power and Authority; No Conflicts;
Compliance With Laws................................ 26
Section 5.05 Legally Enforceable Agreements........................ 26
Section 5.06 Litigation............................................ 26
Section 5.07 Good Title to Properties.............................. 27
Section 5.08 Taxes .............................................. 27
Section 5.09 ERISA .............................................. 27
Section 5.10 No Default on Outstanding Judgments or
Orders.............................................. 28
Section 5.11 No Defaults on Other Agreements....................... 28
Section 5.12 Government Regulation................................. 28
Section 5.13 Environmental Protection.............................. 28
Section 5.14 Solvency.............................................. 28
Section 5.15 Financial Statements.................................. 29
i
<PAGE> 3
Page
Section 5.16 Valid Existence of Affiliates......................... 29
Section 5.17 Insurance............................................. 29
Section 5.18 Accuracy of Information; Full Disclosure.............. 29
Section 5.19 Status .............................................. 30
ARTICLE VI. AFFIRMATIVE COVENANTS................................. 30
Section 6.01 Maintenance of Existence.............................. 30
Section 6.02 Maintenance of Records................................ 30
Section 6.03 Maintenance of Insurance.............................. 30
Section 6.04 Compliance with Laws; Payment of Taxes................ 30
Section 6.05 Right of Inspection................................... 30
Section 6.06 Compliance With Environmental Laws.................... 31
Section 6.07 Payment of Costs...................................... 31
Section 6.08 Maintenance of Properties............................. 31
Section 6.09 Reporting and Miscellaneous Document
Requirements........................................ 31
Section 6.10 Mandatory Prepayments................................. 34
Section 6.11 Management............................................ 34
ARTICLE VII. NEGATIVE COVENANTS.................................... 34
Section 7.01 Mergers Etc........................................... 34
Section 7.02 Investments........................................... 34
Section 7.03 Sale of Assets........................................ 34
Section 7.04 Encumbrance of Certain Assets......................... 35
ARTICLE VIII. FINANCIAL COVENANTS................................... 35
Section 8.01 Equity Value.......................................... 35
Section 8.02 Relationship of Total Outstanding
Indebtedness to Equity Value........................ 35
Section 8.03 Relationship of Secured Indebtedness to
Equity Value........................................ 35
Section 8.04 Relationship of Combined EBITDA to Interest
Expense............................................. 35
Section 8.05 Relationship of Combined EBITDA to Total
Outstanding Indebtedness............................ 35
Section 8.06 Unsecured Debt Yield.................................. 35
ARTICLE IX. EVENTS OF DEFAULT..................................... 36
Section 9.01 Events of Default..................................... 36
Section 9.02 Remedies.............................................. 38
ARTICLE X. ADMINISTRATIVE AGENT; RELATIONS
AMONG BANKS........................................... 38
Section 10.01 Appointment, Powers and Immunities of
Administrative Agent................................ 38
Section 10.02 Reliance by Administrative Agent..................... 39
Section 10.03 Defaults............................................. 39
Section 10.04 Rights of Administrative Agent as a Bank............. 40
Section 10.05 Indemnification of Administrative Agent.............. 40
Section 10.06 Non-Reliance on Administrative Agent and
Other Banks......................................... 40
Section 10.07 Failure of Administrative Agent to Act............... 41
Section 10.08 Resignation or Removal of Administrative
Agent............................................... 41
Section 10.09 Amendments Concerning Agency Function................ 42
ii
<PAGE> 4
Section 10.10 Liability of Administrative Agent..................... 42
Section 10.11 Transfer of Agency Function........................... 42
Section 10.12 Non-Receipt of Funds by Administrative
Agent....................................... 42
Section 10.13 Withholding Taxes..................................... 43
Section 10.14 Minimum Commitment by UBS............................. 43
Section 10.15 Pro Rata Treatment.................................... 43
Section 10.16 Sharing of Payments Among Banks....................... 44
Section 10.17 Possession of Documents............................... 44
ARTICLE XI. NATURE OF OBLIGATIONS.................................. 44
Section 11.01 Absolute and Unconditional Obligations................ 44
Section 11.02 Non-Recourse to VRT Principals........................ 45
ARTICLE XII. MISCELLANEOUS.......................................... 46
Section 12.01 Binding Effect of Request for Advance................. 46
Section 12.02 Amendments and Waivers................................ 46
Section 12.03 Usury .............................................. 47
Section 12.04 Expenses; Indemnification............................. 47
Section 12.05 Assignment; Participation............................. 47
Section 12.06 Documentation Satisfactory............................ 49
Section 12.07 Notices .............................................. 49
Section 12.08 Setoff .............................................. 50
Section 12.09 Table of Contents; Headings........................... 50
Section 12.10 Severability.......................................... 50
Section 12.11 Counterparts.......................................... 50
Section 12.12 Integration........................................... 50
Section 12.13 Governing Law......................................... 51
Section 12.14 Waivers .............................................. 51
Section 12.15 Jurisdiction; Immunities.............................. 51
EXHIBIT A - Authorization Letter
EXHIBIT B - Note
EXHIBIT C - List of Material Affiliates
EXHIBIT D - Solvency Certificate
EXHIBIT E - Assignment and Assumption Agreement
iii
<PAGE> 5
CREDIT AGREEMENT dated as of April 15, 1997 among VORNADO REALTY L.P.,
a limited partnership organized and existing under the laws of the State of
Delaware ("Borrower"), VORNADO REALTY TRUST, a real estate investment trust
organized and existing under the laws of the State of Maryland and the sole
general partner of Borrower ("General Partner"), UNION BANK OF SWITZERLAND (New
York Branch), as agent for the Banks (in such capacity, together with its
successors in such capacity, "Administrative Agent"), and UNION BANK OF
SWITZERLAND (New York Branch) (in its individual capacity and not as
Administrative Agent, "UBS"; UBS and the lenders who from time to time become
Banks pursuant to Section 3.07 or 12.05, each a "Bank" and collectively, the
"Banks").
Borrower desires that the Banks extend credit as provided herein, and
the Banks are prepared to extend such credit. General Partner is fully liable
for the obligations of Borrower hereunder by virtue of its status as the sole
general partner of Borrower. Accordingly, Borrower, General Partner, each Bank
and Administrative Agent agree as follows:
ARTICLE I. DEFINITIONS; ETC.
Section 1.01 Definitions. As used in this Agreement the following terms
have the following meanings (except as otherwise provided, terms defined in the
singular to have a correlative meaning when used in the plural and vice versa):
"Additional Costs" has the meaning specified in Section 3.01.
"Administrative Agent" has the meaning specified in the preamble.
"Administrative Agent's Office" means Administrative Agent's address
located at 299 Park Avenue, New York, NY 10171, or such other address in the
United States as Administrative Agent may designate by written notice to
Borrower and the Banks.
"Affiliate" means, with respect to any Person (the "first Person"), any
other Person: (1) which directly or indirectly controls, or is controlled by, or
is under common control with the first Person; or (2) ten percent (10%) or more
of the beneficial interest in which is directly or indirectly owned or held by
the first Person. The term "control" means the possession, directly or
indirectly, of the power, alone, to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this Credit Agreement.
<PAGE> 6
"Applicable Lending Office" means, for each Bank and for its LIBOR Loan
or Base Rate Loan, as applicable, the lending office of such Bank (or of an
Affiliate of such Bank) designated as such on its signature page hereof or in
the applicable Assignment and Assumption Agreement, or such other office of such
Bank (or of an Affiliate of such Bank) as such Bank may from time to time
specify to Administrative Agent and Borrower as the office by which its LIBOR
Loan or Base Rate Loan, as applicable, is to be made and maintained.
"Applicable Margin" means: (1) with respect to the Base Rate and Base
Rate Loans, 0%, and (2) with respect to the LIBOR Interest Rate and LIBOR Loans,
.625%.
"Assignee" has the meaning specified in Section 12.05.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, substantially in the form of EXHIBIT E hereto, pursuant to
which a Bank assigns and an Assignee assumes rights and obligations in
accordance with Section 12.05.
"Authorization Letter" means a letter agreement executed by Borrower in
the form of EXHIBIT A hereto.
"Bank" and "Banks" have the respective meanings specified in the
preamble.
"Bank Parties" means Administrative Agent and the Banks.
"Banking Day" means (1) any day on which commercial banks are not
authorized or required to close in New York City and (2) whenever such day
relates to a LIBOR Loan, an Interest Period with respect to a LIBOR Loan, or
notice with respect to any LIBOR Loan, a day on which dealings in Dollar
deposits are also carried out in the London interbank market and banks are open
for business in London.
"Base Rate" means, for any day, the higher of (1) the Federal Funds
Rate for such day plus one-half percent (.50%), or (2) the Prime Rate for such
day.
"Base Rate Loan" means all or any portion (as the context requires) of
a Bank's Loan which shall accrue interest at a rate determined in relation to
the Base Rate.
"Borrower" has the meaning specified in the preamble; except that, in
the financial definitions and the definition of Consolidated Businesses,
"Borrower" shall mean General Partner and the Mendik Properties (as defined in
the current report on Form 8-K of General Partner filed with the Securities and
2
<PAGE> 7
Exchange Commission on March 26, 1997 (the "Form 8-K")) and certain management
and leasing assets held by the Mendik Group (as defined in the Form 8-K) as
contemplated by the Form 8-K (collectively, the "Mendik Assets") collectively
with respect to periods of time prior to the Closing Date and shall mean
Borrower with respect to periods after the Closing Date.
"Borrower's Accountants" means Deloitte & Touche, or such other
accounting firm(s) selected by Borrower and reasonably acceptable to the
Required Banks.
"Capitalization Value" means, at any time, the sum of (1) Combined
EBITDA, for the twelve (12) month period then ended (except that for purposes of
this definition, the aggregate contribution to Combined EBITDA from leasing
commissions and management and development fees shall not exceed 5% of Combined
EBITDA), capitalized at a rate of 9% per annum, (2) Borrower's beneficial share
of unrestricted cash and marketable securities of Borrower and its Consolidated
Businesses and UJVs, at such time, as reflected in VRT's Consolidated Financial
Statements, and (3) without duplication, the cost basis of properties of
Borrower under construction as certified by Borrower, such certificate to be
accompanied by all appropriate documentation supporting such figure.
"Capital Lease" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.
"Closing Date" means the date this Agreement has been executed by all
parties.
"Code" means the Internal Revenue Code of 1986.
"Combined EBITDA" means, for any period of time, (1) revenues less
operating costs before Interest Expense, income taxes, gains or losses on the
sale of real estate and/or marketable securities, depreciation and amortization
and extraordinary items (including without limitation non-recurring items such
as gains or losses from asset sales) for Borrower and its Consolidated
Businesses, plus (2) Borrower's beneficial interest in revenues less operating
costs before Interest Expense, income taxes, gains or losses on the sale of real
estate and/or marketable securities, depreciation and amortization and
extraordinary items (after eliminating appropriate intercompany amounts)
applicable to each of the UJVs, in all cases as reflected in the VRT
Consolidated Financial Statements.
"Consolidated Businesses" means, collectively each Affiliate of
Borrower who is included in the VRT Consolidated Statements in accordance with
GAAP.
3
<PAGE> 8
"Consolidated Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money, secured or unsecured, of Borrower
and its Consolidated Businesses, including mortgage and other notes payable but
excluding any indebtedness which is margin indebtedness on cash and cash
equivalent securities, all as reflected in the VRT Consolidated Financial
Statements.
"Contingent Liabilities" means the sum of (1) those liabilities, as
determined in accordance with GAAP, set forth and quantified as contingent
liabilities in the notes to the VRT Consolidated Financial Statements and (2)
contingent liabilities, other than those described in the foregoing clause (1),
which represent direct payment guaranties of Borrower; provided, however, that
Contingent Liabilities shall exclude contingent liabilities which represent the
"Other Party's Share" of "Duplicated Obligations" (as such quoted terms are
hereinafter defined). "Duplicated Obligations" means, collectively, all those
payment guaranties in respect of Debt of UJVs for which Borrower and another
party are jointly and severally liable, where the other party is, in the sole
judgment of the Required Banks, capable of satisfying the Other Party's Share of
such obligation. "Other Party's Share" means such other party's fractional share
of the obligation under the UJV in question.
"Continue", "Continuation" and "Continued" refer to the continuation
pursuant to Section 2.09 of a LIBOR Loan as a LIBOR Loan from one Interest
Period to the next Interest Period.
"Convert", "Conversion" and "Converted" refer to a conversion pursuant
to Section 2.09 of a Base Rate Loan into a LIBOR Loan or a LIBOR Loan into a
Base Rate Loan, each of which may be accompanied by the transfer by a Bank (at
its sole discretion) of all or a portion of its Loan from one Applicable Lending
Office to another.
"Debt" means: (1) indebtedness or liability for borrowed money, or for
the deferred purchase price of property or services (including trade
obligations); (2) obligations as lessee under Capital Leases; (3) current
liabilities in respect of unfunded vested benefits under any Plan; (4)
obligations under letters of credit issued for the account of any Person; (5)
all obligations arising under bankers' or trade acceptance facilities; (6) all
guarantees, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase any of the
items included in this definition, to provide funds for payment, to supply funds
to invest in any Person, or otherwise to assure a creditor against loss; (7) all
obligations secured by any Lien on property owned by the Person whose Debt is
being measured, whether or not the obligations have been assumed; and (8) all
obligations under any agreement providing for contingent
4
<PAGE> 9
participation or other hedging mechanisms with respect to interest payable on
any of the items described above in this definition.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means a rate per annum equal to: (1) with respect to
Base Rate Loans, a variable rate three percent (3%) above the rate of interest
then in effect thereon (including the Applicable Margin); and (2) with respect
to LIBOR Loans, a fixed rate three percent (3%) above the rate(s) of interest in
effect thereon (including the Applicable Margin) at the time of Default until
the end of the then current Interest Period therefor and, thereafter, a variable
rate three percent (3%) above the rate of interest for a Base Rate Loan
(including the Applicable Margin).
"Disposition" means a sale (whether by assignment, transfer or Capital
Lease) of an asset.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Environmental Discharge" means any discharge or release of any
Hazardous Materials in violation of any applicable Environmental Law.
"Environmental Law" means any applicable Law relating to pollution or
the environment, including Laws relating to noise or to emissions, discharges,
releases or threatened releases of Hazardous Materials into the work place, the
community or the environment, or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"Environmental Notice" means any written complaint, order, citation,
letter, inquiry, notice or other written communication from any Person (1)
affecting or relating to Borrower's compliance with any Environmental Law in
connection with any activity or operations at any time conducted by Borrower,
(2) relating to the occurrence or presence of or exposure to or possible or
threatened or alleged occurrence or presence of or exposure to Environmental
Discharges or Hazardous Materials at any of Borrower's locations or facilities,
including, without limitation: (a) the existence of any contamination or
possible or threatened contamination at any such location or facility and (b)
remediation of any Environmental Discharge or Hazardous Materials at any such
location or facility or any part thereof; and (3) any violation or alleged
violation of any relevant Environmental Law.
5
<PAGE> 10
"Equity Value" means, at any time, Capitalization Value less the Total
Outstanding Indebtedness.
"ERISA" means the Employee Retirement Income Security Act of 1974
including the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of organizations (within the meaning of
Section 414(b) of the Code) as Borrower or General Partner or is under common
control (within the meaning of Section 414(c) of the Code) with Borrower or
General Partner or is required to be treated as a single employer with Borrower
or General Partner under Section 414(m) or 414(o) of the Code.
"Event of Default" has the meaning specified in Section 9.01.
"Federal Funds Rate" means, for any day, the rate per annum (expressed
on a 360-day basis of calculation) equal to the weighted average of the rates on
overnight federal funds transactions as published by the Federal Reserve Bank of
New York for such day provided that (1) if such day is not a Banking Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
immediately preceding Banking Day as so published on the next succeeding Banking
Day, and (2) if no such rate is so published on such next succeeding Banking
Day, the Federal Funds Rate for such day shall be the average of the rates
quoted by three Federal Funds brokers to Administrative Agent on such day on
such transactions.
"Fiscal Year" means each period from January 1 to December 31.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.15 (except for changes concurred in by Borrower's Accountants).
"General Partner" has the meaning specified in the preamble.
"Good Faith Contest" means the contest of an item if: (1) the item is
diligently contested in good faith, and, if appropriate, by proceedings timely
instituted; (2) adequate reserves are established with respect to the contested
item; (3) during the period of such contest, the enforcement of any contested
item is effectively stayed; and (4) the failure to pay or comply with the
contested item during the period of the contest is not likely to result in a
Material Adverse Change.
6
<PAGE> 11
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty" means the guaranty(ies) of all or part of Borrower's
obligations to be executed by General Partner.
"Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms are
defined from time to time in or for the purposes of any relevant Environmental
Law, including asbestos fibers and friable asbestos, polychlorinated biphenyls,
and any petroleum or hydrocarbon-based products or derivatives.
"Interest Expense" means, for any period of time, the consolidated
interest expense (without deduction of consolidated interest income) of Borrower
and its Consolidated Businesses, including, without limitation or duplication
(or, to the extent not so included, with the addition of), (1) the portion of
any rental obligation in respect of any Capital Lease obligation allocable to
interest expense in accordance with GAAP; (2) the amortization of Debt
discounts; (3) any payments or fees (other than up-front fees) with respect to
interest rate swap or similar agreements; and (4) the interest expense and items
listed in clauses (1) through (3) above applicable to each of the UJVs
multiplied by Borrower's respective beneficial interests in the UJVs, in all
cases as reflected in the applicable VRT Consolidated Financial Statements.
"Interest Period" means, with respect to any LIBOR Loan, the period
commencing on the date the same is advanced, converted from a Base Rate Loan or
Continued, as the case may be, and ending, as Borrower may select pursuant to
Section 2.04, on the numerically corresponding day in the first, second or third
calendar month thereafter, provided that each such Interest Period which
commences on the last Banking Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Banking Day of the appropriate calendar month.
"Law" means any federal, state or local statute, law, rule, regulation,
ordinance, order, code, or rule of common law, now or hereafter in effect, and
in each case as amended, and any judicial or administrative interpretation
thereof by a Governmental Authority or otherwise, including any judicial or
administrative order, consent decree or judgment.
"LIBOR Base Rate" means, with respect to any Interest Period therefor,
the rate per annum (rounded upwards if necessary to the nearest 1/16 of 1%)
quoted at approximately 11:00 a.m.,
7
<PAGE> 12
New York time, by the principal New York branch of UBS two (2) Banking Days
prior to the first day of such Interest Period for the offering to leading banks
in the London interbank market of Dollar deposits in immediately available
funds, for a period, and in an amount, comparable to such Interest Period and
principal amount of the LIBOR Loan in question outstanding during such Interest
Period.
"LIBOR Interest Rate" means, for any LIBOR Loan, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
Administrative Agent to be equal to the quotient of (1) the LIBOR Base Rate for
such LIBOR Loan for the Interest Period therefor divided by (2) one minus the
LIBOR Reserve Requirement for such LIBOR Loan for such Interest Period.
"LIBOR Loan" means all or any portion (as the context requires) of any
Bank's Loan which shall accrue interest at rate(s) determined in relation to
LIBOR Interest Rate(s).
"LIBOR Reserve Requirement" means, for any LIBOR Loan, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the Interest Period for
such LIBOR Loan under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding One Billion Dollars ($1,000,000,000)
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the LIBOR Reserve Requirement
shall also reflect any other reserves required to be maintained by such member
banks by reason of any Regulatory Change against (1) any category of liabilities
which includes deposits by reference to which the LIBOR Base Rate is to be
determined as provided in the definition of "LIBOR Base Rate" in this Section
1.01 or (2) any category of extensions of credit or other assets which include
loans the interest rate on which is determined on the basis of rates referred to
in said definition of "LIBOR Base Rate".
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment for collateral purposes, deposit arrangement, lien
(statutory or other), or other security agreement or charge of any kind or
nature whatsoever of any third party (excluding any right of setoff but
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction to evidence any of
the foregoing).
"Loan" and "Loans" have the respective meanings specified in Section
2.01.
8
<PAGE> 13
"Loan Commitment" means, with respect to each Bank, the obligation to
make a Loan in the principal amount set forth below:
<TABLE>
<CAPTION>
Loan
Bank Commitment
---- ----------
<S> <C>
UBS $400,000,000
------------
Total $400,000,000
============
</TABLE>
"Loan Documents" means this Agreement, the Notes, the Guaranty, the
Authorization Letter and the Solvency Certificate.
"Material Adverse Change" means either (1) a material adverse change in
the status of the business, results of operations, financial condition or
property of Borrower or General Partner or (2) any event or occurrence of
whatever nature which is likely to have a material adverse effect on the ability
of Borrower or General Partner to perform their obligations under the Loan
Documents.
"Material Affiliates" means the Affiliates listed on EXHIBIT C hereto.
"Maturity Date" means July 15, 1997, as the same may be extended
pursuant to Section 2.13.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by Borrower or any ERISA Affiliate
and which is covered by Title IV of ERISA.
"Note" and "Notes" have the respective meanings specified in Section
2.06.
"Obligations" means each and every obligation, covenant and agreement
of Borrower, now or hereafter existing, contained in this Agreement, and any of
the other Loan Documents, whether for principal, reimbursement obligations,
interest, fees, expenses, indemnities or otherwise, and any amendments or
supplements thereto, extensions or renewals thereof or replacements therefor,
including but not limited to all indebtedness, obligations and liabilities of
Borrower to Administrative Agent and any Bank now existing or hereafter incurred
under or arising out of or in connection with the Notes, this Agreement, the
other Loan Documents, and any documents or instruments executed in connection
therewith; in each case whether direct or indirect, joint or several, absolute
or contingent, liquidated or unliquidated, now or hereafter existing, renewed or
restructured, whether or not from time to time decreased or extinguished and
later increased, created or incurred, and including all indebtedness of
Borrower, under any
9
<PAGE> 14
instrument now or hereafter evidencing or securing any of the foregoing.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture, limited
liability company, Governmental Authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by Borrower or General
Partner or any ERISA Affiliate and which is covered by Title IV of ERISA or to
which Section 412 of the Code applies.
"presence", when used in connection with any Environmental Discharge or
Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.
"Prime Rate" means that rate of interest from time to time announced by
UBS at its Principal Office as its prime commercial lending rate.
"Principal Office" means the principal office of UBS in the United
States, presently located at 299 Park Avenue, New York, New York 10171.
"Pro Rata Share" means, for purposes of this Agreement and with respect
to each Bank, a fraction, the numerator of which is the amount of such Bank's
Loan Commitment and the denominator of which is the Total Loan Commitment.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time, or any similar Law from time to time in effect.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as the same may be
10
<PAGE> 15
amended or supplemented from time to time, or any similar Law from time to time
in effect.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, municipal or foreign
laws or regulations (including Regulation D) or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including such Bank of or under any United States, federal, state,
municipal or foreign laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty (30) day notice period
is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Required Banks" means at any time the Banks holding at least sixty-six
and sixty six hundredths percent (66.66%) of the then aggregate unpaid principal
amount of the Loans.
"SEC Reports" means the reports required to be delivered to the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
"Secured Indebtedness" means that portion of Total Outstanding
Indebtedness that is secured.
"Solvency Certificate" means a certificate in substantially the form of
EXHIBIT D hereto, to be delivered by Borrower pursuant to the terms of this
Agreement.
"Solvent" means, when used with respect to any Person, that (1) the
fair value of the property of such Person, on a going concern basis, is greater
than the total amount of liabilities (including, without limitation, contingent
liabilities) of such Person; (2) the present fair saleable value of the assets
of such Person, on a going concern basis, is not less than the amount that will
be required to pay the probable liabilities of such Person on its debts as they
become absolute and matured; (3) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature; (4) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged; and (5) such Person has sufficient
resources, provided that such resources are prudently utilized, to satisfy all
of such Person's obligations.
11
<PAGE> 16
Contingent liabilities will be computed at the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Total Loan Commitment" means an amount equal to the aggregate amount
of all Loan Commitments.
"Total Outstanding Indebtedness" means the sum, without duplication, of
(1) Consolidated Outstanding Indebtedness, (2) VRT's Share of UJV Combined
Outstanding Indebtedness and (3) Contingent Liabilities.
"UJV Combined Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money, secured or unsecured, of the
UJV's, on a combined basis, including mortgage and other notes payable but
excluding any indebtedness which is margin indebtedness on cash and cash
equivalent securities, all as reflected in the balance sheets of each of the
UJVs, prepared in accordance with GAAP.
"UJVs" means the unconsolidated joint ventures in which Borrower owns a
beneficial interest and which are accounted for under the equity method in the
VRT Consolidated Financial Statements.
"Unencumbered Combined EBITDA" means that portion of Combined EBITDA
attributable to Unencumbered Assets.
"Unfunded Current Liability" of any Plan means the amount, if any, by
which the actuarial present value of accumulated plan benefits as of the close
of its most recent plan year, based upon the actuarial assumptions used by the
Plan's actuary in the most recent annual valuation of the Plan, exceeds the fair
market value of the assets allocable thereto, determined in accordance with
Section 412 of the Code.
"Unencumbered Assets" means collectively, assets, reflected on the VRT
Consolidated Financial Statements, wholly owned, directly or indirectly, by
Borrower and not subject to any Lien to secure all or any portion of Secured
Indebtedness and assets of UJVs which are not subject to any Lien to secure all
or any portion of Secured Indebtedness.
"Unsecured Debt Yield" means, for any prior twelve-month period, the
ratio, expressed as a percentage, of (1) Unencumbered Combined EBITDA for such
period to (2) Unsecured Indebtedness less Borrower's unrestricted cash and cash
equivalent securities as of the end of such period.
"Unsecured Indebtedness" means that portion of Total Outstanding
Indebtedness that is unsecured.
12
<PAGE> 17
"VRT Consolidated Financial Statements" means collectively the
consolidated balance sheet and related consolidated statement of operations,
accumulated deficiency in assets and cash flows, and footnotes thereto, of each
of General Partner and the Mendik Assets prior to the date hereof and of
Borrower after the date hereof, in each case prepared in accordance with GAAP.
"VRT Principals" means the trustees, officers and directors of General
Partner at any applicable time.
"VRT's Share of UJV Combined Outstanding Indebtedness" means the sum of
the indebtedness of each of the UJVs contributing to UJV Combined Outstanding
Indebtedness multiplied by Borrower's respective beneficial fractional interests
in each such UJV.
Section 1.02 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
Section 1.03 Computation of Time Periods. Except as otherwise provided
herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
Section 1.04 Rules of Construction. When used in this Agreement: (1)
"or" is not exclusive; (2) a reference to a law includes any amendment or
modification to such law; (3) a reference to a Person includes its permitted
successors and permitted assigns; (4) except as provided otherwise, all
references to the singular shall include the plural and vice versa; (5) except
as provided in this Agreement, a reference to an agreement, instrument or
document shall include such agreement, instrument or document as the same may be
amended, modified or supplemented from time to time in accordance with its terms
and as permitted by the Loan Documents; (6) all references to Articles or
Sections shall be to Articles and Sections of this Agreement unless otherwise
indicated; and (7) all Exhibits to this Agreement shall be incorporated into
this Agreement.
ARTICLE II. THE LOANS
Section 2.01 The Loans. Subject to the terms and conditions of this
Agreement, each of the Banks severally agrees to make a loan to Borrower (each
such loan by a Bank, a "Loan"; such loans, collectively, the "Loans") pursuant
to which each Bank shall advance to Borrower on the Closing Date an amount equal
to its Loan Commitment. The Loans may be outstanding as:
13
<PAGE> 18
(1) Base Rate Loans; (2) LIBOR Loans; or (3) a combination of the foregoing, as
Borrower shall elect and notify Administrative Agent in accordance with Section
2.03. The LIBOR Loan and Base Rate Loan of each Bank shall be maintained at such
Bank's Applicable Lending Office for its LIBOR Loan and Base Rate Loan,
respectively.
Section 2.02 Purpose. The Loan shall be made for the business purpose
of acquiring assets and providing adequate reserves. Borrower covenants and
agrees that in no event shall proceeds of the Loans, or any part thereof, be
used for any illegal purpose or for the purpose, whether immediate, incidental
or ultimate, of buying or carrying "margin stock" within the meaning of
Regulation U, or in connection with any hostile acquisition.
Section 2.03 Notice and Manner of Borrowing. The Banks' obligation to
disburse the proceeds of the Loans shall be subject to Borrower's submission to
Administrative Agent of a request for disbursement of the proceeds of the Loans,
which request contains the following: (1) the portion of the Loans that will be
Base Rate Loans and LIBOR Loans, and (2) in the case all or a portion of such
Loans is a LIBOR Loan, the duration of the Interest Period applicable thereto.
Not later than 10:00 a.m. (New York time) on the date such disbursement is to be
made, each Bank shall, through its Applicable Lending Office and subject to the
conditions of this Agreement, make the amount to be disbursed by it available to
Administrative Agent, at Administrative Agent's Office and in immediately
available funds for the account of Borrower. The amount so received by
Administrative Agent shall, subject to the conditions of this Agreement, be made
available to Borrower, in immediately available funds, by Administrative Agent's
wiring said funds to General Partner's account number 231313517 at Fleet Bank,
N.A., ABA number 021200339.
Section 2.04 Interest Periods; Renewals. In the case of the LIBOR
Loans, Borrower shall select an Interest Period of any duration in accordance
with the definition of Interest Period in Section 1.01, subject to the following
limitations: (1) no Interest Period may extend beyond the Maturity Date; (2) if
an Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless such Banking Day would
fall in the next calendar month, in which event such Interest Period shall end
on the immediately preceding Banking Day; and (3) only three (3) discrete
segments of a Bank's Loan bearing interest at a LIBOR Interest Rate for a
designated Interest Period may be outstanding at any one time (each such segment
of each Bank's Loan corresponding to a proportionate segment of each of the
other Banks' Loans).
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<PAGE> 19
Upon notice to Administrative Agent as provided in Section 2.11,
Borrower may Continue any LIBOR Loan on the last day of the Interest Period of
the same or different duration in accordance with the limitations provided
above.
Section 2.05 Interest. Borrower shall pay interest to Administrative
Agent for the account of the applicable Bank on the outstanding and unpaid
principal amount of the Loans, at a rate per annum as follows: (1) for Base Rate
Loans at a rate equal to the Base Rate plus the Applicable Margin; and (2) for
LIBOR Loans at a rate equal to the applicable LIBOR Interest Rate plus the
Applicable Margin. Any principal amount not paid when due (when scheduled, at
acceleration or otherwise) shall bear interest thereafter, payable on demand, at
the Default Rate.
The interest rate on Base Rate Loans shall change when the Base Rate
changes. Interest on Base Rate Loans and LIBOR Loans shall not exceed the
maximum amount permitted under applicable law. Interest shall be calculated for
the actual number of days elapsed on the basis of, in the case of both Base Rate
Loans and LIBOR Loans, three hundred sixty (360) days.
Accrued interest shall be due and payable in arrears upon and with
respect to any payment or prepayment of principal and on the first Banking Day
of each calendar month; provided, however, that interest accruing at the Default
Rate shall be due and payable on demand.
Section 2.06 Notes. The Loan made by each Bank under this Agreement
shall be evidenced by, and repaid with interest in accordance with, a single
promissory note of Borrower in the form of EXHIBIT B hereto duly completed and
executed by Borrower, representing the amount of such Bank's Loan Commitment, or
if less, the aggregate unpaid principal amount of the Loans by such Bank to
Borrower, payable to such Bank for the account of the Applicable Lending Office
(each, a "Note" and collectively, the "Notes"). Each Note shall mature, and all
outstanding principal and other sums thereunder shall be paid in full, on the
Maturity Date.
Each Bank is hereby authorized by Borrower to endorse on the schedule
attached to the Note held by it, the amount of each payment of principal
received by such Bank for the account of its Applicable Lending Office(s) on
account of its Loan, which endorsement shall, in the absence of manifest error,
be conclusive as to the outstanding balance of the Loan made by such Bank;
provided, however, that the failure to make any such notation shall not limit or
otherwise affect the obligations of Borrower under this Agreement or the Note
held by such Bank. Each Bank agrees that prior to any assignment of the Note it
will endorse the schedule attached to its Note.
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<PAGE> 20
Section 2.07 Prepayments. Without prepayment premium or penalty but
subject to Section 3.05, Borrower may, upon at least one (1) Banking Day's
notice to Administrative Agent in the case of the Base Rate Loans, and at least
three (3) Banking Days' notice to Administrative Agent in the case of LIBOR
Loans, prepay the Loans in whole or, with respect to Base Rate Loans only, in
part, provided that (1) any partial prepayment under this Section shall be in
integral multiples of One Million Dollars ($1,000,000); and (2) each prepayment
under this Section shall include all interest accrued on the amount of principal
prepaid to (but excluding) the date of prepayment.
Section 2.08 Method of Payment. Borrower shall make each payment under
this Agreement and under the Notes not later than 11:00 A.M. (New York time) on
the date when due in Dollars to Administrative Agent at Administrative Agent's
Office in immediately available funds. Administrative Agent will thereafter, on
the day of its receipt of each such payment, cause to be distributed to each
Bank (1) such Bank's ratable share (based upon the respective outstanding
principal amounts and interest due under the Notes of the Banks) of the payments
of principal and interest in like funds for the account of such Bank's
Applicable Lending Office; and (2) fees payable to such Bank in accordance with
the terms of this Agreement. Borrower hereby authorizes Administrative Agent and
the Banks, if and to the extent payment by Borrower is not made when due under
this Agreement or under the Notes, to charge from time to time against any
account Borrower maintains with Administrative Agent or any Bank any amount so
due to Administrative Agent and/or the Banks.
Except to the extent provided in this Agreement, whenever any payment
to be made under this Agreement or under the Notes is due on any day other than
a Banking Day, such payment shall be made on the next succeeding Banking Day,
and such extension of time shall in such case be included in the computation of
the payment of interest and other fees, as the case may be.
Section 2.09 Conversions or Continuation of Loans. Subject to the
provisions of Article III and Sections 2.04 and 2.10, Borrower shall have the
right to Convert Base Rate Loans into LIBOR Loans, to Convert LIBOR Loans into
Base Rate Loans, or to Continue LIBOR Loans as LIBOR Loans, at any time or from
time to time, provided that: (1) Borrower shall give Administrative Agent notice
of each such Conversion or Continuation as provided in Section 2.11; and (2) a
LIBOR Loan may be Continued only on the last day of the applicable Interest
Period for such LIBOR Loan. Except as otherwise provided in this Agreement, each
Continuation and Conversion shall be applicable to each Bank's Loan in
accordance with its Pro Rata Share.
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<PAGE> 21
Section 2.10 Minimum Amounts. With respect to the Loans as a whole,
each Conversion shall be in an amount at least equal to Three Million Dollars
($3,000,000) and in integral multiples of One Hundred Thousand Dollars
($100,000).
Section 2.11 Certain Notices Regarding Conversions and Continuations of
Loans. Notices by Borrower to Administrative Agent of Conversions and
Continuations of LIBOR Loans shall be irrevocable and shall be effective only if
received by Administrative Agent not later than 10:00 a.m. (New York time) on
the number of Banking Days prior to the date of the relevant Conversion or
Continuation specified below:
<TABLE>
<CAPTION>
Number of
Notice Banking Days Prior
------ ------------------
<S> <C>
Conversions into Base Rate
Loans one (1)
Conversions into or Continuations
as, LIBOR Loans three (3)
</TABLE>
Promptly following its receipt of any such notice, Administrative Agent shall so
advise the Banks. Each such notice of Conversion shall specify the LIBOR Loans
or Base Rate Loans to be Converted; and each such notice of Conversion or
Continuation shall specify the date of Conversion or Continuation (which shall
be a Banking Day), the amount thereof (subject to Section 2.10) and the duration
of the Interest Period applicable thereto (subject to Section 2.04). In the
event that Borrower fails to Continue LIBOR Loans within the time period and as
otherwise provided in this Section , such LIBOR Loans will be automatically
Converted into Base Rate Loans on the last day of the then current applicable
Interest Period for such LIBOR Loans.
Section 2.12 Late Payment Premium. Borrower shall pay to Administrative
Agent for the account of the Banks a late payment premium in the amount of 4% of
any payments of principal or interest under the Loans made more than ten (10)
days after the due date thereof, which shall be due with any such late payment.
Section 2.13 Extension of Maturity. Borrower shall have an option to
extend the Maturity Date for a period of three (3) months. If Borrower exercises
that option, it shall have a second option to extend the Maturity Date for a
period of six (6) months (but in no event to a date later than April 14, 1998).
Each option is subject to Administrative Agent's receipt of a written request
from Borrower for such extension not later than thirty (30) days prior to the
then applicable Maturity Date and is subject to there existing no Default.
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<PAGE> 22
ARTICLE III. YIELD PROTECTION;
ILLEGALITY; ETC.
Section 3.01 Additional Costs. Borrower shall pay directly to
each Bank from time to time on demand such amounts as such Bank may reasonably
determine to be necessary to compensate it for any increased costs which such
Bank determines are attributable to its making or maintaining a LIBOR Loan, or
its obligation to make or maintain a LIBOR Loan, or its obligation to Convert a
Base Rate Loan to a LIBOR Loan hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of its LIBOR Loan or such
obligations (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), in each case resulting from any Regulatory
Change which:
(1) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or the Notes in respect of any such
LIBOR Loan (other than (i) changes in the rate of general corporate,
franchise, branch profit, net income or other income tax imposed on
such Bank or its Applicable Lending Office or (ii) a tax described in
Section 10.13); or
(2) (other than to the extent the LIBOR Reserve Requirement is
taken into account in determining the LIBOR Rate at the commencement of
the applicable Interest Period) imposes or modifies any reserve,
special deposit, deposit insurance or assessment, minimum capital,
capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities
of, such Bank (including any LIBOR Loan or any deposits referred to in
the definition of "LIBOR Interest Rate" in Section 1.01), or any
commitment of such Bank (including such Bank's Loan Commitment
hereunder); or
(3) imposes any other condition (unrelated to the basis of
taxation referred to in paragraph (1) above) affecting this Agreement
or the Notes (or any of such extensions of credit or liabilities).
Without limiting the effect of the provisions of the first
paragraph of this Section , in the event that, by reason of any Regulatory
Change, any Bank either (1) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits of other
liabilities of such Bank which includes deposits by reference to which the LIBOR
Interest Rate is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes loans based on
the LIBOR Interest Rate or (2) becomes subject to restrictions on the amount of
such a category
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<PAGE> 23
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to Borrower (with a copy to Administrative Agent), the obligation of such
Bank to Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be
suspended (in which case the provisions of Section 3.04 shall be applicable)
until such Regulatory Change ceases to be in effect.
Determinations and allocations by a Bank for purposes of this
Section of the effect of any Regulatory Change pursuant to the first or second
paragraph of this Section , on its costs or rate of return of making or
maintaining its Loan or portions thereof or on amounts receivable by it in
respect of its Loan or portions thereof, and the amounts required to compensate
such Bank under this Section, shall be included in a calculation of such amounts
given to Borrower and shall be conclusive absent manifest error.
Section 3.02 Limitation on Types of Loans. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of the LIBOR
Interest Rate for any Interest Period:
(1) Administrative Agent reasonably determines (which
determination shall be conclusive) that quotations of interest rates
for the relevant deposits referred to in the definition of "LIBOR
Interest Rate" in Section 1.01 are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining
rates of interest for the LIBOR Loans as provided in this Agreement; or
(2) a Bank reasonably determines (which determination shall be
conclusive) and promptly notifies Administrative Agent that the
relevant rates of interest referred to in the definition of "LIBOR
Interest Rate" in Section 1.01 upon the basis of which the rate of
interest for LIBOR Loans for such Interest Period is to be determined
do not adequately cover the cost to such Bank of making or maintaining
such LIBOR Loan for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof, and so long
as such condition remains in effect, the Banks (or, in the case of the
circumstances described in clause (2) above, the affected Bank) shall be under
no obligation to Convert Base Rate Loans into LIBOR Loans or to Continue LIBOR
Loans and Borrower shall, on the last day(s) of the then current Interest
Period(s) for the affected outstanding LIBOR Loans, either prepay the affected
LIBOR Loans or Convert the affected LIBOR Loans into Base Rate Loans in
accordance with Section 2.09.
Section 3.03 Illegality. Notwithstanding any other provision
of this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to honor its obligation to make or maintain a LIBOR
Loan hereunder or to
19
<PAGE> 24
Convert a Base Rate Loan into a LIBOR Loan, then such Bank shall promptly notify
Administrative Agent and Borrower thereof and such Bank's obligation to make or
maintain, to Continue, or to Convert its Base Rate Loan into, a LIBOR Loan shall
be suspended (in which case the provisions of Section 3.04 shall be applicable)
until such time as such Bank may again make and maintain a LIBOR Loan.
Section 3.04 Treatment of Affected Loans. If the obligations
of any Bank to Continue its LIBOR Loan, or to Convert its Base Rate Loan into a
LIBOR Loan, are suspended pursuant to Sections 3.01 or 3.03 (each LIBOR Loan so
affected being herein called an "Affected Loan"), such Bank's Affected Loan
shall be automatically Converted into a Base Rate Loan on the last day of the
then current Interest Period for the Affected Loan (or, in the case of a
Conversion required by Sections 3.01 or 3.03, on such earlier date as such Bank
may specify to Borrower).
To the extent that such Bank's Affected Loan has been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such Bank's Affected Loan shall be applied instead to its Base Rate
Loan and such Bank shall have no obligation to Convert its Base Rate Loan into a
LIBOR Loan.
Section 3.05 Certain Compensation. Other than in connection
with a Conversion of an Affected Loan, Borrower shall pay to Administrative
Agent for the account of the applicable Bank, upon the request of such Bank
through Administrative Agent which request includes a calculation of the
amount(s) due, such amount or amounts as shall be sufficient (in the reasonable
opinion of such Bank) to compensate it for any loss, cost or expense which such
Bank reasonably determines is attributable to:
(1) any payment, prepayment, Conversion or Continuation of a
LIBOR Loan made by such Bank on a date other than the last day of an
applicable Interest Period for such LIBOR Loan whether by reason of
acceleration or otherwise; or
(2) any failure by Borrower for any reason to Convert or
Continue a LIBOR Loan to be Converted or Continued by such Bank on the
date specified therefor in the relevant notice under Section 2.11.
Without limiting the foregoing, such compensation shall
include an amount equal to the present value (using as the discount rate an
interest rate equal to the rate determined under (2) below) of the excess, if
any, of (1) the amount of interest (less the Applicable Margin) which otherwise
would have accrued on the principal amount so paid, prepaid, Converted or
Continued (or not Converted or Continued) for the period from the date of such
payment, prepayment, Conversion or Continuation (or failure
20
<PAGE> 25
to Convert or Continue) to the last day of the then current applicable Interest
Period for the LIBOR Loan (or, in the case of a failure to Convert or Continue,
to the last day of the applicable Interest Period for the LIBOR Loan which would
have commenced on the date specified therefor in the relevant notice) at the
applicable rate of interest for the LIBOR Loan provided for herein, over (2) the
amount of interest (as reasonably determined by such Bank) based upon the
interest rate which such Bank would have bid in the London interbank market for
Dollar deposits, for amounts comparable to such principal amount and maturities
comparable to such period. A determination of any Bank as to the amounts payable
pursuant to this Section shall be conclusive absent manifest error.
Section 3.06 Capital Adequacy. If any Bank shall have
determined that, after the date hereof, the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or its Parent) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within
fifteen (15) days after demand by such Bank (with a copy to Administrative
Agent), Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its Parent) for such reduction. A certificate of
any Bank claiming compensation under this Section , setting forth in reasonable
detail the basis therefor, shall be conclusive absent manifest error.
Section 3.07 Substitution of Banks. If any Bank (an "Affected
Bank") (i) makes demand upon Borrower for (or if Borrower is otherwise required
to pay) Additional Costs pursuant to Section 3.01 or (ii) is unable to make or
maintain its Loan or any portion thereof at the LIBOR Based Rate as a result of
a condition described in Section 3.03 or clause (2) of Section 3.02, Borrower
may, within ninety (90) days of receipt of such demand or notice (or the
occurrence of such other event causing Borrower to be required to pay Additional
Costs or causing said Section 3.03 or clause (2) of Section 3.02 to be
applicable), as the case may be, give written notice (a "Replacement Notice") to
Administrative Agent and to each Bank of Borrower's intention either (x) to
prepay in full the Affected Bank's Note and to terminate the Affected Bank's
entire Loan Commitment or (y) to
21
<PAGE> 26
replace the Affected Bank with another financial institution (the "Replacement
Bank") designated in such Replacement Notice.
In the event Borrower opts to give the notice provided for in
clause (x) above, and if the Affected Bank shall not agree within thirty (30)
days of its receipt thereof to waive the payment of the Additional Costs in
question or the effect of the circumstances described in Section 3.03 or clause
(2) of Section 3.02, then, so long as no Default or Event of Default shall
exist, Borrower may terminate the Affected Bank's entire Loan Commitment,
provided that in connection therewith it pays to the Affected Bank all
outstanding principal and accrued and unpaid interest under the Affected Bank's
Note, together with all other amounts, if any, due from Borrower to the Affected
Bank, including all amounts properly demanded and unreimbursed under Section
3.01.
In the event Borrower opts to give the notice provided for in
clause (y) above, and if (i) Administrative Agent shall, within thirty (30) days
of its receipt of the Replacement Notice, notify Borrower and each Bank in
writing that the Replacement Bank is reasonably satisfactory to Administrative
Agent and (ii) the Affected Bank shall not, prior to the end of such thirty
(30)-day period, agree to waive the payment of the Additional Costs in question
or the effect of the circumstances described in Section 3.03 or clause (2) of
Section 3.02, then the Affected Bank shall, so long as no Default or Event of
Default shall exist, assign its Note and all of its rights and obligations under
this Agreement to the Replacement Bank, and the Replacement Bank shall assume
all of the Affected Bank's rights and obligations, pursuant to an agreement,
substantially in the form of an Assignment and Assumption Agreement, executed by
the Affected Bank and the Replacement Bank. In connection with such assignment
and assumption, the Replacement Bank shall pay to the Affected Bank an amount
equal to the outstanding principal amount under the Affected Bank's Note plus
all interest accrued thereon, plus all other amounts, if any (other than the
Additional Costs in question), then due and payable to the Affected Bank;
provided, however, that prior to or simultaneously with any such assignment and
assumption, Borrower shall have paid to such Affected Bank all amounts properly
demanded and unreimbursed under Section 3.01. Upon the effective date of such
assignment and assumption, the Replacement Bank shall become a Bank Party to
this Agreement and shall have all the rights and obligations of a Bank as set
forth in such Assignment and Assumption Agreement, and the Affected Bank shall
be released from its obligations hereunder, and no further consent or action by
any party shall be required. Upon the consummation of any assignment pursuant to
this Section , a substitute note shall be issued to the Replacement Bank by
Borrower, in exchange for the return of the Affected Bank's Note. Such
substitute note shall constitute a "Note" and the obligations evidenced by such
substitute note
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<PAGE> 27
shall constitute "Obligations" for all purposes of this Agreement and the other
Loan Documents. If the Replacement Bank is not incorporated under the laws of
the United States of America or a state thereof, it shall, prior to the first
date on which interest or fees are payable hereunder for its account, deliver to
Borrower and Administrative Agent certification as to exemption from deduction
or withholding of any United States federal income taxes in accordance with
Section 10.13. Each Replacement Bank shall be deemed to have made the
representations contained in, and shall be bound by the provisions of, Section
10.13.
Borrower, Administrative Agent and the Banks shall execute
such modifications to the Loan Documents as shall be reasonably required in
connection with and to effectuate the foregoing.
ARTICLE IV. CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to the Loans. The
obligations of the Banks hereunder to advance the proceeds of the Loans are
subject to the condition precedent that Administrative Agent shall have received
on or before the Closing Date each of the following documents, and each of the
following requirements shall have been fulfilled:
(1) Fees and Expenses. The payment of all fees and expenses
incurred by Administrative Agent (including, without limitation, the
reasonable fees and expenses of legal counsel);
(2) Note. The Note for UBS, duly executed by Borrower;
(3) Financial Statements. Audited VRT Consolidated Financial
Statements as of and for the year ended December 31, 1996, acceptable
to the Banks;
(4) Certificates of Limited Partnership/Incorporation. A copy
of the Certificate of Limited Partnership for Borrower and a copy of
the articles of incorporation of General Partner, each certified by the
appropriate Secretary of State or equivalent state official;
(5) Agreements of Limited Partnership/Bylaws. A copy of the
Agreement of Limited Partnership for Borrower and a copy of the bylaws
of General Partner, including all amendments thereto, each certified by
the Secretary or an Assistant Secretary of General Partner as being in
full force and effect on the Closing Date;
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<PAGE> 28
(6) Good Standing Certificates. A certified copy of a
certificate from the Secretary of State or equivalent state official of
the states where Borrower and General Partner are organized, dated as
of the most recent practicable date, showing the good standing or
partnership qualification of (i) Borrower and (ii) General Partner;
(7) Foreign Qualification Certificates. A certified copy of a
certificate from the Secretary of State or equivalent state official of
the state where Borrower and General Partner maintain their principal
place of business, dated as of the most recent practicable date,
showing the qualification to transact business in such state as a
foreign limited partnership or foreign corporation, as the case may be,
for (i) Borrower and (ii) General Partner;
(8) Resolutions. A copy of a resolution or resolutions adopted
by the Board of Directors of General Partner, certified by the
Secretary or an Assistant Secretary of General Partner as being in full
force and effect on the Closing Date, authorizing the Loans provided
for herein and the execution, delivery and performance of the Loan
Documents to be executed and delivered by General Partner hereunder on
behalf of itself and Borrower;
(9) Incumbency Certificate. A certificate, signed by the
Secretary or an Assistant Secretary of General Partner and dated the
Closing Date, as to the incumbency, and containing the specimen
signature or signatures, of the Persons authorized to execute and
deliver the Loan Documents to be executed and delivered by it and
Borrower hereunder;
(10) Solvency Certificate. A Solvency Certificate, duly
executed, from Borrower;
(11) Opinion of Counsel for Borrower. Favorable opinions,
dated the Closing Date, from counsels for Borrower and General Partner,
as to such matters as Administrative Agent may reasonably request;
(12) Authorization Letter. The Authorization Letter,
duly executed by Borrower;
(13) Guaranty. The Guaranty duly executed by General Partner;
(14) Certificate. The following statements shall be true and
Administrative Agent shall have received a certificate dated the
Closing Date signed by a duly authorized signatory of Borrower stating,
to the best of the certifying party's knowledge, the following:
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<PAGE> 29
(a) All representations and warranties contained in
this Agreement and in each of the other Loan Documents are
true and correct on and as of the Closing Date as though made
on and as of such date, and
(b) No Default or Event of Default has occurred and
is continuing, or could result from the transactions
contemplated by this Agreement and the other Loan Documents;
(15) Compliance Certificate. A certificate of the sort
required by paragraph (3) of Section 6.09; and
(16) Evidence. Evidence of Borrower's acquisition of the
Mendik Assets and the transfer of the assets of General Partner and
Alexander's, Inc. to Borrower.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Borrower (and General Partner, if expressly included in
Sections contained in this Article) represents and warrants to Administrative
Agent and each Bank as follows:
Section 5.01 Existence. Borrower is a limited partnership duly
organized and existing under the laws of the State of Delaware, with its
principal place of business in the State of New Jersey, and is duly qualified as
a foreign limited partnership, properly licensed, in good standing and has all
requisite authority to conduct its business in each jurisdiction in which it
owns properties or conducts business except where the failure to be so qualified
or to obtain such authority would not have a material adverse effect. Each of
its Consolidated Businesses is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
requisite authority to conduct its business in each jurisdiction in which it
owns property or conducts business, except where the failure to be so qualified
or to obtain such authority would not have a material adverse effect. General
Partner is a real estate investment trust duly organized and existing under the
laws of the State of Maryland, with its principal place of business in the State
of New Jersey, is duly qualified as a foreign corporation and properly licensed
and in good standing in each jurisdiction where the failure to qualify or be
licensed would constitute a Material Adverse Change with respect to General
Partner or have a material adverse effect on the business or properties of
General Partner. The stock of General Partner is listed on the New York Stock
Exchange.
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<PAGE> 30
Section 5.02 Corporate/Partnership Powers. The execution,
delivery and performance of the Loan Documents required to be delivered by
Borrower hereunder are within its partnership authority and the corporate power
of General Partner, have been duly authorized by all requisite action, and are
not in conflict with the terms of any organizational instruments of such entity,
or any instrument or agreement to which Borrower or General Partner is a party
or by which Borrower, General Partner or any of their respective assets may be
bound or affected.
Section 5.03 Power of Officers. The officers of General
Partner executing the Loan Documents required to be delivered by it on its own
behalf or that of Borrower hereunder have been duly elected or appointed and
were fully authorized to execute the same at the time each such Loan Document
was executed.
Section 5.04 Power and Authority; No Conflicts; Compliance
With Laws. The execution, delivery and performance of the obligations required
to be performed by Borrower and General Partner of the Loan Documents does not
and will not (a) violate any provision of, or require any filing, registration,
consent or approval under, any Law (including, without limitation, Regulation
U), order, writ, judgment, injunction, decree, determination or award presently
in effect having applicability to either of them, (b) result in a breach of or
constitute a default under or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which either of
them may be a party or by which either of them or their properties may be bound
or affected except for consents which have been obtained, (c) result in, or
require, the creation or imposition of any Lien, upon or with respect to any of
its properties now owned or hereafter acquired, or (d) cause either of them to
be in default under any such Law, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument; to
the best of their knowledge, Borrower and General Partner are in compliance with
all Laws applicable to them and their properties where the failure to be in
compliance would cause a Material Adverse Change to occur.
Section 5.05 Legally Enforceable Agreements. Each Loan
Document is a legal, valid and binding obligation of Borrower and/or General
Partner, as the case may be, enforceable in accordance with its terms, except to
the extent that such enforcement may be limited by applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.
Section 5.06 Litigation. Except as disclosed in General
Partner's SEC Reports existing as of the date hereof, there are no actions,
suits or proceedings pending or, to its knowledge, threatened against Borrower,
General Partner or any of
26
<PAGE> 31
their Affiliates before any court or arbitrator or any Governmental Authority
reasonably likely to have a material effect on Borrower's ability to repay the
Loans.
Section 5.07 Good Title to Properties. Borrower and each of
its Affiliates have good, marketable and legal title to all of the properties
and assets each of them purports to own (including, without limitation, those
reflected in the December 31, 1996 financial statements referred to in Section
5.15) and only with exceptions which do not materially detract from the value of
such property or assets or the use thereof in Borrower's and such Affiliate's
business, and except to the extent that any such properties and assets have been
encumbered or disposed of since the date of such financial statements without
violating any of the covenants contained in Article VII or elsewhere in this
Agreement. Borrower and its Material Affiliates enjoy peaceful and undisturbed
possession of all leased property necessary in any material respect in the
conduct of their respective businesses. All such leases are valid and subsisting
and are in full force and effect.
Section 5.08 Taxes. Borrower and General Partner have filed
all tax returns (federal, state and local) required to be filed and have paid
all taxes, assessments and governmental charges and levies due and payable
without the imposition of a penalty, including interest and penalties, except to
the extent they are the subject of a Good Faith Contest.
Section 5.09 ERISA. Borrower and General Partner are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred with
respect to any Plan; no notice of intent to terminate a Plan has been filed nor
has any Plan been terminated within the past five (5) years; no circumstance
exists which constitutes grounds under Section 4042 of ERISA entitling the PBGC
to institute proceedings to terminate, or appoint a trustee to administer, a
Plan, nor has the PBGC instituted any such proceedings; Borrower, General
Partner and the ERISA Affiliates have not completely or partially withdrawn
under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; Borrower,
General Partner and the ERISA Affiliates have met the minimum funding
requirements of Section 412 of the Code and Section 302 of ERISA of each with
respect to the Plans of each and there is no Unfunded Current Liability with
respect to any Plan established or maintained by each; and Borrower, General
Partner and the ERISA Affiliates have not incurred any liability to the PBGC
under ERISA (other than for the payment of premiums under Section 4007 of
ERISA). No part of the funds to be used by Borrower in satisfaction of its
obligations under this Agreement constitute "plan assets" of any "employee
benefit plan" within the meaning of ERISA or of any "plan" within the meaning of
Section 4975(e)(1) of the Code, as interpreted by the Internal
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Revenue Service and the U.S. Department of Labor in rules, regulations,
releases, bulletins or as interpreted under applicable case law.
Section 5.10 No Default on Outstanding Judgments or Orders. Borrower
and General Partner have satisfied all judgments which are not being appealed
and are not in default with respect to any judgment, order, writ, injunction,
decree, rule or regulation of any court, arbitrator or federal, state, municipal
or other Governmental Authority, commission, board, bureau, agency or
instrumentality, domestic or foreign.
Section 5.11 No Defaults on Other Agreements. Except as disclosed to
the Bank Parties in writing or as disclosed in General Partner's SEC Reports,
Borrower or General Partner, to the best of their knowledge, are not a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any partnership, trust or other restriction which is
likely to result in a Material Adverse Change. To the best of their knowledge,
neither Borrower nor General Partner is in default in any respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument which is likely to result in
a Material Adverse Change.
Section 5.12 Government Regulation. Neither Borrower nor General
Partner is subject to regulation under the Investment Company Act of 1940 or any
statute or regulation limiting any such Person's ability to incur indebtedness
for money borrowed as contemplated hereby.
Section 5.13 Environmental Protection. To Borrower's knowledge, except
as disclosed in General Partner's SEC Reports existing as of the date hereof,
none of Borrower's or its Affiliates' properties contains any Hazardous
Materials that, under any Environmental Law currently in effect, (1) would
impose liability on Borrower or General Partner that is likely to result in a
Material Adverse Change, or (2) is likely to result in the imposition of a Lien
on any assets of Borrower, General Partner or any Material Affiliates that is
likely to result in a Material Adverse Change. To Borrower's knowledge, neither
it, General Partner nor any Material Affiliates are in violation of, or subject
to any existing, pending or threatened investigation or proceeding by any
Governmental Authority under any Environmental Law that is likely to result in a
Material Adverse Change.
Section 5.14 Solvency. Borrower and General Partner are, and upon
consummation of the transactions contemplated by this Agreement, the other Loan
Documents and any other documents, instruments or agreements relating thereto,
will be, Solvent.
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Section 5.15 Financial Statements. The VRT Consolidated Financial
Statements most recently delivered to the Banks pursuant to the terms of this
Agreement are in all material respects complete and correct and fairly present
the financial condition of the subjects thereof as of the dates of and for the
periods covered by such statements, all in accordance with GAAP. There has been
no Material Adverse Change since the date of such most recently delivered VRT
Consolidated Financial Statements.
Section 5.16 Valid Existence of Affiliates. Each Material Affiliate is
an entity duly organized and existing in good standing under the laws of the
jurisdiction of its formation. As to each Material Affiliate, its correct name,
the jurisdiction of its formation, Borrower's direct or indirect percentage of
beneficial interest therein, and the type of business in which it is primarily
engaged, are set forth on said EXHIBIT C. Borrower and each of its Material
Affiliates have the power to own their respective properties and to carry on
their respective businesses now being conducted. Each Material Affiliate is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the respective businesses conducted by
it or its respective properties, owned or held under lease, make such
qualification necessary and where the failure to be so qualified would have the
effect of a Material Adverse Change on Borrower and its Consolidated Businesses
taken as a whole.
Section 5.17 Insurance. Borrower and each of its Affiliates has in
force paid insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in the same or a similar business and similarly situated.
Section 5.18 Accuracy of Information; Full Disclosure. Neither this
Agreement nor any documents, financial statements, reports, notices, schedules,
certificates, statements or other writings furnished by or on behalf of Borrower
to Administrative Agent or any Bank in connection with the negotiation of this
Agreement or the consummation of the transactions contemplated hereby, or
required herein to be furnished by or on behalf of Borrower (other than
projections which are made by Borrower in good faith), contains any untrue or
misleading statement of a material fact or omits a material fact necessary to
make the statements herein or therein not misleading. There is no fact which
Borrower has not disclosed to Administrative Agent and the Banks in writing or
which is not included in General Partner's SEC Reports which materially affects
adversely nor, so far as Borrower can now foresee, will materially affect
adversely the business or financial condition of Borrower or the ability of
Borrower to perform this Agreement and the other Loan Documents.
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Section 5.19 Status. General Partner agrees that all of its
representations and warranties set forth in this Article V and elsewhere in this
Agreement are true on the Closing Date.
ARTICLE VI. AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or the Loan Commitments
remain in effect, or any other amount is owing by Borrower to any Bank hereunder
or under any other Loan Document, Borrower and General Partner shall each:
Section 6.01 Maintenance of Existence. Preserve and maintain its legal
existence and, if applicable, good standing in the jurisdiction of organization
and, if applicable, qualify and remain qualified as a foreign entity in each
jurisdiction in which such qualification is required, except to the extent that
failure to so qualify is not likely to result in a Material Adverse Change.
Section 6.02 Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP,
reflecting all of its financial transactions.
Section 6.03 Maintenance of Insurance. At all times, maintain and keep
in force, and cause each of its Material Affiliates to maintain and keep in
force, insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof.
Section 6.04 Compliance with Laws; Payment of Taxes. Comply in all
material respects with all Laws applicable to it or to any of its properties or
any part thereof, such compliance to include, without limitation, paying before
the same become delinquent all taxes, assessments and governmental charges
imposed upon it, General Partner or upon any of their property, except to the
extent they are the subject of a Good Faith Contest.
Section 6.05 Right of Inspection. At any reasonable time and from time
to time upon reasonable notice, permit Administrative Agent or any Bank or any
agent or representative thereof (provided that, at Borrower's request,
Administrative Agent or such Bank, agent or representative must be accompanied
by a representative of Borrower), to examine and make copies and abstracts from
the records and books of account of, and visit the properties of, Borrower and
to discuss the affairs, finances and
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accounts of Borrower with the independent accountants of Borrower.
Section 6.06 Compliance With Environmental Laws. Comply in all material
respects with all applicable Environmental Laws and immediately pay or cause to
be paid all costs and expenses incurred in connection with such compliance,
except to the extent there is a Good Faith Contest.
Section 6.07 Payment of Costs. Pay all costs and expenses required for
the satisfaction of the conditions of this Agreement.
Section 6.08 Maintenance of Properties. Do all things reasonably
necessary to maintain, preserve, protect and keep its and its Affiliates'
properties in good repair, working order and condition.
Section 6.09 Reporting and Miscellaneous Document Requirements. Furnish
directly to each of the Banks:
(1) Annual Financial Statements. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, the VRT Consolidated
Financial Statements as of the end of and for such Fiscal Year, in reasonable
detail and stating in comparative form the respective figures for the
corresponding date and period in the prior Fiscal Year and audited by Borrower's
Accountants;
(2) Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) days after the end of each calendar quarter (other
than the last quarter of the Fiscal Year), the unaudited VRT Consolidated
Financial Statements as of the end of and for such calendar quarter, in
reasonable detail and stating in comparative form the respective figures for the
corresponding date and period in the prior Fiscal Year;
(3) Certificate of No Default and Financial Compliance. Within fifty
(50) days after the end of each of the first three quarters of each Fiscal Year
and within ninety-five (95) days after the end of each Fiscal Year, a
certificate of the chief financial officer or treasurer of General Partner (a)
stating that, to the best of his or her knowledge, no Default or Event of
Default has occurred and is continuing, or if a Default or Event of Default has
occurred and is continuing, specifying the nature thereof and the action which
is proposed to be taken with respect thereto; (b) stating that the covenants
contained in Section 6.10, Sections 7.02, 7.03 and 7.04 and in Article VIII have
been complied with (or specifying those that have not been complied with) and
including computations demonstrating such compliance (or non-compliance); (c)
setting forth the details of all items comprising Total Outstanding Indebtedness
(including
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amount, maturity, interest rate and amortization requirements), Secured
Indebtedness, Unencumbered Combined EBITDA, Interest Expense and Unsecured
Indebtedness; and (d) only at the end of each Fiscal Year stating Borrower's
taxable income;
(4) Certificate of Borrower's Accountants. Simultaneously with the
delivery of the annual financial statements required by paragraph (1) of this
Section , (a) a statement of Borrower's Accountants who audited such financial
statements comparing the computations set forth in the financial compliance
certificate required by paragraphs (3)(b) and (d) of this Section to the audited
financial statements required by paragraph (1) of this Section and (b) when the
audited financial statements required by paragraph (1) of this Section have a
qualified auditor's opinion, a statement of Borrower's Accountants who audited
such financial statements of whether any Default or Event of Default has
occurred and is continuing;
(5) Notice of Litigation. Promptly after the commencement and knowledge
thereof, notice of all actions, suits, and proceedings before any court or
arbitrator, affecting Borrower or General Partner which, if determined adversely
to Borrower or General Partner is likely to result in a Material Adverse Change
and which would be required to be reported in Borrower's or General Partner's
SEC Reports;
(6) Notices of Defaults and Events of Default. As soon as possible and
in any event within ten (10) days after Borrower becomes aware of the occurrence
of a material Default or any Event of Default a written notice setting forth the
details of such Default or Event of Default and the action which is proposed to
be taken with respect thereto;
(7) Sales or Acquisitions of Assets. Promptly after the occurrence
thereof, written notice of any Disposition or acquisition of assets (other than
acquisitions or Dispositions of investments such as certificates of deposit,
Treasury securities and money market deposits in the ordinary course of
Borrower's cash management) in excess of Twenty Five Million Dollars
($25,000,000) together with, in the case of any acquisition of such an asset,
copies of the agreements governing the acquisition and historical financial
information and Borrower's projections with respect to the property acquired;
(8) Material Adverse Change. As soon as is practicable and in any event
within five (5) days after knowledge of the occurrence of any event or
circumstance which is likely to result in or has resulted in a Material Adverse
Change and which would be required to be reported in General Partner's SEC
Reports, written notice thereof;
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(9) Bankruptcy of Tenants. Promptly after becoming aware of the same,
written notice of the bankruptcy, insolvency or cessation of operations of any
tenant in any property of Borrower or in which Borrower has an interest to which
four percent (4%) or more of aggregate minimum rent payable to Borrower directly
or through its Consolidated Businesses or UJVs is attributable;
(10) Offices. Thirty (30) days' prior written notice of any change in
the chief executive office or principal place of business of Borrower;
(11) Environmental and Other Notices. As soon as possible and in any
event within thirty (30) days after receipt, copies of all Environmental Notices
received by Borrower which are not received in the ordinary course of business
and which relate to a previously undisclosed situation which is likely to result
in a Material Adverse Change;
(12) Insurance Coverage. Promptly, such information concerning
Borrower's insurance coverage as Administrative Agent may reasonably request;
(13) Proxy Statements, Etc. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports which
Borrower or its Material Affiliates sends to its shareholders, and copies of all
regular, periodic and special reports, and all registration statements which
Borrower or its Material Affiliates files with the Securities and Exchange
Commission or any Governmental Authority which may be substituted therefor, or
with any national securities exchange;
(14) Rent Rolls. As soon as available and in any event within ninety
(90) days after the end of each Fiscal Year, a rent roll, tenant sales report
and operating statement for each property directly or indirectly owned in whole
or in part by Borrower;
(15) Capital Expenditures. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year, a schedule of such Fiscal
Year's capital expenditures and a budget for the next Fiscal Year's planned
capital expenditures for each property directly or indirectly owned in whole or
in part by Borrower; and
(16) General Information. Promptly, such other information respecting
the condition or operations, financial or otherwise, of Borrower or any
properties of Borrower as Administrative Agent may from time to time reasonably
request.
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Section 6.10 Mandatory Prepayments. Immediately upon receipt of the
same, cause any proceeds, net of necessary and proper expenses, received by
Borrower or General Partner from any financing, equity offering, public or
private debt offering, Disposition of any of its now owned or hereafter acquired
assets or any other capital event to be applied to the repayment of the Loans.
Section 6.11 Management. At all times, cause Borrower or its Affiliates
to provide property management and leasing services for at least eighty percent
(80%) of the properties then owned, directly or indirectly, in whole or in part
by Borrower.
ARTICLE VII. NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to
Administrative Agent or any Bank hereunder or under any other Loan Document,
Borrower shall not do any or all of the following:
Section 7.01 Mergers Etc. Merge or consolidate with (except where
Borrower is the surviving entity), or sell, assign, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) (or
enter into any agreement to do any of the foregoing).
Section 7.02 Investments. Make any loan or advance to any Person or
purchase or otherwise acquire any capital stock, assets, obligations or other
securities of, make any capital contribution to, or otherwise invest in, or
acquire any interest in, any Person (any such transaction, an "Investment") if
such Investment constitutes the acquisition of a minority interest in a Person
(a "Minority Interest") and the amount of such Investment, together with the
value of all other Minority Interests acquired after the Closing Date
contributing to Equity Value, would exceed fifteen percent (15%) of
Capitalization Value. A fifty percent (50%) beneficial interest in a Person, in
connection with which the holder thereof exercises joint control over such
Person with the holder(s) of the other fifty percent (50%) beneficial interest,
shall not constitute a "Minority Interest" for purposes of this Section .
Section 7.03 Sale of Assets. Effect a Disposition of any of its now
owned or hereafter acquired assets (other than "margin stock" as defined in
Regulation U), including assets in which Borrower owns a beneficial interest
through its ownership of interests in joint ventures, aggregating more than
twenty five percent (25%) of Capitalization Value.
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Section 7.04 Encumbrance of Certain Assets. At any time, mortgage,
hypothecate or otherwise encumber to secure a Debt (it being understood that,
for purposes of this Section, an asset shall be deemed "encumbered" if it is the
subject of a pledge not to encumber) any of its properties or any properties of
any UJV which are currently unencumbered, create any additional mortgage,
hypothecation or other encumbrance on any such properties which are currently
encumbered or create any mortgage, hypothecation or other encumbrance on any
such properties which are hereafter acquired.
ARTICLE VIII. FINANCIAL COVENANTS
So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to
Administrative Agent or any Bank under this Agreement or under any other Loan
Document, Borrower shall not permit or suffer:
Section 8.01 Equity Value. At any time, Equity Value to be less than
Six Hundred Million Dollars ($600,000,000); or
Section 8.02 Relationship of Total Outstanding Indebtedness to Equity
Value. At any time, Total Outstanding Indebtedness to exceed fifty five percent
(55%) of Capitalization Value; or
Section 8.03 Relationship of Secured Indebtedness to Equity Value. At
any time, Secured Indebtedness to exceed thirty five percent (35%) of
Capitalization Value; or
Section 8.04 Relationship of Combined EBITDA to Interest Expense. For
any prior twelve-month period, the ratio of (1) Combined EBITDA to (2) Interest
Expense, each for such period, to be less than 2.25 to 1.00; or
Section 8.05 Relationship of Combined EBITDA to Total Outstanding
Indebtedness. For any prior twelve-month period, the ratio (expressed as a
percentage) of (1) Combined EBITDA for such period, to (2) Total Outstanding
Indebtedness less Borrower's unrestricted cash and cash equivalent securities as
of the end of such period to be less than sixteen percent (16%); or
Section 8.06 Unsecured Debt Yield. Unsecured Debt Yield to be less than
sixteen percent (16%).
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ARTICLE IX. EVENTS OF DEFAULT
Section 9.01 Events of Default. Any of the following events shall be an
"Event of Default":
(1) If Borrower shall: fail to pay the principal of any Notes
(including any payment required under Section 6.10) as and when due; or fail to
pay interest accruing on any Notes as and when due and such failure to pay shall
continue unremedied for five (5) days after the due date of such amount; or fail
to pay any fee or any other amount due under this Agreement or any other Loan
Document as and when due and such failure to pay shall continue unremedied for
two (2) days after notice by Administrative Agent of such failure to pay; or
(2) If any representation or warranty made by Borrower or General
Partner in this Agreement or in any other Loan Document or which is contained in
any certificate, document, opinion, financial or other statement furnished at
any time under or in connection with a Loan Document shall prove to have been
incorrect in any material respect on or as of the date made; or
(3) If Borrower shall fail (a) to perform or observe any term, covenant
or agreement contained in Section 6.11, Article VII or Article VIII; or (b) to
perform or observe any term, covenant or agreement contained in this Agreement
(other than obligations specifically referred to elsewhere in this Section 9.01)
and such failure shall remain unremedied for thirty (30) consecutive calendar
days after notice thereof; provided, however, that if any such default under
clause (b) above cannot by its nature be cured within such thirty (30) day grace
period and so long as Borrower shall have commenced cure within such thirty (30)
day grace period and shall, at all times thereafter, diligently prosecute the
same to completion, Borrower shall have an additional period to cure such
default; in no event, however, is the foregoing intended to effect an extension
of the Maturity Date; or
(4) If Borrower or General Partner shall fail (a) to pay any Debt
(other than the payment obligations described in paragraph (1) of this Section )
in an amount equal to or greater than Ten Million Dollars ($10,000,000) when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) after the expiration of any applicable grace period, or (b) to
perform or observe any material term, covenant, or condition under any agreement
or instrument relating to any such Debt, when required to be performed or
observed, if the effect of such failure to perform or observe is to accelerate,
or to permit the acceleration of, after the giving of notice or the lapse of
time, or both (other than in cases where, in the judgment of the Required Banks,
meaningful discussions likely to result in (i) a waiver or cure of the failure
to perform or observe, or (ii)
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otherwise averting such acceleration are in progress between Borrower and the
obligee of such Debt), the maturity of such Debt, or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled or otherwise required prepayment), prior to the stated
maturity thereof; or
(5) If any of Borrower, General Partner or any Affiliate of Borrower to
which One Hundred Million Dollars ($100,000,000) or more of Capitalization Value
is attributable, shall: (a) generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (b) make an
assignment for the benefit of creditors, petition or apply to any tribunal for
the appointment of a custodian, receiver or trustee for it or a substantial part
of its assets; or (c) commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or (d)
have had any such petition or application filed or any such proceeding shall
have been commenced, against it, in which an adjudication or appointment is made
or order for relief is entered, or which petition, application or proceeding
remains undismissed or unstayed for a period of sixty (60) days or more; or (e)
be the subject of any proceeding under which all or a substantial part of its
assets may be subject to seizure, forfeiture or divestiture; or (f) by any act
or omission indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for all or any substantial part of its property;
or (g) suffer any such custodianship, receivership or trusteeship for all or any
substantial part of its property, to continue undischarged for a period of sixty
(60) days or more; or
(6) If one or more judgments, decrees or orders for the payment of
money in excess of Ten Million Dollars ($10,000,000) in the aggregate shall be
rendered against Borrower or General Partner, and any such judgments, decrees or
orders shall continue unsatisfied and in effect for a period of thirty (30)
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal; or
(7) If any of the following events shall occur or exist with respect to
Borrower, General Partner, or any ERISA Affiliate: (a) any Prohibited
Transaction involving any Plan; (b) any Reportable Event with respect to any
Plan: (c) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; (d) any event or circumstance
which might constitute grounds entitling the PBGC to institute proceedings under
Section 4042 of ERISA for the termination of, or for the appointment of a
trustee to administer, any Plan, or the institution by the PBGC of any such
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proceedings; or (e) complete or partial withdrawal under Section 4201 or 4204 of
ERISA from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, if such event or
conditions, if any, could in the opinion of any Bank subject Borrower, General
Partner or any ERISA Affiliate to any tax, penalty, or other liability to a
Plan, Multiemployer Plan, the PBGC or otherwise (or any combination thereof)
which in the aggregate exceeds or may exceed Fifty Thousand Dollars ($50,000);
or
(8) If at any time General Partner is not a qualified real estate
investment trust under Sections 856 through 860 of the Code or is not listed on
the New York Stock Exchange; or
(9) If at any time Borrower or General Partner constitutes plan assets
for ERISA purposes (within the meaning of C.F.R. Section 2510.3-101).
Section 9.02 Remedies. If any Event of Default shall occur and be
continuing, Administrative Agent shall, upon request of the Required Banks, by
notice to Borrower, (1) declare the unpaid balance of the Notes, all interest
thereon, and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon such balance, all such interest, and all such amounts due
under this Agreement shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by Borrower; and/or (2) exercise any remedies provided
in any of the Loan Documents or by law.
ARTICLE X. ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS
Section 10.01 Appointment, Powers and Immunities of Administrative
Agent. Each Bank hereby irrevocably appoints and authorizes Administrative Agent
to act as its agent hereunder and under any other Loan Document with such powers
as are specifically delegated to Administrative Agent by the terms of this
Agreement and any other Loan Document, together with such other powers as are
reasonably incidental thereto. Administrative Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and any
other Loan Document or required by law, and shall not by reason of this
Agreement be a fiduciary or trustee for any Bank except to the extent that
Administrative Agent acts as an agent with respect to the receipt or payment of
funds. Administrative Agent shall not be responsible to the Banks for any
recitals, statements, representations or warranties made by Borrower or any
officer, partner or official of Borrower or any other Person contained in this
Agreement or any other Loan Document, or in any certificate or other document or
instrument referred to or provided for in, or received by any of them under,
this Agreement or any other
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Loan Document, or for the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
any other document or instrument referred to or provided for herein or therein,
for the perfection or priority of any Lien securing the Obligations or for any
failure by Borrower to perform any of its obligations hereunder or thereunder.
Administrative Agent may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither Administrative Agent nor any of its
directors, officers, employees or agents shall be liable or responsible for any
action taken or omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith, except for its or their
own gross negligence or willful misconduct. Borrower shall pay any fee agreed to
by Borrower and Administrative Agent with respect to Administrative Agent's
services hereunder.
Section 10.02 Reliance by Administrative Agent. Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Administrative Agent.
Administrative Agent may deem and treat each Bank as the holder of the Loan made
by it for all purposes hereof and shall not be required to deal with any Person
who has acquired a participation in any Loan or participation from a Bank. As to
any matters not expressly provided for by this Agreement or any other Loan
Document, Administrative Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder in accordance with instructions signed
by the Required Banks, and such instructions of the Required Banks and any
action taken or failure to act pursuant thereto shall be binding on all of the
Banks and any other holder of all or any portion of any Loan or participation.
Section 10.03 Defaults. Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default or Event of Default unless
Administrative Agent has received notice from a Bank or Borrower specifying such
Default or Event of Default and stating that such notice is a "Notice of
Default." In the event that Administrative Agent receives such a notice of the
occurrence of a Default or Event of Default, Administrative Agent shall give
prompt notice thereof to the Banks. Administrative Agent, following consultation
with the Banks, shall (subject to Section 10.07) take such action with respect
to such Default or Event of Default which is continuing as shall be directed by
the Required Banks; provided that, unless and until
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Administrative Agent shall have received such directions, Administrative Agent
may take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Banks; and provided further that Administrative Agent shall not send a
Notice of Default or acceleration to Borrower without the approval of the
Required Banks. In no event shall Administrative Agent be required to take any
such action which it determines to be contrary to law.
Section 10.04 Rights of Administrative Agent as a Bank. With respect to
its Loan Commitment and the Loan provided by it, Administrative Agent in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not acting as
Administrative Agent, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include Administrative Agent in its capacity as a Bank.
Administrative Agent and its Affiliates may (without having to account therefor
to any Bank) accept deposits from, lend money to (on a secured or unsecured
basis), and generally engage in any kind of banking, trust or other business
with Borrower (and any Affiliates of Borrower) as if it were not acting as
Administrative Agent.
Section 10.05 Indemnification of Administrative Agent. Each Bank agrees
to indemnify Administrative Agent (to the extent not reimbursed under Section
12.04 or under the applicable provisions of any other Loan Document, but without
limiting the obligations of Borrower under Section 12.04 or such provisions),
for its Pro Rata Share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against Administrative Agent in any way relating to or arising out of this
Agreement, any other Loan Document or any other documents contemplated by or
referred to herein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which Borrower is
obligated to pay under Section 12.04) or under the applicable provisions of any
other Loan Document or the enforcement of any of the terms hereof or thereof or
of any such other documents or instruments; provided that no Bank shall be
liable for (1) any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified, (2) any loss of
principal or interest with respect to Administrative Agent's Loan or (3) any
loss suffered by Administrative Agent in connection with a swap or other
interest rate hedging arrangement entered into with Borrower.
Section 10.06 Non-Reliance on Administrative Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed
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appropriate, made its own credit analysis of Borrower and the decision to enter
into this Agreement and that it will, independently and without reliance upon
Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any other Loan Document. Administrative Agent shall not be required to keep
itself informed as to the performance or observance by Borrower of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or to inspect the properties or books of
Borrower. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by Administrative Agent
hereunder, Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of Borrower (or any Affiliate of Borrower) which
may come into the possession of Administrative Agent or any of its Affiliates.
Administrative Agent shall not be required to file this Agreement, any other
Loan Document or any document or instrument referred to herein or therein, for
record or give notice of this Agreement, any other Loan Document or any document
or instrument referred to herein or therein, to anyone.
Section 10.07 Failure of Administrative Agent to Act. Except for action
expressly required of Administrative Agent hereunder, Administrative Agent shall
in all cases be fully justified in failing or refusing to act hereunder unless
it shall have received further assurances (which may include cash collateral) of
the indemnification obligations of the Banks under Section 10.05 in respect of
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.
Section 10.08 Resignation or Removal of Administrative Agent.
Administrative Agent shall have the right to resign at any time. Administrative
Agent may be removed at any time with cause by the Required Banks, provided that
Borrower and the other Banks shall be promptly notified thereof. Upon any such
removal or resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent which successor Administrative Agent, so long as
it is reasonably acceptable to the Required Banks, shall be that Bank then
having the greatest Loan Commitment. If no successor Administrative Agent shall
have been so appointed by the Required Banks and shall have accepted such
appointment within thirty (30) days after the Required Banks' removal of the
retiring Administrative Agent, then the retiring Administrative Agent may, on
behalf of the Banks, appoint a successor Administrative Agent, which shall be
one of the Banks. The Required Banks or the retiring Administrative Agent, as
the case may be, shall upon the appointment of a successor Administrative Agent
promptly so notify Borrower and
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the other Banks. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's removal hereunder as
Administrative Agent, the provisions of this Article X shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Administrative Agent.
Section 10.09 Amendments Concerning Agency Function. Notwithstanding
anything to the contrary contained in this Agreement, Administrative Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Loan Document which affects its duties, rights, and/or
function hereunder or thereunder unless it shall have given its prior written
consent thereto.
Section 10.10 Liability of Administrative Agent. Administrative Agent
shall not have any liabilities or responsibilities to Borrower on account of the
failure of any Bank to perform its obligations hereunder or to any Bank on
account of the failure of Borrower to perform its obligations hereunder or under
any other Loan Document.
Section 10.11 Transfer of Agency Function. Without the consent of
Borrower or any Bank, Administrative Agent may at any time or from time to time
transfer its functions as Administrative Agent hereunder to any of its offices
wherever located in the United States, provided that Administrative Agent shall
promptly notify Borrower and the Banks thereof.
Section 10.12 Non-Receipt of Funds by Administrative Agent. Unless
Administrative Agent shall have received notice from a Bank or Borrower (either
one as appropriate being the "Payor") prior to the date on which such Bank is to
make payment hereunder to Administrative Agent of the proceeds of a Loan or
Borrower is to make payment to Administrative Agent, as the case may be (either
such payment being a "Required Payment"), which notice shall be effective upon
receipt, that the Payor will not make the Required Payment in full to
Administrative Agent, Administrative Agent may assume that the Required Payment
has been made in full to Administrative Agent on such date, and Administrative
Agent in its sole discretion may, but shall not be obligated to, in reliance
upon such assumption, make the amount thereof available to the intended
recipient on such date. If and to the extent the Payor shall not have in fact so
made the Required Payment in full to Administrative Agent, the recipient of such
payment shall repay to Administrative Agent forthwith on demand such amount made
available to it together with interest
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thereon, for each day from the date such amount was so made available by
Administrative Agent until the date Administrative Agent recovers such amount,
at the customary rate set by Administrative Agent for the correction of errors
among Banks for three (3) Banking Days and thereafter at the Base Rate.
Section 10.13 Withholding Taxes. Each Bank represents at all times
during the term of this Agreement that it is entitled to receive any payments to
be made to it hereunder without the withholding of any tax and will furnish to
Administrative Agent and Borrower such forms, certifications, statements and
other documents as Administrative Agent or Borrower may request from time to
time to evidence such Bank's exemption from the withholding of any tax imposed
by any jurisdiction or to enable Administrative Agent or Borrower to comply with
any applicable Laws or regulations relating thereto. Without limiting the effect
of the foregoing, if any Bank is not created or organized under the laws of the
United States of America or any state thereof, such Bank will furnish to
Administrative Agent and Borrower a United States Internal Revenue Service Form
4224 in respect of all payments to be made to such Bank by Borrower or
Administrative Agent under this Agreement or any other Loan Document or a United
States Internal Revenue Service Form 1001 establishing such Bank's complete
exemption from United States withholding tax in respect of payments to be made
to such Bank by Borrower or Administrative Agent under this Agreement or any
other Loan Document, or such other forms, certifications, statements or
documents, duly executed and completed by such Bank as evidence of such Bank's
exemption from the withholding of U.S. tax with respect thereto. Administrative
Agent shall not be obligated to make any payments hereunder to such Bank in
respect of any Loan or participation or such Bank's Loan Commitment or
obligation to purchase participations until such Bank shall have furnished to
Administrative Agent and Borrower the requested form, certification, statement
or document.
Section 10.14 Minimum Commitment by UBS. Subsequent to the Closing
Date, UBS hereby agrees to maintain a Loan Commitment in an amount no less than
$25,000,000 for so long as no Event of Default exists under this Agreement, as
the same may be decreased from time to time in accordance with the provisions of
this Agreement, and further agrees to hold and not to participate or assign any
of such amount other than an assignment to a Federal Reserve Bank or to the
Parent or a majority-owned subsidiary of UBS.
Section 10.15 Pro Rata Treatment. Except to the extent otherwise
provided, the advance of proceeds of the Loans shall be made by the Banks
ratably according to the amounts of their respective Loan Commitments.
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Section 10.16 Sharing of Payments Among Banks. If a Bank shall obtain
payment of any principal of or interest on any Loan made by it through the
exercise of any right of setoff, banker's lien, counterclaim, or by any other
means (including direct payment), and such payment results in such Bank
receiving a greater payment than it would have been entitled to had such payment
been paid directly to Administrative Agent for disbursement to the Banks, then
such Bank shall promptly purchase for cash from the other Banks participations
in the Loans made by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share ratably the benefit of such payment. To such end the Banks
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. Borrower agrees that any Bank so purchasing a participation in the
Loans made by other Banks may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness of Borrower.
Section 10.17 Possession of Documents. Each Bank shall keep possession
of its own Note. Administrative Agent shall hold all the other Loan Documents
and related documents in its possession and maintain separate records and
accounts with respect thereto, and shall permit the Banks and their
representatives access at all reasonable times to inspect such Loan Documents,
related documents, records and accounts.
ARTICLE XI. NATURE OF OBLIGATIONS
Section 11.01 Absolute and Unconditional Obligations. Borrower and
General Partner acknowledge and agree that their obligations and liabilities
under this Agreement and under the other Loan Documents shall be absolute and
unconditional irrespective of: (1) any lack of validity or enforceability of any
of the Obligations, any Loan Documents, or any agreement or instrument relating
thereto; (2) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from any Loan Documents or any other
documents or instruments executed in connection with or related to the
Obligations; (3) any exchange or release of any collateral, if any, or of any
other Person from all or any of the Obligations; or (4) any other circumstances
which might otherwise constitute a defense available to, or a discharge of,
Borrower, General Partner or any other Person in respect of the Obligations.
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The obligations and liabilities of Borrower and General Partner under
this Agreement and other Loan Documents shall not be conditioned or contingent
upon the pursuit by any Bank or any other Person at any time of any right or
remedy against Borrower, General Partner or any other Person which may be or
become liable in respect of all or any part of the Obligations or against any
collateral or security or guarantee therefor or right of setoff with respect
thereto.
Section 11.02 Non-Recourse to VRT Principals. This Agreement and the
obligations hereunder and under the Loan Documents are fully recourse to
Borrower and General Partner. Notwithstanding anything to the contrary contained
in this Agreement, in any of the other Loan Documents, or in any other
instruments, certificates, documents or agreements executed in connection with
the Loans (all of the foregoing, for purposes of this Section , hereinafter
referred to, individually and collectively, as the "Relevant Documents"), no
recourse under or upon any Obligation, representation, warranty, promise or
other matter whatsoever shall be had against any of the VRT Principals and each
Bank expressly waives and releases, on behalf of itself and its successors and
assigns, all right to assert any liability whatsoever under or with respect to
the Relevant Documents against, or to satisfy any claim or obligation arising
thereunder against, any of the VRT Principals or out of any assets of the VRT
Principals, provided, however, that nothing in this Section shall be deemed to:
(1) release Borrower or General Partner from any personal liability pursuant to,
or from any of its respective obligations under, the Relevant Documents, or from
personal liability for its fraudulent actions or fraudulent omissions; (2)
release any VRT Principals from personal liability for its or his own fraudulent
actions or fraudulent omissions; (3) constitute a waiver of any obligation
evidenced or secured by, or contained in, the Relevant Documents or affect in
any way the validity or enforceability of the Relevant Documents; or (4) limit
the right of Administrative Agent and/or the Banks to proceed against or realize
upon any collateral hereafter given for the Loans or any and all of the assets
of Borrower or General Partner (notwithstanding the fact that the VRT Principals
have an ownership interest in Borrower or General Partner and, thereby, an
interest in the assets of Borrower or General Partner) or to name Borrower or
General Partner (or, to the extent that the same are required by applicable law
or are determined by a court to be necessary parties in connection with an
action or suit against Borrower, General Partner or any collateral hereafter
given for the Loans, any of the VRT Principals) as a party defendant in, and to
enforce against any collateral hereafter given for the Loans and/or assets of
Borrower or General Partner any judgment obtained by Administrative Agent and/or
the Banks with respect to, any action or suit under the Relevant Documents so
long as no judgment shall be taken (except to the extent taking a judgment is
required by applicable law or determined by a court to be
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necessary to preserve Administrative Agent's and/or Banks' rights against any
collateral hereafter given for the Loans or Borrower or General Partner, but not
otherwise) or shall be enforced against the VRT Principals or their assets.
ARTICLE XII. MISCELLANEOUS
Section 12.01 Binding Effect of Request for Advance. Borrower agrees
that, by its acceptance of the advance of proceeds of the Loans under this
Agreement, it shall be bound in all respects by any request for advance
submitted on its behalf in connection therewith with the same force and effect
as if Borrower had itself executed and submitted the request for advance and
whether or not the request for advance is executed and/or submitted by an
authorized person.
Section 12.02 Amendments and Waivers. No amendment or material waiver
of any provision of this Agreement or any other Loan Document nor consent to any
material departure by Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Banks and, solely for
purposes of its acknowledgment thereof, Administrative Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given, provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all the Banks do any of the
following: (1) reduce the principal of, or interest on, the Notes or any fees
due hereunder or any other amount due hereunder or under any Loan Document; (2)
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees due hereunder or under any Loan Document, or waive any default
in the payment of principal, interest or any other amount due hereunder or under
any Loan Documents; (3) change the definition of Required Banks; (4) amend this
Section or any other provision requiring the consent of all the Banks; or (5)
waive any default under paragraph (5) of Section 9.01. No failure on the part of
Administrative Agent or any Bank to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof or preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law. All
communications from Administrative Agent to the Banks requesting the Banks'
determination, consent, approval or disapproval (i) shall be given in the form
of a written notice to each Bank, (ii) shall be accompanied by a description of
the matter or thing as to which such determination, approval, consent or
disapproval is requested and (iii) shall include Administrative Agent's
recommended course of action or determination in respect thereof. Each Bank
shall reply promptly, but in any event within fifteen (15) Banking Days (or five
(5) Banking Days with respect to any decision to accelerate or stop acceleration
of the Loan) after
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receipt of the request therefor by Administrative Agent (the "Bank Reply
Period"). Unless a Bank shall give written notice to Administrative Agent that
it objects to the recommendation or determination of Administrative Agent
(together with a written explanation of the reasons behind such objection)
within the Bank Reply Period, such Bank shall be deemed to have approved or
consented to such recommendation or determination.
Section 12.03 Usury. Anything herein to the contrary notwithstanding,
the obligations of Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of law applicable to a Bank
limiting rates of interest which may be charged or collected by such Bank.
Section 12.04 Expenses; Indemnification. Borrower agrees to reimburse
Administrative Agent on demand for all costs, expenses, and charges (including,
without limitation, all reasonable fees and charges of engineers, appraisers and
external legal counsel) incurred by Administrative Agent in connection with the
Loans and to reimburse each of the Banks for reasonable legal costs, expenses
and charges incurred by each of the Banks in connection with the performance or
enforcement of this Agreement, the Notes, or any other Loan Documents; provided,
however, that Borrower is not responsible for costs, expenses and charges
incurred by the Bank Parties in connection with the administration or
syndication of the Loans. Borrower agrees to indemnify Administrative Agent and
each Bank and their respective directors, officers, employees and agents from,
and hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses incurred by any of them arising out of or by reason of (x)
any claims by brokers due to acts or omissions by Borrower, or (y) any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any actual or
proposed use by Borrower of the proceeds of the Loans, including without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
The obligations of Borrower under this Section shall survive the
repayment of all amounts due under or in connection with any of the Loan
Documents and the termination of the Loans.
Section 12.05 Assignment; Participation. This Agreement shall be
binding upon, and shall inure to the benefit of, Borrower, Administrative Agent,
the Banks and their
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respective successors and permitted assigns. Borrower may not assign or transfer
its rights or obligations hereunder.
Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Loan (the
"Participations") with the consent of Administrative Agent, which consent shall
not be unreasonably withheld or delayed. In the event of any such grant by a
Bank of a participating interest to a Participant, whether or not Borrower or
Administrative Agent was given notice, such Bank shall remain responsible for
the performance of its obligations hereunder, and Borrower and Administrative
Agent shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations hereunder. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of Borrower hereunder and under any other Loan Document including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement or any other Loan Document; provided that such
participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in Section 12.02
without the consent of the Participant.
Subject to the provisions of Section 10.14, any Bank having a Loan
Commitment in an amount of Thirty Million Dollars ($30,000,000) or more may at
any time assign to any bank or other institution with the acknowledgment of
Administrative Agent and the consent of Borrower and UBS, which consent shall
not be unreasonably withheld or delayed (such assignee, a "Consented Assignee"),
or to one or more banks or other institutions which are majority owned
subsidiaries of a Bank or to the Parent of a Bank (each Consented Assignee or
subsidiary bank or institution, an "Assignee") all, or a proportionate part of
all, of its rights and obligations under this Agreement and its Note, and such
Assignee shall assume rights and obligations, pursuant to an Assignment and
Assumption Agreement executed by such Assignee and the Bank, provided that, in
each case, after giving effect to such assignment each Bank's and each
Assignee's portion of the Loan will be equal to or greater than Fifteen Million
Dollars ($15,000,000). Upon execution and delivery of such instrument and
payment by such Assignee to the Bank of an amount equal to the purchase price
agreed between the Bank and such Assignee, such Assignee shall be a Bank Party
to this Agreement and shall have all the rights and obligations of a Bank as set
forth in such Assignment and Assumption Agreement, and the Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this paragraph, substitute notes shall be issued
to the assigning Bank and Assignee by Borrower, in exchange for the return of
the
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original Note. All such substitute notes shall constitute "Notes" and the
obligations evidenced by such substitute notes shall constitute "Obligations"
for all purposes of this Agreement and the other Loan Documents. If the Assignee
is not incorporated under the laws of the United States of America or a state
thereof, it shall, prior to the first date on which interest or fees are payable
hereunder for its account, deliver to Borrower and Administrative Agent
certification as to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 10.13. Each Assignee shall be
deemed to have made the representations contained in, and shall be bound by the
provisions of, Section 10.13.
Any Bank may at any time assign all or any portion of its rights under
this Agreement and its Note to a Federal Reserve Bank. No such assignment shall
release the transferor Bank from its obligations hereunder.
Borrower recognizes that in connection with a Bank's selling of
Participations or making of assignments, any or all documentation, financial
statements, appraisals and other data, or copies thereof, relevant to Borrower
or the Loans may be exhibited to and retained by any such Participant or
assignee or prospective Participant or assignee. In connection with a Bank's
delivery of any financial statements and appraisals to any such Participant or
assignee or prospective Participant or assignee, such Bank shall also indicate
that the same are delivered on a confidential basis. Borrower agrees to provide
all assistance reasonably requested by a Bank to enable such Bank to sell
Participations or make assignments of its Loan as permitted by this Section .
Each Bank agrees to provide Borrower with notice of all Participations sold by
such Bank.
Section 12.06 Documentation Satisfactory. All documentation required
from or to be submitted on behalf of Borrower in connection with this Agreement
and the documents relating hereto shall be subject to the prior approval of, and
be satisfactory in form and substance to, Administrative Agent, its counsel and,
where specifically provided herein, the Banks. In addition, the persons or
parties responsible for the execution and delivery of, and signatories to, all
of such documentation, shall be acceptable to, and subject to the approval of,
Administrative Agent and its counsel and the Banks.
Section 12.07 Notices. Unless the party to be notified otherwise
notifies the other parties in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to Administrative
Agent by telephone, confirmed by writing, and to the Banks and to Borrower and
General Partner by ordinary mail or overnight courier or telecopy, receipt
confirmed, addressed to such party at its
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address on the signature page of this Agreement. Notices shall be effective: (1)
if by telephone, at the time of such telephone conversation, (2) if given by
mail, three (3) days after mailing; (3) if given by overnight courier, upon
receipt; and (4) if given by telecopy, upon receipt.
Section 12.08 Setoff. To the extent permitted or not expressly
prohibited by applicable law, Borrower and General Partner agree that, in
addition to (and without limitation of) any right of setoff, bankers' lien or
counterclaim a Bank may otherwise have, each Bank shall be entitled, at its
option, to offset balances (general or special, time or demand, provisional or
final) held by it for the account of Borrower or General Partner at any of such
Bank's offices, in Dollars or in any other currency, against any amount payable
by Borrower or General Partner to such Bank under this Agreement or such Bank's
Note, or any other Loan Document which is not paid when due (regardless of
whether such balances are then due to Borrower or General Partner), in which
case it shall promptly notify Borrower, General Partner and Administrative Agent
thereof; provided that such Bank's failure to give such notice shall not affect
the validity thereof. Payments by Borrower or General Partner hereunder or under
the other Loan Documents shall be made without setoff or counterclaim.
Section 12.09 Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 12.10 Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 12.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
Section 12.12 Integration. The Loan Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
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Section 12.13 Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of New York.
Section 12.14 Waivers. To the extent permitted or not expressly
prohibited by applicable law, in connection with the obligations and liabilities
as aforesaid, Borrower and General Partner hereby waive: (1) promptness and
diligence; (2) notice of any actions taken by any Bank Party under this
Agreement, any other Loan Document or any other agreement or instrument relating
thereto except to the extent otherwise provided herein; (3) all other notices,
demands and protests, and all other formalities of every kind in connection with
the enforcement of the Obligations, the omission of or delay in which, but for
the provisions of this Section , might constitute grounds for relieving Borrower
or General Partner of their obligations hereunder; (4) any requirement that any
Bank Party protect, secure, perfect or insure any Lien on any collateral or
exhaust any right or take any action against Borrower, General Partner or any
other Person or any collateral; (5) any right or claim of right to cause a
marshalling of the assets of Borrower or General Partner; and (6) all rights of
subrogation or contribution, whether arising by contract or operation of law
(including, without limitation, any such right arising under the Federal
Bankruptcy Code) or otherwise by reason of payment by Borrower or General
Partner, either jointly or severally, pursuant to this Agreement or other Loan
Documents.
Section 12.15 Jurisdiction; Immunities. Borrower, General Partner,
Administrative Agent and each Bank hereby irrevocably submit to the jurisdiction
of any New York State or United States Federal court sitting in New York City
over any action or proceeding arising out of or relating to this Agreement, the
Notes or any other Loan Document. Borrower, General Partner, Administrative
Agent, and each Bank irrevocably agree that all claims in respect of such action
or proceeding may be heard and determined in such New York State or United
States Federal court. Borrower, General Partner, Administrative Agent, and each
Bank irrevocably consent to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to Borrower,
General Partner, Administrative Agent or each Bank, as the case may be, at the
addresses specified herein. Borrower, General Partner, Administrative Agent and
each Bank agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Borrower, General Partner, Administrative
Agent and each Bank further waive any objection to venue in the State of New
York and any objection to an action or proceeding in the State of New York on
the basis of forum non conveniens. Borrower, General Partner, Administrative
Agent and each Bank agree that any action or proceeding brought against
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Borrower, General Partner, Administrative Agent or any Bank, as the case may be,
shall be brought only in a New York State court sitting in New York City or a
United States Federal court sitting in New York City, to the extent permitted or
not expressly prohibited by applicable law.
Nothing in this Section shall affect the right of Borrower, General
Partner, Administrative Agent or any Bank to serve legal process in any other
manner permitted by law.
To the extent that Borrower, General Partner, Administrative Agent or
any Bank have or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether from service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, Borrower, General Partner, Administrative
Agent and each Bank hereby irrevocably waive such immunity in respect of its
obligations under this Agreement, the Notes and any other Loan Document.
BORROWER, GENERAL PARTNER, ADMINISTRATIVE AGENT AND EACH BANK WAIVE ANY
RIGHT EACH SUCH PARTY MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION
OR PROCEEDING BROUGHT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE LOAN. IN
ADDITION, BORROWER AND GENERAL PARTNER HEREBY WAIVE, IN CONNECTION WITH ANY
SUIT, ACTION OR PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS WITH
RESPECT TO THE NOTES, ANY RIGHT BORROWER OR GENERAL PARTNER MAY HAVE TO (1) TO
THE EXTENT PERMITTED OR NOT EXPRESSLY PROHIBITED BY APPLICABLE LAW, INTERPOSE
ANY COUNTERCLAIM THEREIN (OTHER THAN A COUNTERCLAIM THAT IF NOT BROUGHT IN THE
SUIT, ACTION OR PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS COULD
NOT BE BROUGHT IN A SEPARATE SUIT, ACTION OR PROCEEDING OR WOULD BE SUBJECT TO
DISMISSAL OR SIMILAR DISPOSITION FOR FAILURE TO HAVE BEEN ASSERTED IN SUCH SUIT,
ACTION OR PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS) OR (2) TO THE
EXTENT PERMITTED OR NOT EXPRESSLY PROHIBITED BY APPLICABLE LAW, HAVE THE SAME
CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING
HEREIN CONTAINED SHALL PREVENT OR PROHIBIT BORROWER OR GENERAL PARTNER FROM
INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST ADMINISTRATIVE AGENT OR THE
BANKS WITH RESPECT TO ANY ASSERTED CLAIM.
52
<PAGE> 57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
VORNADO REALTY L.P., a
Delaware limited partnership
By: Vornado Realty Trust, a
Maryland real estate
investment trust, general
partner
By /s/ Joseph Macnow
----------------------------------
Name: Joseph Macnow
Title: Vice President
VORNADO REALTY TRUST, a Maryland
real estate investment trust
By /s/ Joseph Macnow
---------------------------------------
Name: Joseph Macnow
Title: Vice President
Address for Notices for both:
Park 80 West
Plaza II
Saddle Brook, New Jersey 07663
Attention: Steven Roth, Chairman
and
Joseph Macnow, Vice
President and Chief
Financial Officer
Telephone: (201) 587-1000
Telecopy: (201) 587-0600
with copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Patricia A. Ceruzzi
and
Janet Geldzahler
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
53
<PAGE> 58
UNION BANK OF SWITZERLAND
(New York Branch)
(as Bank and Administrative Agent)
By /s/ Joseph Bassil
---------------------------------------
Name: Joseph Bassil
Title: Vice President
By /s/ Albert Rabil, III
---------------------------------------
Name: Albert Rabil, III
Title: Managing Director
Address for Notices and Applicable
Lending Office for Base Rate Loan
and LIBOR Loan:
299 Park Avenue
38th Floor
New York, New York 10171-0026
Attention: Albert Rabil, III
and Mara Martez
Telephone: (212) 821-3872
Telecopy: (212) 821-3943
with copies to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: George C. Weiss
Telephone: (212) 259-7320
Telecopy: (212) 259-6333
54
<PAGE> 59
EXHIBIT A
AUTHORIZATION LETTER
April 15, 1997
Union Bank of Switzerland
(New York Branch)
299 Park Avenue
New York, New York 10171
Re: Credit Agreement dated as of April 15, 1997 (the "Loan
Agreement"; capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan
Agreement) among us, as Borrower, the Banks named therein, and
you, as Administrative Agent for said Banks
Gentlemen:
In connection with the captioned Loan Agreement, we hereby designate
any of the following persons to give to you instructions, including notices
required pursuant to the Agreement, orally, by telephone or teleprocess, or in
writing:
Steven Roth
Michael Fascitelli
Joseph Macnow
Clifford Broser
Ross Morrison
Instructions may be honored on the oral, telephonic, teleprocess or
written instructions of anyone purporting to be any one of the above designated
persons even if the instructions are for the benefit of the person delivering
them. We will furnish you with confirmation of each such instruction either by
telex (whether tested or untested) or in writing signed by any person designated
above (including any telecopy which appears to bear the signature of any person
designated above) on the same day that the instruction is provided to you but
your responsibility with respect to any instruction shall not be affected by
your failure to receive such confirmation or by its contents.
<PAGE> 60
Without limiting the foregoing, we hereby unconditionally authorize any
one of the above-designated persons to execute and submit the request for the
advance of proceeds of the Loans and notices of Conversions and Continuations to
you under the Loan Agreement with the identical force and effect in all respects
as if executed and submitted by us.
You shall be fully protected in, and shall incur no liability to us
for, acting upon any instructions which you in good faith believe to have been
given by any person designated above, and in no event shall you be liable for
special, consequential or punitive damages. In addition, we agree to hold you
and your agents harmless from any and all liability, loss and expense arising
directly or indirectly out of instructions that we provide to you in connection
with the Loan Agreement except for liability, loss or expense occasioned by the
gross negligence or willful misconduct of you or your agents.
Upon notice to us, you may, at your option, refuse to execute any
instruction, or part thereof, without incurring any responsibility for any loss,
liability or expense arising out of such refusal if you in good faith believe
that the person delivering the instruction is not one of the persons designated
above or if the instruction is not accompanied by an authentication method that
we have agreed to in writing.
We will promptly notify you in writing of any change in the persons
designated above and, until you have actually received such written notice and
have had a reasonable opportunity to act upon it, you are authorized to act upon
instructions, even though the person delivering them may no longer be
authorized.
Very truly yours,
VORNADO REALTY L.P., a
Delaware limited partnership
By: Vornado Realty Trust, a
Maryland real estate
investment trust, general
partner
By
-----------------------------------
Name:
Title:
2
<PAGE> 61
EXHIBIT B
NOTE
$___________ New York, New York
__________, 199_
For value received, Vornado Realty L.P., a Delaware limited partnership
("Borrower"), hereby promises to pay to the order of ___________ or its
successors or assigns (collectively, the "Bank"), at the principal office of
Union Bank of Switzerland (New York Branch) located at 299 Park Avenue, New
York, New York 10171 (the "Administrative Agent") for the account of the
Applicable Lending Office at the Bank, the principal sum of ________ Dollars
($____________), or if less, the amount loaned by the Bank to Borrower pursuant
to the Loan Agreement (as defined below) and actually outstanding, in lawful
money of the United States and in immediately available funds, in accordance
with the terms set forth in the Loan Agreement. Borrower also promises to pay
interest on the unpaid principal balance hereof, for the period such balance is
outstanding, in like money, at said office for the account of said Applicable
Lending Office, at the time and at a rate per annum as provided in the Loan
Agreement. Any amount of principal hereof which is not paid when due, whether at
stated maturity, by acceleration, or otherwise, shall bear interest from the
date when due until said principal amount is paid in full, payable on demand, at
the rate set forth in the Loan Agreement.
The date and amount of each payment of the Loan, shall be recorded by
the Bank on its books and, prior to any transfer of this Note (or, at the
discretion of the Bank, at any other time), endorsed by the Bank on the schedule
attached hereto and any continuation thereof.
This Note is one of the Notes referred to in the Credit Agreement dated
as of April 15, 1997 (as the same may be amended from time to time, the "Loan
Agreement") among Borrower, Vornado Realty Trust, the Banks named therein
(including the Bank) and Administrative Agent, as administrative agent for the
Banks. All of the terms, conditions and provisions of the Loan Agreement are
hereby incorporated by reference. All capitalized terms used herein and not
defined herein shall have the meanings given to them in the Loan Agreement.
The Loan Agreement contains, among other things, provisions for the
prepayment of and acceleration of this Note upon the happening of certain stated
events.
<PAGE> 62
No recourse shall be had under this Note against the VRT Principals
except as and to the extent set forth in Section 11.02 of the Loan Agreement.
All parties to this Note, whether principal, surety, guarantor or
endorser, hereby waive presentment for payment, demand, protest, notice of
protest and notice of dishonor.
This Note shall be governed by the laws of the State of New York,
provided that, as to the maximum lawful rate of interest which may be charged or
collected, if the laws applicable to the Bank permit it to charge or collect a
higher rate than the laws of the State of New York, then such law applicable to
the Bank shall apply to the Bank under this Note.
IN WITNESS WHEREOF, Borrower has executed and delivered this Note on
the day and year first above written.
Very truly yours,
VORNADO REALTY L.P., a
Delaware limited partnership
By: Vornado Realty Trust, a
Maryland real estate
investment trust, general
partner
By
-----------------------------------
Name:
Title:
This is to certify that this Note was executed in my presence on the
date hereof by the party whose signature appears above in the capacity
indicated.
----------------------------
Notary Public
My commission expires:
----------------------------
2
<PAGE> 63
<TABLE>
<CAPTION>
Amount Balance
Date of Payment Outstanding Notation By
<S> <C> <C> <C>
</TABLE>
<PAGE> 64
EXHIBIT C
LIST OF MATERIAL AFFILIATES
<PAGE> 65
EXHIBIT C
<TABLE>
<CAPTION>
STATE OF PERCENTAGE
NAME OF SUBSIDIARY ORGANIZATION OF OWNERSHIP
- ------------------------------------------- ------------ ------------
<S> <C> <C>
14th Street Acquisition Corporation New York 100%
Amherst Holding Corporation New York 100%
Amherst Industries, Inc. New York 100%
Atlantic City Holding Corporation New Jersey 100%
Bensalem Holding Company Pennsylvania 100%
Bethlehem Holding Company Pennsylvania 100%
Bordertown Holding Corporation New Jersey 100%
Brentwood Development Corp. New York 100%
Bridgeland Warehouses, Inc. New Jersey 100%
Camden Holding Corporation New Jersey 100%
Chicopee Holding Corporation Massachusetts 100%
Clementon Holding Corporation New Jersey 100%
Cross Avenue Broadway Corporation New York 100%
Cumberland Holding Corporation New Jersey 100%
Dallas Skillman Abrams Crossing Corporation Texas 100%
Delran Holding Corporation New Jersey 100%
Dover Holding Corporation New Jersey 100%
Dundalk Stores Corporation Maryland 100%
Durham Leasing Corp. New Jersey 100%
Eudowood Holding Corporation Maryland 100%
Evesham Holding Corporation New Jersey 100%
Gallery Market Holding Company Pennsylvania 100%
Glen Burnie Shopping Plaza, Inc. Maryland 100%
Greenwich Holding Corporation New York 100%
Hackbridge Corporation New Jersey 100%
Hagerstown Holding Corporation Maryland 100%
Hanover Holding Corporation New Jersey 100%
Hanover Industries, Inc. New Jersey 100%
Hanover Leasing Corporation New Jersey 100%
Hanover Public Warehousing, Inc. New Jersey 100%
Henrietta Holding Corp. New York 100%
HEP Acquisition Corporation Delaware 100%
Jersey City Leasing Corporation New Jersey 100%
Kearny Holding Corp. New Jersey 100%
Kearny Leasing Corporation New Jersey 100%
Lancaster Holding Company Pennsylvania 100%
Landthorp Enterprises, Inc. Delaware 100%
Lawnside Holding Corporation New Jersey 100%
Lawnwhite Leasing Corporation New Jersey 100%
Lawnwhite Holding Corporation New Jersey 100%
Lewisville Town Centre Corporation Texas 100%
Littleton Holding Corporation New Jersey 100%
Lodi Industries Corp. New Jersey 100%
Lodi Leasing Corporation New Jersey 100%
Manalapan Industries, Inc. New Jersey 100%
Marple Holding Company Pennsylvania 100%
</TABLE>
The assets held by the entities listed above have been transferred (by
contribution, merger or otherwise) to partnerships or limited liability
companies who are the successors to such entities and constitute the Material
Affiliates
<PAGE> 66
<TABLE>
<CAPTION>
STATE OF PERCENTAGE
NAME OF SUBSIDIARY ORGANIZATION OF OWNERSHIP
- ------------------ ------------ ------------
<S> <C> <C>
Menands Holding Corporation New York 100%
Mesquite Crossing Corporation Texas 100%
Middletown Holding Corporation New Jersey 100%
Montclair Holding Corporation New Jersey 100%
Morris Plains Leasing Corp. New Jersey 100%
National Hydrant Corporation New York 100%
New Hanover, Inc. New Jersey 100%
Newington Holding Corporation Connecticut 100%
New Woodbridge, Inc. New Jersey 100%
North Bergen Stores, Inc. New Jersey 100%
North Plainfield Holding Corporation New Jersey 100%
Oak Trading Company New Jersey 100%
Philadelphia Holding Company Pennsylvania 100%
Phillipsburg Holding Corporation New Jersey 100%
Pike Holding Company Pennsylvania 100%
Princeton Corridor Holding Corporation New Jersey 100%
Princeton Windsor Holding Corporation New Jersey 100%
Rahway Leasing Corporation New Jersey 100%
RMJ Company, Inc. New Jersey 100%
Rochester Holding Corporation New York 100%
Silver Lane Properties Connecticut 100%
Springfield Holding Corporation Massachusetts 100%
Star Universal Corporation New Jersey 100%
T.G. Hanover, Inc. New Jersey 100%
T.G. Stores, Inc. Maryland 100%
The Second Lawnside Corporation New Jersey 100%
The Second Rochester Corporation New York 100%
Turnersville Holding Corporation New Jersey 100%
Two Guys - Conn., Inc. Connecticut 100%
Two Guys - Mass., Inc. Massachusetts 100%
Two Guys from Harrison, Inc. New Jersey 100%
Two Guys from Harrison Company Pennsylvania 100%
Two Guys from Harrison - N.Y., Inc. New York 100%
Unado Corp. New Jersey 100%
Upper Moreland Holding Company Pennsylvania 100%
Vornado, Inc. New York 100%
Vornado Acquisition Corporation Delaware 100%
Vornado Finance Corp. Delaware 100%
Vornado Holding Corporation Delaware 100%
Vornado Investments Corporation Delaware 100%
Watchung Holding Corporation New Jersey 100%
White Horse Lawnside Corporation New Jersey 100%
West Windsor Holding Corporation New Jersey 100%
York Holding Company Pennsylvania 100%
</TABLE>
The assets held by the entities listed above have been transferred (by
contribution, merger or otherwise) to partnerships or limited liability
companies who are the successors to such entities and constitute the Material
Affiliates.
<PAGE> 67
EXHIBIT D
SOLVENCY CERTIFICATE
The __________ executing this certificate is the _______________ of
Vornado Realty Trust, a Maryland real estate investment trust ("General
Partner"), a general partner of Vornado Realty L.P., a Delaware limited
partnership ("Borrower"), and is familiar with its properties, assets and
businesses, and is duly authorized to execute this certificate on behalf of
Borrower pursuant to Section 4.01(10) of the Credit Agreement dated April 15,
1997 (the "Loan Agreement") among Borrower, General Partner, the banks party
thereto (each a "Bank" and collectively, the "Banks") and Union Bank of
Switzerland (New York Branch), as agent for the Banks (in such capacity,
together with its successors in such capacity, the "Agent"). In executing this
Certificate, such individual is acting solely in [his] [her] capacity as the
_________ of General Partner, and not in [his] [her] individual capacity. Unless
otherwise defined herein, terms defined in the Loan Agreement are used herein as
therein defined.
The undersigned further certifies that [he] [she] has carefully
reviewed the Loan Agreement and the other Loan Documents and the contents of
this Certificate and, in connection herewith, has made such investigation and
inquiries as [he] [she] deems necessary and prudent therefor. The undersigned
further certifies that the financial information and assumptions which underlie
and form the basis for the representations made in this Certificate were
reasonable when made and were made in good faith and continue to be reasonable
as of the date hereof.
The undersigned understands that the Agent is relying on the truth and
accuracy of this Certificate in connection with the transactions contemplated by
the Loan Agreement.
The undersigned certifies that Borrower is Solvent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
April 15, 1997.
------------------------------
<PAGE> 68
EXHIBIT E
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of __________, 199_, among
[insert name of assigning Bank] ("Assignor"), [insert name of Assignee]
("Assignee"), Vornado Realty L.P., a Delaware limited partnership ("Borrower")
and Union Bank of Switzerland (New York Branch), as administrative agent for the
Banks referred to below (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
Preliminary Statement
1. This Assignment and Assumption Agreement (this "Agreement")
relates to the Credit Agreement (as the same may be amended from time to time,
the "Loan Agreement") dated April 15, 1997 among Borrower, Vornado Realty Trust,
the banks party thereto (each a "Bank" and, collectively, the "Banks") and the
Administrative Agent. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Loan Agreement.
2. Subject to the terms and conditions set forth in the Loan
Agreement, Assignor has made a Loan Commitment to Borrower in an aggregate
principal amount of ___________ Dollars ($____________) ("Assignor's Loan
Commitment").
3. The aggregate outstanding principal amount of Assignor's Loan
made pursuant to Assignor's Loan Commitment at commencement of business on the
date hereof is __________ Dollars ($__________).
4. Assignor desires to assign to Assignee (a) all of the rights
of Assignor under the Loan Agreement in respect of a portion of its Loan and
Loan Commitment thereunder in an amount equal to __________ ($__________) (the
"Assigned Loan and Commitment"); and Assignee desires to accept assignment of
such rights and assume the corresponding obligations from Assignor on such
terms.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Assignment. Assignor hereby assigns and sells to Assignee
all of the rights of Assignor under the Loan Agreement in and to the Assigned
Loan and Commitment, and
<PAGE> 69
Assignee hereby accepts such assignment from Assignor and assumes all of the
obligations of Assignor under the Loan Agreement with respect to the Assigned
Loan and Commitment. Upon the execution and delivery hereof by Assignor,
Assignee, Borrower and the Administrative Agent and the payment of the amount
specified in Section 2 hereof required to be paid on the date hereof, (1)
Assignee shall, as of the commencement of business on the date hereof, succeed
to the rights and obligations of a Bank under the Loan Agreement with a Loan and
a Loan Commitment in an amount equal to the Assigned Loan and Commitment, and
(2) the Loan and Loan Commitment of Assignor shall, as of the commencement of
business on the date hereof, be reduced correspondingly and Assignor released
from its obligations under the Loan Agreement to the extent such obligations
have been assumed by Assignee. The assignment provided for herein shall be
without recourse to Assignor.
SECTION 2. Payments. As consideration for the assignment and sale
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the date
hereof in immediately available funds an amount equal to __________
($___________) [insert the amount of that portion of Assignor's Loan being
assigned]. It is understood that any fees paid to Assignor under the Loan
Agreement are for the account of Assignor. Each of Assignor and Assignee hereby
agrees that if it receives any amount under the Loan Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
SECTION 3. [CONSENT OF BORROWER AND UBS AND ACKNOWLEDGMENT BY THE
ADMINISTRATIVE AGENT;] Execution and Delivery of Note. [THIS AGREEMENT IS
CONDITIONED UPON THE CONSENT OF BORROWER AND UBS AND ACKNOWLEDGMENT BY THE
ADMINISTRATIVE AGENT PURSUANT TO SECTION 12.05 OF THE LOAN AGREEMENT. THE
EXECUTION OF THIS AGREEMENT BY BORROWER AND UBS AND THE ADMINISTRATIVE AGENT IS
EVIDENCE OF THIS CONSENT AND ACKNOWLEDGMENT, RESPECTIVELY. ONLY NECESSARY IF
ASSIGNEE IS NOT A MAJORITY OWNED SUBSIDIARY OF A BANK OR OF THE PARENT OF A
BANK] Pursuant to Section 12.05 of the Loan Agreement, Borrower has agreed to
execute and deliver Notes payable to the respective orders of Assignee and
Assignor to evidence the assignment and assumption provided for herein.
SECTION 4. Non-Reliance on Assignor. Assignor makes no representation
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition, or statements of Borrower or any other
party to any Loan Document, or the validity and enforceability of the
obligations of Borrower or any other party to a Loan Document in respect of the
Loan Agreement or any other Loan Document. Assignee acknowledges that it has,
independently and without
2
<PAGE> 70
reliance on Assignor, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of Borrower and the
other parties to the Loan Documents.
SECTION 5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 6. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 7. Certain Representations and Agreements by Assignee.
Reference is made to Section 10.13 of the Loan Agreement. Assignee hereby
represents that it is entitled to receive any payments to be made to it under
the Loan Agreement or hereunder without the withholding of any tax and agrees to
furnish the evidence of such exemption as specified therein and otherwise to
comply with the provisions of said Section 10.13.
3
<PAGE> 71
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By
-----------------------------------
Name:
Title:
[NAME OF ASSIGNEE]
By
-----------------------------------
Name:
Title:
Applicable Lending Office:
Address for Notices:
[Assignee]
[Address]
Attention:
---------------
Telephone: ( )
--- --------
Telecopy: ( )
--- --------
VORNADO REALTY L.P., a
Delaware limited partnership
By: Vornado Realty Trust, a
Maryland real estate
investment trust, general
partner
By
-----------------------------------
Name:
Title:
4
<PAGE> 72
UNION BANK OF SWITZERLAND
(New York Branch)
(as Bank and Administrative Agent)
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
5
<PAGE> 1
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into
as of April 15, 1997 by and between VORNADO REALTY TRUST, a Maryland real estate
investment trust (the "Company"), and the holders of Units listed on Schedule A
hereto (individually, a "Holder").
WHEREAS, each Holder is receiving on the date hereof Class C, Class D
or Class E units of limited partnership interest ("Units", which term shall
include any Class A units of limited partnership interest into which such Class
C, Class D or Class E units may be converted pursuant to section 4.2.D of the
Partnership Agreement as defined in Section 1 hereof) in Vornado Realty L.P., a
Delaware limited partnership (the "Partnership");
WHEREAS, in connection therewith, the Company has agreed to grant to
each Holder the Registration Rights (as defined in Section 1 hereof);
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
SECTION 1. REGISTRATION RIGHTS
If Holder receives common shares of beneficial interest of the Company
("Common Shares") upon redemption of Units (the "Redemption Shares") pursuant to
the terms of the First Amended and Restated Agreement of Limited Partnership of
the Partnership, as the same may be amended from time to time (the "Partnership
Agreement"), then, unless such Redemption Shares are issued to such Holder
pursuant to an Issuer Registration Statement as provided in Section 2 below,
Holder shall be entitled to offer for sale pursuant to a shelf registration
statement the Redemption Shares, subject to the terms and conditions set forth
in Section 3 hereof (the "Registration Rights").
SECTION 2. ISSUER REGISTRATION STATEMENT
Anything contained herein to the contrary notwithstanding, in the event
that the Redemption Shares are issued by the Company to Holder pursuant to an
effective registration statement (an "Issuer Registration Statement") filed with
the Securities and Exchange Commission (the "Commission"), the Company shall be
deemed to have satisfied all of its registration obligations under this
Agreement.
<PAGE> 2
SECTION 3. DEMAND REGISTRATION RIGHTS
3.1 (a) Registration Procedure. Unless such Redemption Shares are
issued pursuant to an Issuer Registration Statement as provided in Section 2
hereof, then subject to Sections 3.1(c) and 3.2 hereof, if any Holder desires to
exercise its Registration Rights with respect to the Redemption Shares, the
Holder shall deliver to the Company a written notice (a "Redemption Notice")
informing the Company of such exercise and specifying the number of shares to be
offered by such Holder (such shares to be offered being referred to herein as
the "Registrable Securities"). Such notice may be given at any time on or after
the date a notice of redemption is delivered by the Holder to the Partnership
pursuant to the Partnership Agreement, but must be given at least fifteen (15)
Business Days prior to the consummation of the sale of Registrable Securities.
As used in this Agreement, a "Business Day" is any Monday, Tuesday, Wednesday,
Thursday or Friday other than a day on which banks and other financial
institutions are authorized or required to be closed for business in the State
of New York or Maryland. Upon receipt of the Registration Notice, the Company,
if it has not already caused the Registrable Securities to be included as part
of an existing shelf registration statement and related prospectus that the
Company then has on file with the Commission (the "Shelf Registration
Statement") (in which event the Company shall be deemed to have satisfied its
registration obligation under this Section 3), will cause to be filed with the
Commission as soon as reasonably practicable after receiving the Registration
Notice a new registration statement and related prospectus (a "New Registration
Statement") that complies as to form in all material respects with applicable
Commission rules providing for the sale by the Holder of the Registrable
Securities, and agrees (subject to Section 3.2 hereof) to use its best efforts
to cause such New Registration Statement to be declared effective by the
Commission as soon as practicable. (As used herein, "Registration Statement" and
"Prospectus" refer to the Shelf Registration Statement and related prospectus
(including any preliminary prospectus) or the New Registration Statement and
related prospectus (including any preliminary prospectus), whichever is utilized
by the Company to satisfy Holder's Registration Rights pursuant to this Section
3, including in each case any documents incorporated therein by reference. Each
Holder agrees to provide in a timely manner information regarding the proposed
distribution by such Holder of the Registrable Securities and such other
information reasonably requested by the Company in connection with the
preparation of and for inclusion in the Registration Statement. The Company
agrees (subject to Section 3.2 hereof) to use its best efforts to keep the
Registration Statement effective (including the preparation and filing of any
amendments and supplements necessary for that purpose) until the earlier of (i)
the date on which Holder consummates the sale of all of the Registrable
Securities registered under the Registration Statement, or (ii) the date on
which all of the Registrable Securities are eligible for sale pursuant to Rule
144(k) (or any successor provision) or in a single transaction pursuant to Rule
144(e) (or any successor provision) under the Securities Act of 1933, as amended
(the "Act"). The Company agrees to provide to Holder a reasonable number of
copies of the final Prospectus and any amendments or supplements thereto.
Notwithstanding the foregoing, the Company may at any time, in its sole
discretion and prior to receiving any Redemption Notice from any Holder, include
all of Holder's Redemption Shares or any portion thereof in any Shelf
Registration Statement. In connection with any Registration Statement utilized
by the Company to satisfy Holder's Registration Rights pursuant to this Section
3, Holder agrees that it will respond within five (5) Business Days to any
request by the Company to provide or
-2-
<PAGE> 3
verify information regarding Holder or Holder's Registrable Securities as may be
required to be included in such Registration Statement pursuant to the rules and
regulations of the Commission.
(b) Offers and Sales. All offers and sales by a Holder under the
Registration Statement referred to in this Section 3 shall be completed within
the period during which the Registration Statement is required to remain
effective pursuant to Section 3.1(a) of this Section 3, and upon expiration of
such period Holder will not offer or sell any Registrable Securities under the
Registration Statement. If directed by the Company, the Holder will return all
undistributed copies of the Prospectus in its possession upon the expiration of
such period.
(c) Limitations on Registration Rights. Each exercise of a Registration
Right shall be with respect to a minimum of the lesser of (i) fifty thousand
(50,000) Common Shares or (ii) the total number of Redemption Shares held by the
exercising Holder at such time plus the number of Redemption Shares that may be
issued upon redemption of Units by Holder. The right of any Holder to deliver a
Registration Notice commences upon the first date the Holder is permitted to
redeem Units pursuant to the Partnership Agreement. The right of any Holder to
deliver a Registration Notice shall expire on the date on which all of the
Redemption Shares held by the Holder or issuable upon redemption of Units held
by the Holder are eligible for sale pursuant to Rule 144(k) (or any successor
provision) or in a single transaction pursuant to Rule 144(e) (or any successor
provision) under the Act. The Registration Rights granted pursuant to this
Section 3.1 may not be exercised in connection with any underwritten public
offering by the Company or by Holder without the prior written consent of the
Company.
3.2 Suspension of Offering. Upon any notice by the Company, either
before or after a Holder has delivered a Registration Notice, that a negotiation
or consummation of a transaction by the Company or any of its subsidiaries is
pending or an event has occurred, which negotiation, consummation or event would
require additional disclosure by the Company in the Registration Statement of
material information which the Company has a bona fide business purpose for
keeping confidential and the nondisclosure of which in the Registration
Statement might cause the Registration Statement to fail to comply with
applicable disclosure requirements (a "Materiality Notice"), Holder agrees that
it will immediately discontinue offers and sales of the Registrable Securities
under the Registration Statement until Holder receives copies of a supplemented
or amended Prospectus that corrects the misstatement(s) or omission(s) referred
to above and receives notice that any post-effective amendment has become
effective; provided, that the Company may delay, suspend or withdraw the
Registration Statement for such reason for no more than sixty (60) days after
delivery of the Materiality Notice at any one time. If so directed by the
Company, Holder will deliver to the Company all copies of the Prospectus
covering the Registrable Securities current at the time of receipt of any
Materiality Notice.
3.3 Qualification. The Company agrees to use its best efforts to
register or qualify the Registrable Securities by the time the applicable
Registration Statement is declared effective by the Commission under all
applicable state securities or "blue sky" laws of such jurisdictions as Holder
shall reasonably request in writing, to keep each such registration or
qualification effective during the period such Registration Statement is
required to be kept
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<PAGE> 4
effective or during the period offers or sales are being made by Holder after
delivery of a Registration Notice to the Company, whichever is shorter, and to
do any and all other acts and things which may be reasonably necessary or
advisable to enable Holder to consummate the disposition in each such
jurisdiction of the Registrable Securities owned by Holder; provided, however,
that the Company shall not be required to (x) qualify generally to do business
in any jurisdiction or to register as a broker or dealer in such jurisdiction
where it would not otherwise be required to qualify but for this Section 3.3,
(y) subject itself to taxation in any such jurisdiction, or (z) submit to the
general service of process in any such jurisdiction.
3.4 Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder and each person, if any, who controls any Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto)
pursuant to which the Registrable Securities were registered under the
Securities Act, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, in each case whether or not a party,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii)
above;
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<PAGE> 5
provided, however, that the indemnity provided pursuant to this Section 3.4 does
not apply to any Holder with respect to any loss, liability, claim, damage or
expense to the extent arising out of (A) any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Holder expressly for
use in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto), or (B) such Holder's failure to
deliver an amended or supplemented Prospectus if such loss, liability, claim,
damage or expense would not have arisen had such delivery occurred.
3.5 Indemnification by Holder. Each Holder (and each permitted assignee
of such Holder, on a several basis) agrees to indemnify and hold harmless the
Company, and each of its trustees/directors and officers (including each
trustee/director and officer of the Company who signed a Registration
Statement), and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto)
pursuant to which the Registrable Securities were registered under the
Securities Act, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of Holder; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, in each case whether or not a party,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii)
above;
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<PAGE> 6
provided, however, that the indemnity provided pursuant to this Section 3.5
shall only apply with respect to any loss, liability, claim, damage or expense
to the extent arising out of (A) any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by such Holder expressly for use in
the Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto), or (B) such Holder's failure to deliver an
amended or supplemental Prospectus if such loss, liability, claim, damage or
expense would not have arisen had such delivery occurred. Notwithstanding the
provisions of this Section 3.5, a Holder and any permitted assignee shall not be
required to indemnify the Company, its officers, trustees/directors or control
persons with respect to any amount in excess of the amount of the total proceeds
to such Holder or such permitted assignee, as the case may be, from sales of the
Registrable Securities of such Holder under the Registration Statement, and no
Holder shall be liable under Section 3.5 for any statements or omissions of any
other Holder.
3.6 Conduct of Indemnification Proceedings. An indemnified party
hereunder shall give reasonably prompt notice to the indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify the indemnifying party (i) shall not
relieve it from any liability which it may have under the indemnity agreement
provided in Section 3.4 or 3.5 above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
results in the forfeiture by the indemnifying party of substantial rights and
defenses, and (ii) shall not, in any event, relieve the indemnifying party from
any obligations to the indemnified party other than the indemnification
obligation provided under Section 3.4 or 3.5 above. If the indemnifying party so
elects within a reasonable time after receipt of such notice, the indemnifying
party may assume the defense of such action or proceeding at such indemnifying
party's own expense with counsel chosen by the indemnifying party and approved
by the indemnified party, which approval shall not be unreasonably withheld;
provided, however, that the indemnifying party will not settle any such action
or proceeding without the written consent of the indemnified party unless, as a
condition to such settlement, the indemnifying party secures the unconditional
release of the indemnified party; and provided further, that if the indemnified
party reasonably determines that a conflict of interest exists where it is
advisable for the indemnified party to be represented by separate counsel or
that, upon advice of counsel, there may be legal defenses available to it which
are different from or in addition to those available to the indemnifying party,
then the indemnifying party shall not be entitled to assume such defense and the
indemnified party shall be entitled to separate counsel at the indemnifying
party's expense. If the indemnifying party is not entitled to assume the defense
of such action or proceeding as a result of the second proviso to the preceding
sentence, the indemnifying party's counsel shall be entitled to conduct the
indemnifying party's defense and counsel for the indemnified party shall be
entitled to conduct the defense of the indemnified party, it being understood
that both such counsel will cooperate with each other to conduct the defense of
such action or proceeding as efficiently as possible. If the indemnifying party
is not so entitled to assume the defense of such action or does not assume such
defense, after having received the notice referred to in the first sentence of
this paragraph, the indemnifying party will pay the reasonable fees and expenses
of counsel for the indemnified party. In such event, however, the indemnifying
party will not be liable for any settlement effected without the written consent
of the indemnifying party. If an indemnifying party is entitled to assume, and
assumes, the defense of such action or
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<PAGE> 7
proceeding in accordance with this paragraph, the indemnifying party shall not
be liable for any fees and expenses of counsel for the indemnified party
incurred thereafter in connection with such action or proceeding.
3.7 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Sections 3.4 and 3.5 above is for any reason held to be unenforceable by the
indemnified party although applicable in accordance with its terms, the Company
and the relevant Holder shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement incurred by the Company and the Holder, (i) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and the
Holder on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative fault of
but also the relative benefits to the Company on the one hand and the Holder on
the other, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits to the indemnifying party and
indemnified party shall be determined by reference to, among other things, the
total proceeds received by the indemnifying party and indemnified party in
connection with the offering to which such losses, claims, damages, liabilities
or expenses relate. The relative fault of the indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, the indemnifying party or the
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 3.7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 3.7, a Holder shall not be
required to contribute any amount in excess of the amount of the total proceeds
to the Holder from sales of the Registrable Securities of such Holder under the
Registration Statement.
Notwithstanding the foregoing, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 3.7, each person, if any, who
controls a Holder within the meaning of Section 15 of the Securities Act shall
have the same rights to contribution as the Holder, and each trustee/director of
the Company, each officer of the Company who signed a Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act shall have the same rights to contribution as the Company.
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<PAGE> 8
SECTION 4. EXPENSES
The Company shall pay all expenses incident to the performance by it of
its registration obligations under Sections 2 and 3, including (i) all stock
exchange, Commission and state securities registration, listing and filing fees,
(ii) all expenses incurred in connection with the preparation, printing and
distributing of any Issuer Registration Statement or Registration Statement and
Prospectus, and (iii) fees and disbursements of counsel for the Company and of
the independent public accountants of the Company. Each Holder shall be
responsible for the payment of any brokerage and sales commissions, fees and
disbursements of the Holder's counsel, accountants and other advisors, and any
transfer taxes relating to the sale or disposition of the Registrable Securities
by such Holder pursuant to Section 3 or otherwise.
SECTION 5. RULE 144 COMPLIANCE
The Company covenants that it will use its best efforts to timely file
the reports required to be filed by the Company under the Securities Act and the
Exchange Act so as to enable each Holder to sell Registrable Securities pursuant
to Rule 144 under the Securities Act. In connection with any sale, transfer or
other disposition by any Holder of any Registrable Securities pursuant to Rule
144 under the Securities Act, the Company shall cooperate with the Holder to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any Securities Act legend, and
enable certificates for such Registrable Securities to be for such number of
shares and registered in such names as Holder may reasonably request at least
ten (10) Business Days prior to any sale of Registrable Securities hereunder.
SECTION 6. MISCELLANEOUS
6.1 Integration; Amendment. This Agreement constitutes the entire
agreement among the parties hereto with respect to the matters set forth herein
and supersedes and renders of no force and effect all prior oral or written
agreements, commitments and understandings among the parties with respect to the
matters set forth herein. Except as otherwise expressly provided in this
Agreement, no amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the Company
and each Holder against whom such amendment, modification or discharge is sought
to be enforced.
6.2 Waivers. No waiver by a party hereto shall be effective unless made
in a written instrument duly executed by the party against whom such waiver is
sought to be enforced, and only to the extent set forth in such instrument.
Neither the waiver by any of the parties hereto of a breach or a default under
any of the provisions of this Agreement, nor the failure of any of the parties,
on one or more occasions, to enforce any of the provisions of this Agreement or
to exercise any right or privilege hereunder shall thereafter be construed as a
waiver of any subsequent breach or default of a similar nature, or as a waiver
of any such provisions, rights or privileges hereunder.
6.3 Assignment; Successors and Assigns. This Agreement and the rights
granted hereunder may not be assigned by any Holder without the written consent
of the
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<PAGE> 9
Company; provided, however, that a Holder may assign its rights and obligations
hereunder, following at least ten (10) days' prior written notice to the
Company, (i) to the direct equity owners (e.g., partners or members) or
beneficiaries in connection with a distribution of such Holder's Units to its
equity owners or beneficiaries and (ii) to a permitted transferee in connection
with a transfer of such Holder's Units in accordance with the terms of the
Partnership Agreement, if, in the case of (i) and (ii) above, such persons agree
in writing to be bound by all of the provisions hereof. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of all of the parties hereto.
6.4 Burden and Benefit. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
personal and legal representatives, successors and, subject to Section 6.3
above, assigns.
6.5 Notices. All notices called for under this Agreement shall be in
writing and shall be deemed given upon receipt if delivered personally or by
facsimile transmission and followed promptly by mail, or mailed by registered or
certified mail (return receipt requested), postage prepaid, to the parties at
the addresses set forth opposite their names in Schedule A hereto, or to any
other address or addressee as any party entitled to receive notice under this
Agreement shall designate, from time to time, to others in the manner provided
in this Section 6.5 for the service of notices; provided, however, that notices
of a change of address shall be effective only upon receipt thereof. Any notice
delivered to the party hereto to whom it is addressed shall be deemed to have
been given and received on the day it was received; provided, however, that if
such day is not a Business Day then the notice shall be deemed to have been
given and received on the Business Day next following such day and if any party
rejects delivery of any notice attempted to be given hereunder, delivery shall
be deemed given on the date of such rejection. Any notice sent by facsimile
transmission shall be deemed to have been given and received on the Business Day
next following the transmission.
6.6 Specific Performance. The parties hereto acknowledge that the
obligations undertaken by them hereunder are unique and that there would be no
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to (i)
compel specific performance of the obligations, covenants and agreements of any
other party under this Agreement in accordance with the terms and conditions of
this Agreement and (ii) obtain preliminary injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement in
any court of the United States or any State thereof having jurisdiction.
6.7 Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Maryland, but not
including the choice of law rules thereof.
6.8 Headings. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this
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<PAGE> 10
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
6.9 Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the person or entity may require.
6.10 Execution in Counterparts. To facilitate execution, this Agreement
may be executed in as many counterparts as may be required. It shall not be
necessary that the signature of or on behalf of each party appears on each
counterpart, but it shall be sufficient that the signature of or on behalf of
each party appears on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of or on behalf of all of the
parties.
6.11 Severability. If fulfillment of any provision of this Agreement,
at the time such fulfillment shall be due, shall transcend the limit of validity
prescribed by law, then the obligation to be fulfilled shall be reduced to the
limit of such validity; and if any clause or provision contained in this
Agreement operates or would operate to invalidate this Agreement, in whole or in
part, then such clause or provision only shall be held ineffective, as though
not herein contained, and the remainder of this Agreement shall remain operative
and in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date first hereinabove set
forth.
VORNADO REALTY TRUST
By: /s/ Joseph Macnow
----------------------------
Name: Joseph Macnow
Title: Vice President
EACH OF THE HOLDERS OF
UNITS LISTED ON SCHEDULE A
HERETO
By: /s/ David R. Greenbaum
----------------------------
Name: David R. Greenbaum
Title: As Attorney-in-Fact
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<PAGE> 11
SCHEDULE A
REGISTRATION RIGHTS AGREEMENTS
The Mendik Partnership, L.P.
FW/Mendik REIT, L.L.C.
Mendik RELP Corp.
2750 Associates
Abrams, Trust U/W/O Ralph
Adler, Robert
Alpert, Vicki
Ambassador Construction Company, Inc.
Aschendorf-Shasha, Ellen
Ash, Herbert
Aubert, Trust FBO Lysa (Schwartz)
Barr, Thomas
Barkin, Leonard
Batkin, Estate of Jean
Batkin, Jean Trust
Batkin, Nancy
Berenson, David
Berenson, Joan
Berenson, Richard
Berenson, Robert
Bianculli, Louis
Bierman, Jacquin
Blumenthal, Joel Marie
Braverman, Madlyn
Carb, Sally
Carney, Thomas
Chambers, Robert
CHO Enterprises
Dembner, Shirley
Dembner, Shirley UGMA for Lindsey Dembner
Doner, Max
Downey, Michael
Dryfoos, Jacqueline
Dubrowski, Raymond
Evans, Ben
Field, Walter L.
Jesse Fierstein & Co.
Fischer, Alan A.
Freedman, Robert
Gershon, Estate of Murray
Getz, Howard
Getz, Sandra
Getz, Sandra & Howard
<PAGE> 12
SCHEDULE A
REGISTRATION RIGHTS AGREEMENTS
Gold, Frederica
Ginsberg, Benedict
Goldberg, Clarence
Goldring, Stanley
Goldschmidt, Beatrice
Goldschmidt, Charles
Goldschmidt, Edward
Goldschmidt, C. Trust U/A/D 7/11/90
Goldschmidt, Lawrence
Gorfinkle, Alaine
Gorfinkle, Lawrence
Green, Bernard
Greif, Goldie
Gutenberg, Bernice
H L Silbert trustee U/W of H A Goldman
Hagler, Philip
Harteveldt, Robert L.
Hirsch, Phillip J.
Hirsch, Judith
Hrusha, Alan
Hutner, Anne Trust F/B/O
Hutner, Estate of Irwin
INS Realty Associates
Fierstein Co.
Jaffe, Elizabeth
Jones, Hazel
Kaufman, Robert M.
Klein, Robin
Knatten Inc.
Knight, Laureine
Komaroff, Stanley
Kosloff, Andrea
Kosloff, Andrea UGMA for Adam Kosloff
Kosloff, Andrea UGMA for Justin Kosloff
Koven, Irving
Kowal, Myron
Kramer, Saul
Kuhn, James D.
Kuhn, Leo
Kurshan, Herbert
Lauder, Leonard
Lauder, Ronald
Leff, Joseph
<PAGE> 13
SCHEDULE A
REGISTRATION RIGHTS AGREEMENTS
Leff, Valerie
Lefkowitz, Howard
LeRoy, Partners
Liroff, Harriett
Liroff, Richard
Loewengart, Irene
Lovitz, David
Maayan Partners
Marvin, Morton
Marvin, Suzanne
Maynard, Jean
Mazer, David
Mazer, Richard
Mendik, Susan
Migdal, L. & Kalmus, E. Trustees u/w/o M Silberst
Mil Equities
Nicardo Corporation
Novick, Lawrence
Oestreich, David A.
Oestreich, Joan E.
Oestreich, Sophy
Oppenheimer, Martin J.
Oppenheimer, Suzanne
Phillips, Family Trust UWO Edith
Phillips, Estate of John D.
Plum Partners L.P.
Prentice Revocable Trust, 12/12/75
RCAY S.A.
Reichler, Richard
Reingold, Suzy
Roberts, H. Richard
Roche, Sara
Rolfe, Ronald
Rosenberg, Ilse
Rosenheim, Revocable Living Trust of Edna
Rosenzveig, Abraham
Rubashkin, Martin
Rubin, Murray M.
Sahid, Joseph
Saunders, Paul
Saul, Andrew
Schacht, Estate of Natalie
Schacht, Ronald
<PAGE> 14
SCHEDULE A
REGISTRATION RIGHTS AGREEMENTS
Schwartz, Trust FBO Samuel
Schwartz, Trust FBO Carolynn
Shapiro, Howard
Shapiro, Robert I.
Shasha, Alfred
Shasha, Alfred A. & Hanina
Shasha, Alfred & Hanina Trustees
Shasha, Robert Y.
Shasha-Kupchick, Leslie
Sheridan Family Partners, L.P.
Shine, William
Silberstein, John J.
Silbert, Harvey I.
Simons, Robert
Sims, David
Slaner, Estate of Alfred P.
Steiner, Phillip Harry
Steiner, Richard Harris
Tannenbaum, Bernard
Tartikoff Living Trust
Winik, Trust U/W/O Carolyn
Watt, Emily
Wang, Kevin
Weissman, Sheila
Williams, John
<PAGE> 1
EXHIBIT 10.3
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is made and entered
into as of the 15th day of April, 1997, by and among Vornado Realty Trust, a
Maryland real estate investment trust (the "Company"), The Mendik Company, L.P.,
a Delaware limited partnership (which intends to change its name to Vornado
Realty L.P.) (the "Operating Partnership"), and Bernard H. Mendik (the
"Executive").
WHEREAS, the Company serves as general partner of the Operating
Partnership and, through the Operating Partnership, is engaged in, among other
things, the acquisition, ownership, management, leasing, renovation and
redevelopment of commercial real estate in the United States;
WHEREAS, the Company, within the Company and through the Operating
Partnership, has formed the Mendik Division, which is engaged in the
acquisition, ownership, management, leasing, renovation and redevelopment of the
Company's office properties in Manhattan;
WHEREAS, the Company acknowledges that it will benefit from the
application of Executive's particular and unique skill, experience, and
background to the management and operation of the Company, and will employ
Executive as Co-Chair of the Company and as Chairman of the Mendik Division and
Chief Executive Officer of the Mendik Division of the Company ("CEO") and, as
Chairman and
<PAGE> 2
CEO, Executive will manage the Mendik Division of the Operating Partnership on
behalf of the Company (collectively the "Mendik Division" unless otherwise
specifically indicated);
WHEREAS, Executive has received stock options in the Company pursuant
to a share option agreement and will be entering into an indemnification
agreement with the Company in the form of Exhibit A hereto (the "Indemnification
Agreement"); and
WHEREAS, the Executive acknowledges that he will be employed by the
Company in a capacity in which his employment by the Company creates a
relationship of confidence and trust and he will obtain confidential information
with regard to the business of the Company and its affiliates and their clients;
WHEREAS, the Executive acknowledges that, as a result of his obtaining
confidential information as to the Company and its affiliates, the Company and
its affiliates will suffer substantial damage, which would be difficult to
ascertain, if the Executive enters into competition with the Company or any
affiliate and that it is necessary for the Company to be protected by the
prohibition against competition and the confidentiality restrictions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein set forth, and for other good and valuable consideration, the
Company, the Operating Partnership and Executive agree as follows:
2
<PAGE> 3
1. Noncompetition.
1(a) Noncompetition. Executive agrees that while Executive is
employed by the Company or is a director of the Company and for a period of one
(1) year following the later of the date Executive ceases to be an employee or
director of the Company (other than if the Executive's employment ends as a
result of a termination pursuant to a termination by the Company without Cause
(as defined on Exhibit B hereto), a termination due to Disability (as defined on
Exhibit B hereto) or a termination for Good Reason (as defined on Exhibit B
hereto), Executive shall not engage in any way, directly or indirectly, in the
acquisition, operation, development, management, leasing or disposition of any
primarily commercial office real estate property (mixed properties being
determined primarily commercial office real estate property or other by the
relative square footage of each) or any improvements thereof located in the
Restricted Area (as defined below), other than in his capacity as an employee,
director, trustee, officer or equity owner of the Company; provided, however,
that this Section 1(a) shall not apply to (i) Executive's activities with
respect to any property or entity listed in Exhibit C attached hereto, provided
that such activities are reasonably necessary to avoid a breach of Executive's
or the general partner's fiduciary or other duty to the owner or other owners of
such property (Executive agrees that the activities prohibited by Section 1(c)
are not reasonably necessary to avoid a breach of such duties), (ii) the
3
<PAGE> 4
acquisition, operation, development, management, leasing or disposition of any
property by any entity in which Executive owns or acquires an equity interest as
a minority passive investor (including, but not limited to as a limited partner
or a non-operating member of a limited liability company, but not including as a
general partner) having no managerial or similar role with respect to such
property, (iii) Executive's or his spouse's or issue's acquisition of any
property or any interest in any property by inheritance, (iv) Executive
providing advice or financial assistance to any of his children with regard to
projects initiated by such child, provided that (x) the financial assistance
shall not exceed $10,000,000 unless Executive holds no more than a minority
interest in such project, (y) at the time such child initially approaches
Executive, Executive has no knowledge (following appropriate due diligence) that
the Company is involved in or considering such a project and (z) if Executive
thereafter obtains knowledge that the Company is considering such project,
Executive shall promptly inform the Company of his involvement with his child
and excuse himself from any involvement with such project on behalf of the
Company or (v) Executive's performance of management company services for other
entities while employed by the Company which performance by Executive is
authorized by an agreement between the Company and such other entity or between
the Company and Executive. For purposes of this Agreement, the "Restricted Area"
is any location within fifty (50) miles of any commercial office building
managed by the Mendik Management Company, Inc. at the time of any action
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by Executive during his employment or directorship or at the later of the dates
of the Executive's termination of employment or directorship in the event of any
action by Executive following his termination of employment and directorship.
1(b) Reasonable and Necessary Restrictions. Executive
acknowledges that the restrictions, prohibitions and other provisions of this
Section 1 are reasonable, fair and equitable in scope, terms and duration, are
necessary to protect the legitimate business interests of the Company, and are a
material inducement to the Company's employment of Executive.
1(c) Non-Solicitation. Executive agrees that while Executive
is employed by the Company or is a director of the Company (i) and for a period
of two (2) years following the later of the date Executive ceases to be an
employee or a director of the Company, Executive will not solicit any of the
Company's or its affiliate's (within the meaning of Rule 12(b)-2 of the
Securities Exchange Act of 1934, but only if in addition such entity would be
classified as a parent or subsidiary of the Company or a parent, all within the
meaning of Section 424(e) or Section 424(f) of the Internal Revenue Code of
1986, as amended, if twenty-five percent (25%) were substituted for fifty
percent (50%) therein) (an "Affiliate") non-clerical employees, agents or
independent contractors to end their relationship with the Company, its
Subsidiaries or its Affiliates provided that the provision of this Section 1(c)
shall not apply to the giving of references (ii) and for a period of one (1)
year following the
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later of the date of termination of Executive's employment or directorship,
pursue or attempt to develop or to direct to any other entity any project known
to Executive which the Company is or was pursuing, developing or attempting to
develop during the period of his employment or directorship or interfere or
otherwise compete (other than in connection with performing services for the
Company or its Subsidiaries with regard to other properties managed by the
Company or its Subsidiaries or for other management companies where Executive is
performing services with the consent of the Company) with any active lease
negotiations of the Mendik Division which the Executive is or was actively
involved in conducting or strategizing on behalf of the Company or its
Subsidiaries (in each case, a "Project"), unless such Project has been inactive
for over nine (9) months. Notwithstanding the foregoing, in the event of a
Change in Control and the Executive's employment terminating within one hundred
twenty (120) days thereafter, the determination of projects being "pursued,
developed or attempted to be developed" shall be limited to projects the Company
was pursuing, developing or attempting to develop prior to the Change in Control
plus any project that Executive becomes materially involved in on behalf of the
Company after the Change in Control.
1(d) Confidential Information. Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets and
confidential information, knowledge or data relating to the Company and its
business and investments, which shall have
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been obtained by Executive during Executive's employment by the Company and
which is not generally available public knowledge (other than by acts by
Executive in violation of this Agreement). Except as the Executive in good faith
believes may be required, appropriate or desirable in connection with his
carrying out his duties as CEO of the Mendik Division of the Company, Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or any legal process, or as is necessary in connection with
any adversarial proceeding against the Company (in which case Executive shall
cooperate with the Company, at the Company's expense, in the Company seeking to
obtain a protective order against disclosure by a court of competent
jurisdiction), communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those designated by the
Company or on behalf of the Company in furtherance of its business or to perform
duties hereunder.
1(e) Removal of Documents. All records, files, drawings,
documents, models, equipment, and the like relating to the Company's business,
which Executive has control over shall not be removed from the Company's
premises without its written consent, unless such removal is in the furtherance
of the Company's business or is in connection with Executive's carrying out his
duties as CEO of the Mendik Division of the Company and, if so removed, shall be
returned to the Company promptly after termination of Executive's employment, or
otherwise promptly
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after removal if such removal occurs following termination of employment.
Executive's rolodex, telephone directory and similar type items, and furniture,
art work and property owned by Executive or otherwise not owned by the Company
shall not be deemed Company property and shall not be covered by this Section
1(e). The Company shall be the owner of all trade secrets and other products
relating to the Company's business developed by Executive alone or in
conjunction with others as part of his employment with the Company.
1(f) Specific Performance. Executive acknowledges that the
Company likely will have no adequate remedy at law if Executive shall fail to
perform any of his obligations hereunder, and the Executive therefore confirms
that the right of the Company to specific performance of the terms of this
Section 1 is essential to protect the rights and interests of the Company.
Accordingly, in addition to any other remedies that the Company may have at law
or in equity, the Company shall have the right to have all obligations,
agreements and other provisions of this Section 1 specifically performed by
Executive, and the Company shall have the right to obtain preliminary injunctive
relief to secure specific performance and to prevent a breach of this Section 1
by Executive.
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2. Miscellaneous.
2(a) Integration; Amendment. This Agreement supersedes and
renders of no force and effect all prior understandings and agreements with
respect to the matters set forth herein. No amendments or additions to this
Agreement shall be binding unless in writing and signed by all of the parties.
2(b) Assignment. No rights or obligations of the Company under
this Agreement may be assigned or transferred, except in connection with a
merger, consolidation or sale of all or substantially all of the assets of the
Company or the Mendik Division where the Company's successor expressly assumes
and agrees to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place; provided that the foregoing shall not serve as a release of the Company.
As used in this Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets or the Mendik Division's
business and/or assets, as the case may be, which executes and delivers the
agreement provided for in this Section 2(b) or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law and any
assignment in accordance with the first sentence of this Section 2(b) shall not
be deemed a termination without Cause by the Company. Executive may not assign
this Agreement or any right or interest therein, whether by operation of law or
otherwise, without the prior written consent of the Company.
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2(c) Severability. If any provision of this Agreement shall be
deemed invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed and enforced as if it had never contained such invalid or
unenforceable provision. In addition, in place of such invalid or unenforceable
provision, there shall automatically be added hereto a provision as similar to
such invalid or unenforceable provision as may be possible and still be valid
and enforceable.
2(d) Waivers. The failure or delay of any party at any time to
require performance by any other party of any provision of this Agreement, even
if known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power, or remedy hereunder, and any
waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy under this Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to other or further notice or demand in
similar or other circumstances.
2(e) Power and Authority. The Company represents and warrants
to Executive that it has the requisite corporate power to enter into this
Agreement and its obligations hereunder; that the execution, delivery and
performance of this Agreement by it has been duly authorized by all appropriate
partnership or
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corporate action, as applicable; and that this Agreement represents a valid and
legally binding obligation with respect to it and its enforceable against it in
accordance with its terms.
2(f) Burden and Benefit. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and, subject to
Section 2(b) above, assigns.
2(g) Legal Fees and Expenses. If any contest or dispute shall
arise between the Company and Executive regarding any provision of this
Agreement, the Indemnification Agreement or any equity grant or other agreement
or compensation arrangement related to his employment, the Company shall
reimburse Executive for all legal fees and expenses reasonably incurred by
Executive in connection with such contest or dispute, but only if Executive is
successful in respect of substantially all of Executive's claims brought and
pursued in connection with such contest or dispute. Such reimbursement shall be
made as soon as practicable following the resolution of such contest or dispute
(whether or not appealed) to the extent the Company receives reasonable written
evidence of such fees and expenses.
2(h) Governing Law; Headings. This Agreement and its
construction, performance, and enforceability shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to provisions of conflict of
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laws. Headings and titles herein are included solely for convenience and shall
not affect, or be used in connection with, the interpretation of this Agreement.
2(i) Notices. All notices called for under this Agreement
shall be in writing and shall be deemed to be sufficient if contained in a
written instrument delivered (i) in person, (ii) by first class registered or
certified mail, postage prepaid and return receipt requested, (iii) by overnight
delivery by a recognized courier service providing a receipt, or (iv) by
facsimile transmission confirmed by transmission report, addressed to the
intended recipient at the address set forth on the signature page hereof (or at
such other address for a party as shall be specified by like notice). Any notice
delivered to the party hereto to whom it is addressed shall be deemed to have
been given on the day it was received; provided, however, that if such day is
not a business day, then the notice shall be deemed to have been given and
received on the business day next following such day. If the other party is
aware that the intended recipient is not at the notice location, either
permanently or temporarily, notice also shall be sent to such location as the
notifying party becomes aware (after reasonable inquiry) that the intended
recipient is then located.
2(j) Counterparts. This Agreement may be executed in one or
more counterparts, each of which counterparts shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
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2(k) Type of Termination. The classification of a type of
termination of employment with the Company shall apply for purposes of
classifying the type of termination of employment with a subsidiary of the
Company and a termination of employment with the Company shall automatically
cause a termination of employment with all subsidiaries of the Company.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement, or caused this Agreement to be duly executed on their behalf, as of
the date first above written.
VORNADO REALTY TRUST
By: /s/ Joseph Macnow
-----------------------------------
Name: Joseph Macnow
Title: Vice President
Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
THE MENDIK COMPANY, L.P.
By: Vornado Realty Trust,
a general partner
By: /s/ Joseph Macnow
------------------------------
Name: Joseph Macnow
Title: Vice President
Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
EXECUTIVE:
/s/ Bernard H. Mendik
----------------------------------------
Bernard H. Mendik
330 Madison Avenue
New York, New York 10017
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EXHIBIT A
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into as of the day of , 1997, by and between Vornado Realty
Trust, a Maryland real estate investment trust (the "Company") and Bernard H.
Mendik (the "Executive").
WHEREAS, Executive has agreed to serve, at the request of the Company
as an executive and officer of the Company and, if elected, a director of the
Company; and
WHEREAS, Executive is willing to serve on behalf of the Company on the
condition that he be indemnified as set forth herein.
NOW, THEREFORE, in consideration of Executive's agreement to serve the
Company as set forth above, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
1. General. The Company agrees that if Executive is made a party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that Executive is or was a trustee, director, officer or employee of the
Company or any subsidiary or division of the Company or is or was serving at the
request of the Company or any subsidiary or division of the Company as a
trustee, fiduciary, director,
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officer, member, employee or agent of another corporation or a partnership,
joint venture, trust or other enterprise, including, without limitation, service
with respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a trustee, fiduciary,
director, officer, member, employee or agent while serving as a trustee,
fiduciary, director, officer, member, employee or agent, Executive shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the law of the State of Maryland, as the same exists or may hereafter be
amended, against all Expenses incurred or suffered by Executive in connection
therewith, and such indemnification shall continue as to Executive even if
Executive has ceased to be an officer, director, trustee, fiduciary or agent, or
is no longer employed by the Company and shall inure to the benefit of his
heirs, executors and administrators. The indemnification hereunder shall not
extend to cover any Expenses arising out of (i) Executive's activities prior to
the date hereof or (ii) Executive's actions after the date hereof to the extent
such actions are with respect to matters that are covered by the indemnification
obligations of FW/Mendik REIT, L.L.C. and certain of its affiliates under the
indemnification agreement attached to the Merger Agreement as Exhibit R.
2. Expenses. As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, losses, judgments, liabilities, fines,
penalties, excise taxes,
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settlements, and costs, attorneys' fees, accountants' fees, and disbursements
and costs of attachment or similar bonds, investigations and any expenses of
establishing a right to indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement is not paid
by the Company or on its behalf, within thirty (30) days after a written claim
or request has been received by the Company, Executive may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, Executive shall be
entitled to be paid also the expenses of prosecuting such suit. All obligations
for indemnification hereunder shall be subject to, and paid in accordance with,
the laws of the State of Maryland.
4. Partial Indemnification. If Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not however, for the total amount thereof, the
Company shall nevertheless indemnify Executive for the portion of such Expenses
to which Executive is entitled.
5. Advances of Expenses. Expenses incurred by Executive in connection
with any Proceeding shall be paid by the Company in advance upon request of
Executive that the Company pay such Expenses; but, only in the event that
Executive shall have delivered in writing to the Company (i) an undertaking to
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reimburse the Company for Expenses with respect to which Executive is not
entitled to indemnification and (ii) an affirmation of his good faith belief
that the standard of conduct necessary for indemnification by the Company has
been met.
6. Notice of Claim. Executive shall give to the Company notice of any
claim against him for which indemnification will or could be sought under this
Agreement at the address set forth on the signature page of this Agreement (or
such other address as provided by notice given as aforesaid). In addition,
Executive shall give the Company such information and cooperation as it may
reasonably require and as shall be within Executive's power and at such times
and places as are convenient for Executive.
7. Defense of Claim. With respect to any Proceeding as to which
Executive notifies the Company of the commencement thereof:
(a) The Company will be entitled to participate at its own
expense; and
(b) Except as otherwise provided below, to the extent that it
may wish, the Company will be entitled to assume the defense thereof,
with counsel reasonably satisfactory to Executive, which the Company's
sole discretion may be regular counsel to the Company and may be
counsel to other officers and directors of the Company or any
subsidiary. Executive also shall have the right to employ his own
counsel in such action, suit or proceeding if
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he reasonably concludes that failure to do so would involve a conflict
of interest between the Company and Executive, and under such
circumstances the fees and expenses of such counsel shall be at the
expense of the Company.
(c) The Company shall not be liable to indemnify Executive
under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty
or limitation on Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold or delay their
consent to any proposed settlement.
8. Non-exclusivity. The right to indemnification and the
payment of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Agreement shall not be exclusive of any other
right which Executive may have or hereafter may acquire under any statute,
provision of the declaration of trust or certificate of incorporation or by-laws
of the Company or any subsidiary or any agreement, vote of shareholder or
disinterested directors or trustees or otherwise. In particular, Executive shall
be a third party beneficiary of the indemnity provided in Section 7.7 of the
Partnership Agreement creating The Mendik Company, L.P., a Delaware limited
partnership.
9. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the
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parties hereto and their respective successors, assigns (including any direct or
indirect successor by merger or consolidation), heirs, executors and
administrators.
10. Governing Law. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed, and governed by and in
accordance with the laws of the State of Maryland, except for the last sentence
of Section 8 which shall be construed under the law that applies to the
Partnership Agreement forming The Mendik Company, L.P., a Delaware limited
partnership.
11. Amendment. No Amendments or additions to that Agreement
shall be binding unless in writing and signed by all of the parties.
12. Waiver of Breach. The failure or delay of either party at
any time to require performance by the other party of any provision of this
Agreement, even if known, shall not affect the right of such party to require
performance of that provision or to exercise any right, power, or remedy
hereunder, and any waiver by any party of any breach of any provision of this
Agreement shall not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of any
right, power, or remedy under this Agreement. No notice to or demand on any
party in any case shall, of itself, entitle such party to other or further
notice or demand in similar or other circumstances.
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13. Severability. The Company and Executive agree that the
agreements and provisions contained in this Agreement are severable and
divisible, that each such agreement and provision does not depend upon any other
provision or agreement for its enforceability, and that each such agreement and
provision set forth herein constitutes an enforceable obligation between the
Company and Executive. Consequently, the parties hereto agree that neither the
invalidity nor the unenforceability of any provision of this Agreement shall
affect the other provisions hereof, and this Agreement shall remain in full
force and effect and be construed in all respects as if such invalid or
unenforceable provision were omitted.
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IN WITNESS WHEREOF, the parties hereto have entered into this agreement
as of the date first above written.
EXECUTIVE:
/s/ Bernard H. Mendik
-------------------------------------
Bernard H. Mendik
[CORPORATE SEAL] VORNADO REALTY TRUST
By: /s/ Joseph Macnow
--------------------------------
Name: Joseph Macnow
Title: Vice President
Agreed as to the last
sentence of Section 8:
The Mendik Company, L.P., a Delaware limited partnership, which will change its
name to Vornado Realty L.P.
By: Vornado Realty Trust, a general partner
By: /s/ Joseph Macnow
---------------------------------
Name: Joseph Macnow
Title: Vice President
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EXHIBIT B
DEFINITIONS
Part I - Cause.
For purposes of this Agreement, a termination for Cause shall only mean
a termination as a result of (i) Executive's willful misconduct with regard to
the Company or its Subsidiaries that is materially economically injurious to the
Company or to the Mendik Division, provided that in no event will willful
misconduct include the exceptions to noncompetition set forth in Section 1(a)
hereof (but the foregoing proviso does not permit Executive's willful misconduct
that is beyond the scope of what is reasonably necessary to satisfy or perform
the Section 1(a) exceptions), (ii) Executive's conviction of, or pleading guilty
or nolo contendere to, a felony (other than a traffic violation), (iii)
Executive's willful and continued failure to use reasonable business efforts to
attempt to substantially perform his duties as Co-Chair of the Company and
Chairman and Chief Executive Officer ("CEO") of the Mendik Division of the
Company (other than such failure resulting from Executive's incapacity due to a
physical or mental illness or subsequent to the issuance of a notice of
termination by Executive for Good Reason) after demand for substantial
performance is delivered by the Company in writing that specifically identifies
the manner in which the Company believes Executive has not used reasonable
business efforts to attempt to substantially perform his duties or (iv)
Executive's willful breach of Section 1 hereof that is materially
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economically injurious either to the Company or the Mendik Division. Executive's
absence from the office shall not solely by itself be a basis for asserting a
violation of (iii) if he continues to use reasonable business efforts to
substantially perform his duties.
For purposes of this Agreement, in addition to the other legal requirements
to be "willful," no act, or failure to act, by Executive shall be considered
"willful" unless committed in bad faith and without a reasonable belief that the
act or omission was in the best interests of the Company. In addition, no action
or inaction shall give rise to a right of the Company to terminate Executive's
employment for Cause for purposes of the meaning of the preceding paragraph
unless and until the Company has delivered to Executive a copy of a resolution
duly adopted by a majority of the Board of Trustees of the Company (the "Board")
at a meeting of the Board called and held for such purpose (after reasonable
(but in no event less than thirty (30) days) notice to Executive and an
opportunity for Executive, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, Executive was
guilty of any conduct set forth in the preceding paragraph and specifying the
particulars thereof in detail. This Agreement shall not prevent Executive from
challenging in any court of competent jurisdiction the Board's determination
that Cause exists or that Executive has failed to cure any act (or failure to
act) that purportedly formed the basis for the Board's determination.
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Part II - Good Reason.
For purposes of this Agreement, a termination for Good Reason shall
mean a termination by the Executive as a result of (unless otherwise consented
to in writing by Executive) (i) the failure to appoint Executive as CEO and
Chairman of the Mendik Division of the Company or Co-Chair of the Company or
elect Executive as a director of the Company, the assignment to Executive,
without his consent, of more than incidental duties outside of the Mendik
Division, the alteration of the duties, responsibilities and authority of
Executive as CEO and Chairman of the Mendik Division of the Company in a manner
that is materially and adversely inconsistent with such duties,
responsibilities or authority or a change in Executive's positions or titles
(provided that the foregoing shall not apply to removal of, or failure to
reelect, Executive as Co-Chair after April 30, 2000 or as a director after
April 30, 2003, or in either case, upon his (A) consent to such action, (B)
termination of employment for Disability or Cause, (C) total and permanent
disability in a manner that would prevent him from functioning as a director,
(D) death or (E) voluntary retirement); (ii) the initial base salary is less
than $200,000, or the Company reduces the Executive's base salary to below
$200,000 or fails to pay Executive's base salary or other earned compensation
when due or to substantially provide the benefits, fringes, perquisites,
payroll practices or equity or incentive opportunities in effect with respect
to senior executive officers of the Company (other than the Chief Executive
Officer of the Company, the President of
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the Company, any other officer of the Company on an individual basis because of
special circumstances, any individual(s) who become employed by the Company
pursuant to an acquisition (with regard to levels of programs or arrangement
committed to at such time), or to any individual(s) pursuant to an agreement
for new hire (with regard to levels of programs or arrangements committed to at
such time)) at a level commensurate with his position (provided that in making
such determination as to future equity grants, the equity grants given
initially in connection with the hiring of Executive shall be disregarded);
(iii) the relocation of the Mendik Division's principal executive offices to a
location other than Manhattan, New York City or relocation of Executive's own
office location from that of the principal offices; (iv) any purported
termination of Executive's employment for Cause which is not effected pursuant
to the procedures of Part I of Exhibit B (and for purposes of this Agreement,
no such purported termination shall be effective); (v) the Company's material
breach of any material term contained in this Agreement or the grant set forth
in Exhibit C or to provide, in all material respects, the indemnification set
forth in the Indemnification Agreement; (vi) the performance, directly or
indirectly, of management, leasing, redevelopment or similar services with
respect to any commercial office property in Manhattan in which the Company has
a direct or indirect interest, other than through the Mendik Division (except
that the foregoing shall not apply to properties currently owned or hereafter
acquired by the Company where there is a preexisting management
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or leasing agreement in place, provided that the Mendik Division shall have
general oversight over such management or leasing operations on behalf of the
Operating Partnership); (vii) a Change in Control (as defined below); (viii) a
material breach by the Company or its subsidiaries of the Master Property
Services Agreement (wholly owned properties) dated as of the same date hereof
or the Master Property Services Agreement (partially owned properties) dated as
of the same date hereof or any of the service agreements contemplated by either
such agreement (the "Cleaning Agreements") or the licensing agreement with
regard to Executive's last name, or (ix) any requirement that Executive report
to anyone other than the Board or the Chief Executive Officer of the Company.
Executive's right to terminate his employment hereunder for Good Reason shall
not be affected by his incapacity due to physical or mental illness.
For purposes of this Agreement, no action or inaction shall give rise
to the right of Executive to terminate his employment with the Company for Good
Reason unless a written notice is given by Executive to the Company within one
hundred twenty (120) days after Executive has actual knowledge of the
occurrence of the event giving rise to Executive's right to terminate pursuant
to this Agreement, and such event has not been cured within thirty (30) days
after such notice. Executive's continued employment during the one hundred and
twenty (120) day period referred to above in this Agreement shall not constitute
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consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
For purposes of this Agreement, a "Change in Control" shall mean the
occurrence of any one of the following:
(i) individuals who, on the Commencement Date, constitute the Board
(the "Incumbent Trustees") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a trustee subsequent
to the Commencement Date whose election or nomination for election was approved
by a vote of at least two-thirds of the Incumbent Trustees then on the Board
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for trustee, without objection to
such nomination) shall be an Incumbent Trustee, provided, however, that no
individual initially elected or nominated as a trustee of the Company as a
result of an actual or threatened election contest with respect to trustees or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be an Incumbent Trustee;
(ii) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after the execution
of this Agreement, a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
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Company representing 30% or more of the combined voting power of the Company's
then outstanding securities eligible to vote for the election of the Board (the
"Company Voting Securities"), provided, however, that an event described in this
paragraph (ii) shall not be deemed to be a Change in Control if any of the
following becomes such a beneficial owner: (A) the Company or any majority-owned
subsidiary (provided, that this exclusion applies solely to the ownership levels
of the Company or the majority-owned subsidiary), (B) any tax-qualified,
broad-based employee benefit plan sponsored or maintained by the Company or any
majority-owned subsidiary, (C) any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) any person pursuant to a
Non-Qualifying Transaction (as defined in paragraph (iii)), (E) Executive or any
group of persons including Executive (or any entity controlled by Executive or
any group of persons including Executive); or (F)(i) any of the partners (as of
the Commencement Date) in Interstate Properties ("Interstate") including
immediate family members and family trusts or family-only partnerships and any
charitable foundation of such partners (the "Interstate Partners"), (ii) any
entities the majority of the voting interests of which are beneficially owned by
the Interstate Partners, or (iii) any "group" (as described in Rule 13d-5(b)(i)
under the Exchange Act) including the Interstate Partners, provided, that the
Interstate Partners beneficially own a majority of the Company Voting Securities
beneficially owned by such group (the person in (i), (ii) and (iii) shall be
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individually and collectively referred to herein as, "Interstate Holders");
(iii) the consummation of a merger, consolidation, share
exchange or similar form of transaction involving the Company or any of its
subsidiaries, or the sale or other disposition of all or substantially all of
the Company's assets or the assets of the Mendik Division of the Operating
Partnership (a "Business Transaction"), unless immediately following such
Business Transaction (y) more than fifty percent (50%) of the total voting
power of the entity resulting from such Business Transaction or the entity
acquiring the Company's assets in such Business Transaction (the "Surviving
Corporation") is beneficially owned, directly or indirectly, by the Interstate
Holders or the Company's shareholders immediately prior to any such Business
Transaction, and (z) no person (other than the persons set forth in clauses (A),
(B), (C), or (F) of paragraph (ii) above or any tax-qualified, broad-based
employee benefit plan of the Surviving Corporation or its Affiliates)
beneficially owns, directly or indirectly, 30% or more of the total voting power
of the Surviving Corporation (a "Non-Qualifying Transaction"); or
(iv) Board approval of a liquidation or dissolution of the
Company, unless the voting common equity interests of an ongoing entity (other
than a liquidating trust) are beneficially owned, directly or indirectly, by the
Company's shareholders in substantially the same proportions as such
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<PAGE> 31
shareholders owned the Company's outstanding voting common equity interests
immediately prior to such liquidation and such ongoing entity assumes all
existing obligations of the Company to Executive under this Agreement, any
Cleaning Agreement, the Share Option Agreement, the Indemnification Agreement
and any other equity grants.
Part III - Disability.
For purposes of this Agreement, a termination due to Disability shall
mean a termination of Executive's employment by the Company, upon at least
thirty (30) days' prior written notice, to Executive if Executive is
substantially unable to perform Executive's duties as CEO of the Mendik
Division of the Company for a period of one hundred eighty (180) consecutive
days due to illness, physical or mental disability or other incapacity,
provided that Executive does not return to the substantial performance of his
duties on a full-time basis within thirty (30) days after receiving notice of
termination from the Company.
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EXHIBIT C
Arden-Esquire Realty Company
(689 Fifth Avenue and 1320-20 Merrick Blvd, Springfield Gardens, Queens)
Eleven Penn Plaza Company
E-M New York Properties L.P.
(100 Church Street)
Mendik Real Estate Limited Partnership
Mendik RELP Corp.
Two Park Company
909 Third Company
330 Madison Company
20 Broad Street Company
Broad 20 L.P.
Westport Office Company (55 Greens Farms Road, Westport, CT)
BMS Vail Limited Partnerships I and II
Silver Towers Associates
Great Neck Terrace Associates
M Newtown Associates
Mendik Realty Company, Inc.
Building Maintenance Service LLC
BMDG, Inc.
The Mendik Partnership, L.P.
Mendik Facilities Group, LLC
Guard Management Services Corp.
Building Maintenance Services Corp.
Chatby Associates
Jayby Associates
Melby Associates
Sonby Associates
11 West 42nd Street Associates
Wyby Associates
Stamford Ridgeway Associates
570 Seventh Avenue
521 Fifth Avenue
References to partnerships and other entities are also deemed to include
constituent partners or entities.
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 15th day of April, 1997, by and among Vornado Realty Trust, a Maryland
real estate investment trust (the "Company"), The Mendik Company, L.P., a
Delaware limited partnership (which intends to change its name to Vornado Realty
L.P.) (the "Operating Partnership"), and David R. Greenbaum (the "Executive").
WHEREAS, the Company serves as general partner of the Operating
Partnership and, through the Operating Partnership, is engaged in, among other
things, the acquisition, ownership, management, leasing, renovation and
redevelopment of commercial real estate in the United States;
WHEREAS, the Company, within the Company and through the Operating
Partnership, has formed the Mendik Division, which is engaged in the
acquisition, ownership, management, leasing, renovation and redevelopment of the
Company's office properties in Manhattan;
WHEREAS, the Company believes that it would benefit from the
application of Executive's particular and unique skill, experience, and
background to the management and operation of the Company, and wishes to employ
Executive as President of the Mendik Division of the Company and, as such,
manage the Mendik Division of the Operating Partnership on behalf of the Company
<PAGE> 2
(collectively the "Mendik Division" unless otherwise specifically indicated);
and
WHEREAS, the parties desire by this Agreement to set forth the terms
and conditions of the employment relationship between the Company and Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein set forth, and for other good and valuable consideration, the
Company, the Operating Partnership and Executive agree as follows:
1. Employment and Duties. The Company hereby hires Executive, and
Executive hereby agrees to be employed, as President of the Mendik Division of
the Company on the terms and conditions provided in this Agreement. If
reasonably requested by the Board of Trustees of the Company (the "Board"),
Executive shall also serve on the Board of Directors of subsidiaries of the
Company which are treated as part of the Mendik Division or as a senior officer
of such subsidiaries without additional compensation. Executive shall perform
the duties and responsibilities and have the authority commensurate with the
position of President in entities similar to the Mendik Division and shall
perform such other duties and responsibilities and have such additional
authority with regard to the Mendik Division, and incidental thereto with regard
to the Company, as may be prescribed by the Chief Executive Officer of the
Mendik Division, the Chief Executive Officer of the Company or the President of
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<PAGE> 3
the Company, provided that such other duties and responsibilities, and such
additional authority shall be consistent with his position as President of the
Mendik Division and further provided that any additional duties,
responsibilities and authority outside of the Mendik Division, or more than
incidental thereto with regard to the Company, shall be mutually agreed upon.
The duties and responsibilities of the Executive shall include, and Executive
(together with, in coordination with and subject to, the Chief Executive Officer
of the Mendik Division of the Company) shall have, full authority to conduct,
operate, and manage the business of the Mendik Division in a manner promoting
the best interests of the Company and its shareholders and the Mendik Division
of the Operating Company on behalf of the Company as general partner, in
accordance with the partnership agreement forming the Operating Partnership,
including the authority to execute contracts, hire, determine the compensation
of and discharge employees, and run all of the business affairs of the Mendik
Division within the scope of the business plan approved by the Board and/or the
Chief Executive Officer or President of the Company, but subject to the right of
the Company to require the specific approval of the Board, the Chief Executive
Officer of the Company or President of the Company with respect to entering into
material financing or property transactions. Executive shall cause to be
established reasonable operating procedures within the Mendik Division,
reasonably acceptable to the President of the Company, that will result in the
Executive being notified by the employees of the
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<PAGE> 4
Mendik Division of potentially conflicting lease negotiations among buildings
(i.e., buildings owned by the entities listed in Exhibit A and office buildings
in which the Company has an ownership or management interest, which may include
buildings owned by the entities listed in Exhibit A). Executive shall notify the
President of the Company of material potentially conflicting negotiations and
the President shall have the right to assume responsibility (directly or through
his designee) for negotiations of buildings owned by the Company in such
situations. Executive shall report to the Board, the Chief Executive Officer of
the Mendik Division and the Chief Executive Officer and President of the
Company. Executive shall devote substantially all of his working time and
attention during normal business hours (other than absence due to illness or
vacation) to the performance of his duties for the Company, subject to the other
provisions of this Section 1. Notwithstanding the foregoing, Executive shall be
permitted, to the extent such activities do not substantially interfere with the
performance by Executive of his duties and responsibilities hereunder or violate
Section 5 hereof, to (a) serve as an officer, employee, trustee, director and/or
general partner of any entity (or any successor thereto) that currently owns,
directly or indirectly, any property or entity listed in Exhibit A attached
hereto, provided that, for each such entity, Executive's activities are
primarily related to such properties, (b) conduct any activity permitted by
Section 5(a) hereof, (c) participate in any other business activities approved
in advance by the Board, (d) engage in
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<PAGE> 5
charitable, civic, fraternal, or trade group activities, or (e) otherwise manage
his and his family's personal, financial or legal affairs, including but not
limited to Building Maintenance Service LLC and interests of MIL Equities LLC
and similar family interests. Executive's duties shall include the delivery of
periodic certifications to the Company with respect to the effect of the Mendik
Division's activities on the Company's status as a real estate investment trust
for Federal income tax purposes. As a condition to Executive's entering into
this Agreement, the Company, the Operating Company and Executive are entering
into, or have previously entered into, an indemnification agreement hereof in
the form attached hereto as Exhibit B (the "Indemnification Agreement").
2. Compensation and Benefits. As compensation for performing the
services required by this Agreement, Executive shall be entitled to receive the
following compensation and benefits during the Employment Term:
2(a) Base Compensation. The Company shall pay to Executive an
aggregate annual salary ("Base Compensation") at a rate of $300,000 per annum,
payable in accordance with the Company's general policies and procedures for
payment of salaries to their executive personnel, but in no event less
frequently than monthly. Increases in Base Compensation, if any, shall be
determined by the compensation committee of the Board based on periodic reviews
of Executive's performance conducted no less frequently than annually. If
Executive's Base Compensation is
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<PAGE> 6
increased by the Company, such increased compensation shall then constitute the
Base Compensation for all purposes of this Agreement. Executive's Base
Compensation shall not be reduced during the term of this Agreement.
2(b) Incentive Compensation. In addition to Base Compensation,
Executive shall be entitled to participate, at a level commensurate with his
position, in any equity and/or incentive compensation programs in effect with
respect to senior executive officers of the Company (other than any plans or
arrangements provided solely for the Chief Executive Officer of the Company, the
President of the Company, any other officer of the Company on an individual
basis because of special circumstances, any individual(s) who become employed by
the Company pursuant to an acquisition (with regard to levels of programs or
arrangements committed to at such time), or to any individual(s) pursuant to an
agreement for a new hire (with regard to levels of programs or arrangements
committed to at such time)). In determining whether the amount of any future
share options or restricted share grants are in compliance with the prior
sentence, any share option grant made by the Company to Executive prior to or on
the date hereof, including those covered by the grants reflected in Exhibit C
hereto shall not be considered. Exhibit C hereto contain the grants of stock
options heretofore made to Executive.
2(c) Executive Benefits. During the term of this Agreement,
Executive shall have the right to participate in any
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<PAGE> 7
retirement, pension, insurance, health, or other benefit plan or program, fringe
benefit or other perquisite that generally is provided by the Company for other
senior executive officers of the Company (which shall not include plans,
programs, benefits or perquisites provided specifically for the benefit of the
Chief Executive Officer of the Company, the President of the Company, any other
officer of the Company on an individual basis because of special circumstances,
any individual(s) who become employed by the Company pursuant to an acquisition
(with regard to levels of programs or arrangements committed to at such time),
or to any individual(s) pursuant to an agreement for a new hire (with regard to
levels of programs or arrangements committed to at such time)). Without limiting
the foregoing, Executive shall be entitled to tax preparation and financial
planning assistance up to a maximum of $15,000 per calendar year, upon approval
by an insurance carrier, a $ 3 million five-year renewable term life insurance
policy and a long-term disability insurance coverage with benefits at a rate of
60% of Base Salary through age 65 and a criteria of comparable position and no
longer than a 180-day waiting period, which disability benefits would be
inclusive of any disability benefits paid under any group long-term disability
plan of the Company and noncontributory wrap-around medical and dental coverage
substantially similar to that which he now has.
2(d) Vacation and Leaves of Absence. Executive shall be
entitled to the normal and customary amount of paid vacation provided to the
Company's senior executives, but in no
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<PAGE> 8
event less than four (4) weeks annually, beginning on the date hereof. In
addition, Executive shall be entitled to the same sick leave and holidays
provided to other executive employees of the Company.
2(e) Expenses. Executive shall be entitled to receive
reimbursement for all reasonable and necessary travel and other expenses
incurred by him in connection with the performance of business-related duties
for the Company, upon the presentation of reasonably itemized statements of such
expenses in accordance with the Company's policies and procedures.
2(f) Services. The Company shall furnish Executive with office
space, stenographic and secretarial assistance and such other facilities and
services comparable to those which he now has. The Executive shall be initially
located at his current offices, which shall be the corporate offices of the
Mendik Division.
2(g) Company Loans. During the Employment Term, upon the
written request of Executive, the Company shall disburse to Executive (i) at any
time, one or more loans in an aggregate principal amount of up to $5,000,000,
(ii) following April 30, 1998, one or more loans in an aggregate principal
amount of up to $2,500,000 and (iii) following April 30, 1999, one or more loans
in an aggregate principal amount of up to $2,500,000, for a potential aggregate
loan amount of up to $10,000,000, which at the time any loan is taken shall not
individually, or in the
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<PAGE> 9
aggregate with then outstanding loans, exceed one-third (1/3) of the value of
the Units (based on the value of the Common Shares of the Company). Each of such
loans shall be on a revolving principal basis subject to the following terms and
conditions: (i) each loan must be in an amount of at least $500,000; (ii) each
loan shall be fully recourse to Executive and shall be fully secured by a pledge
of all or a portion of his units of partnership interest in the Operating
Partnership ("Units"); (iii) each loan shall be subject to interest at the
applicable Federal rate under Section 1274(d) of the Internal Revenue Code of
1986, as amended (the "Code"), on the date the loan is made; (iv) the interest
on each loan shall be paid quarterly as set forth in the agreements evidencing
such loans (the intent of which will be to approximate the timing of the
quarterly distributions on the Units) and the quarterly distributions made
pursuant to the Units shall be applied by the Company to the extent necessary to
satisfy the next following quarterly interest payment as of the date of such
quarterly distribution, and Executive shall pay any remaining interest owed on
the loan, if any, after such application of the distributions; and (v) the
principal amount of each loan will be due and payable upon the first to occur of
(A) thirty (30) days after a termination of employment by the Company or by the
Executive for any reason (other than for Cause), (B) a termination of employment
for Cause, (C) the end of the Employment Term upon a failure to extend the
Employment Term, or (D) the fifth anniversary of the date the loan is made;
provided, that if the aggregate principal
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<PAGE> 10
amount of outstanding loans ever exceeds fifty percent (50%) of the value of the
Units (based on the value of Common Shares of the Company), such excess shall be
due and payable within sixty (60) days thereafter. Executive shall not be
required to pledge or otherwise hypothecate or encumber any of Executive's
personal assets in connection with any loan other than the Units as described
above. The payment of the value of the Units upon redemption shall be offset by
any due and payable loan amounts under this Section 2(g), and the Company may
require in the loan documents that, if a loan becomes due and payable (other
than as a result of exceeding the fifty percent (50%) limit) and is not paid
within ninety (90) days of such due date, Executive agrees, if requested by the
Company, to promptly redeem adequate Units to repay such loan and to promptly
provide proceeds of such redemption to the Company in repayment of such loan.
The agreements evidencing each loan shall contain such additional terms and
conditions as are reasonably acceptable to the Executive in good faith.
3. Term. The term of employment under this Agreement (the "Employment
Term") shall commence on the date hereof (the "Commencement Date") and shall
continue through April 30, 2000; provided, that, the Employment Term shall
automatically be extended commencing on April 30, 2000 for successive additional
one (1) year periods unless either party gives written notice not to extend the
Employment Term not less than ninety (90) days prior to the then next upcoming
expiration date. The Employment
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<PAGE> 11
Term may be sooner terminated by either party in accordance with Section 4 of
this Agreement.
4. Termination and Termination Benefits. The termination of Executive's
employment during the Employment Term by Executive or the Company shall not be
treated as a breach of this Agreement.
4(a) Termination by the Company Without Cause. The Company may
terminate the Employment Term and Executive's employment hereunder without
"Cause" upon written notice to Executive. For purposes of this Section 4(a), a
termination of the Employment Term by the Company without Cause shall include
any termination or nonextension by the Company pursuant to a written notice
under Section 3 above (other than a termination for Cause as defined in Section
4(b) below).
4(b) Termination by the Company for Cause. Subject to the
following paragraph, the Company may terminate the Employment Term and
Executive's employment hereunder for "Cause" upon written notice to Executive.
For purposes of this Section 4(b), a termination for Cause shall only mean a
termination as a result of (i) Executive's willful misconduct with regard to the
Company or its subsidiaries (within the meaning of Section 424(f) of the Code (a
"Subsidiary") that is materially economically injurious to the Company or to the
Mendik Division, provided that in no event will willful misconduct include the
exceptions to noncompetition set forth in Section 5(a) hereof (but, the
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<PAGE> 12
foregoing proviso does not permit Executive's willful misconduct that is beyond
the scope of what is reasonably necessary to satisfy or perform the Section 5(a)
exceptions), (ii) Executive's conviction of, or plea of guilty or nolo
contendere to, a felony (other than a traffic violation), (iii) Executive's
willful and continued failure to use reasonable business efforts to attempt to
substantially perform his duties hereunder (other than such failure resulting
from Executive's incapacity due to a physical or mental illness or subsequent to
the issuance of a notice of termination by Executive for Good Reason) after
demand for substantial performance is delivered by the Company in writing that
specifically identifies the manner in which the Company believes Executive has
not used reasonable business efforts to attempt to substantially perform his
duties or (iv) Executive's willful breach of Section 5 hereof that is materially
economically injurious either to the Company or the Mendik Division.
For purposes of this Section 4(b), in addition to the other legal
requirements to be "willful," no act, or failure to act, by Executive shall be
considered "willful" unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of the Company. In
addition, no action or inaction shall give rise to a right of the Company to
terminate this Agreement and Executive's employment hereunder for Cause pursuant
to the preceding paragraph unless and until the Company has delivered to
Executive a copy of a
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<PAGE> 13
resolution duly adopted by a majority of the Board (excluding Executive, if he
is a member of the Board) at a meeting of the Board called and held for such
purpose (after reasonable (but in no event less than thirty (30) days) notice to
Executive and an opportunity for Executive, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of any conduct set forth in the preceding paragraph and
specifying the particulars thereof in detail. This Section 4(b) shall not
prevent Executive from challenging in any court of competent jurisdiction the
Board's determination that Cause exists or that Executive has failed to cure any
act (or failure to act) that purportedly formed the basis for the Board's
determination.
4(c) Termination by the Company Due to Disability. If, due to
illness, physical or mental disability, or other incapacity, Executive is
substantially unable, for one hundred and eighty (180) consecutive days, to
perform his duties hereunder, the Company may terminate the Employment Term and
his Employment hereunder upon at least thirty (30) days' prior written notice to
Executive given after the one hundred eighty (180) days, and provided the
Executive does not return to the substantial performance of his duties on a
full-time basis within such thirty (30) day period.
4(d) Termination by Executive With Good Reason. Subject to the
following paragraph, Executive may terminate the Employment Term and his
employment hereunder for "Good Reason"
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<PAGE> 14
upon written notice to the Company. For purposes of this Section 4(d), a
termination for Good Reason shall mean a termination as a result of (unless
otherwise consented to in writing by Executive) (i) the failure to appoint
Executive to the positions set forth in Section 1, the assignment to Executive,
without his consent, of more than incidental duties outside of the Mendik
Division, the alteration of the duties, responsibilities and authority of
Executive as set forth in Section 1 in a manner that is materially and adversely
inconsistent with such duties, responsibilities or authority or a change to
Executive's position or title; (ii) a failure by the Company to pay when due any
amounts due under Section 2 hereof or any other earned and due compensation to
Executive or to substantially provide any benefit set forth in Section 2; (iii)
the relocation of the Mendik Division's principal executive offices to a
location other than Manhattan, New York City or relocation of Executive's own
office location from that of the principal offices; (iv) any purported
termination of Executive's employment for Cause which is not effected pursuant
to the procedures of Section 4(b) (and for purposes of this Agreement, no such
purported termination shall be effective); (v) the Company's material breach of
any material term contained in this Agreement or the grant set forth in Exhibit
C or to provide, in all material respects, the indemnification set forth in the
Indemnification Agreement; (vi) the performance, directly or indirectly, of
management, leasing, redevelopment or similar services with respect to any
commercial office property in Manhattan in which the Company has a direct or
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indirect interest, other than through the Mendik Division (except that the
foregoing shall not apply to properties currently owned or hereafter acquired by
the Company where there is a preexisting management or leasing agreement in
place, provided that the Mendik Division shall have general oversight over such
management or leasing operations on behalf of the Operating Partnership); (vii)
a Change in Control (as defined below); (viii) a material breach by the Company
or its Subsidiaries of the Master Property Services Agreement (wholly owned
properties) dated as of the same date hereof or the Master Property Services
Agreement (partially owned properties) dated as of the same date hereof or any
of the service agreements contemplated by either such agreement (the "Cleaning
Agreements"); (ix) if Bernard H. Mendik ("Mr. Mendik") is not the Chief
Executive Officer or Chairman of the Mendik Division of the Company, the
appointment of an individual other than Executive as either Chief Executive
Officer or Chairman of the Mendik Division of the Company, as the case may be,
other than an appointment for the period which Executive is unable to perform
due to physical or mental illness or Executive's termination for Cause; (x) any
requirement that Executive report to anyone other than the Board, the President
of the Company, the Chief Executive Officer of the Company or the Chief
Executive Officer of the Mendik Division; or (xi) the removal or failure to
elect Mr. Mendik as a director of the Company at any time prior to April 30,
2003, other than as a result of Mr. Mendik's (A) consent to such action, (B)
termination that would be a termination for Disability or for Cause within the
meaning of Mr.
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Mendik's Noncompetition Agreement with the Company, (C) total and permanent
disability in a manner that would prevent him from functioning as a director,
(D) death or (E) voluntary retirement; provided that if simultaneously with such
removal, Executive is elected to the Board, a Good Reason event shall not be
deemed to have occurred unless Executive is subsequently removed as a director
of the Company at any time prior to April 30, 2003, other than as a result of
Executive's (A) consent to such action, (B) physical or mental illness, (C)
action or inaction which would constitute Cause within the meaning of Section
4(b) hereof, (D) death or (E) voluntary retirement. Executive's right to
terminate his employment hereunder for Good Reason shall not be affected by his
incapacity due to physical or mental illness.
For purposes of this Section 4(d), no action or inaction shall give
rise to the right of Executive to terminate the Employment Term and Executive's
employment hereunder for Good Reason unless a written notice is given by
Executive to the Company within one hundred twenty (120) days after Executive
has actual knowledge of the occurrence of the event giving rise to Executive's
right to terminate pursuant to this Section 4(d), and such event has not been
cured within thirty (30) days after such notice. Executive's continued
employment during the one hundred and twenty (120) day period referred to above
in this Section 4(d) shall not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good Reason hereunder.
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For purposes of this Section 4(d), "Change in Control" shall mean the
occurrence of any one of the following:
(i) individuals who, on the Commencement Date, constitute the Board
(the "Incumbent Trustees") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a trustee subsequent to
the Commencement Date whose election or nomination for election was approved by
a vote of at least two-thirds of the Incumbent Trustees then on the Board
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for trustee, without objection to
such nomination) shall be an Incumbent Trustee, provided, however, that no
individual initially elected or nominated as a trustee of the Company as a
result of an actual or threatened election contest with respect to trustees or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be an Incumbent Trustee.
(ii) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after the Commencement
Date, a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities eligible
to vote for the election of the Board (the "Company Voting Securities"),
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provided, however, that an event described in this paragraph (ii) shall not be
deemed to be a Change in Control if any of the following becomes such a
beneficial owner: (A) the Company or any majority-owned subsidiary (provided,
that this exclusion applies solely to the ownership levels of the Company or the
majority-owned subsidiary), (B) any tax-qualified, broad-based employee benefit
plan sponsored or maintained by the Company or any majority-owned subsidiary,
(C) any underwriter temporarily holding securities pursuant to an offering of
such securities, (D) any person pursuant to a Non-Qualifying Transaction (as
defined in paragraph (iii)), (E) Executive or any group of persons including
Executive (or any entity controlled by Executive or any group of persons
including Executive) or (F)(i) any of the partners (as of the Commencement Date)
in Interstate Properties ("Interstate") including immediate family members and
family trusts or family-only partnerships and any charitable foundations of such
partners (the "Interstate Partners"), (ii) any entities the majority of the
voting interests of which are beneficially owned by the Interstate Partners, or
(iii) any "group" (as described in Rule 13d-5(b)(i) under the Exchange Act)
including the Interstate Partners, provided, that the Interstate Partners
beneficially owns a majority of the Company Voting Securities beneficially owned
by such group (the persons in (i), (ii) and (iii) shall be individually and
collectively referred to herein as, "Interstate Holders");
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(iii) the consummation of a merger, consolidation, share
exchange or similar form of transaction involving the Company or any of its
Subsidiaries, or the sale or other disposition of all or substantially all of
the Company's assets or the assets of the Mendik Division of the Operating
Partnership (a "Business Transaction"), unless immediately following such
Business Transaction (y) more than fifty percent (50%) of the total voting power
of the entity resulting from such Business Transaction or the entity acquiring
the Company's assets or the assets of the Mendik Division of the Operating
Partnership in such Business Transaction (the "Surviving Corporation") is
beneficially owned, directly or indirectly, by the Interstate Holders or the
Company's shareholders immediately prior to any such Business Transaction, and
(z) no person (other than the persons set forth in clauses (A), (B), (C), or (F)
of paragraph (ii) above or any tax-qualified, broad-based employee benefit plan
of the Surviving Corporation or its Affiliates) beneficially owns, directly or
indirectly, 30% or more of the total voting power of the Surviving Corporation
(a "Non-Qualifying Transaction"); or
(iv) Board approval of a liquidation or dissolution of the
Company, unless the voting common equity interests of an ongoing entity (other
than a liquidating trust) are beneficially owned, directly or indirectly, by the
Company's shareholders in substantially the same proportions as such
shareholders owned the Company's outstanding voting common equity
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interests immediately prior to such liquidation and such ongoing entity assumes
all existing obligations of the Company under this Agreement, any Cleaning
Agreement, the Indemnification Agreement and any equity grant.
4(e) Termination by Executive Other Than Pursuant to Section
4(d). Executive may terminate this Agreement and Executive's employment
hereunder at any time for any reason upon ninety (90) days' prior written notice
to the Company.
4(f) Death Benefit. Notwithstanding any other provision of
this Agreement, the Employment Term shall terminate on the date of Executive's
death. In such event, (i) Executive's estate shall be paid the amount specified
in Section 4(g)(i) below and one (1) times Executive's annual rate of Base
Salary and (ii) the Company shall provide Executive's spouse and dependents with
welfare benefits as provided in Section 4(g)(ii) for one (1) year from the date
of death.
4(g) Termination Compensation. Upon the termination of the
Employment Term and Executive's employment hereunder (including any nonextension
of the Employment Term), the Company shall provide Executive with the payments
and benefits set forth below. Executive acknowledges and agrees that the
payments and benefits set forth in this Section and elsewhere herein and in
other written grants and agreements constitute liquidated damages for
termination of his employment hereunder (including any nonextension of the
Employment Term).
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(i) Upon a termination of the Employment Term and Executive's
employment hereunder, Executive shall be entitled to promptly receive (A) his
Base Compensation through the effective date of termination, (B) if such
termination is other than pursuant to Section 4(b) hereof, any annual earned
bonus for any completed fiscal year, (C) if such termination is pursuant to
Sections 4(a), 4(c) or 4(d) hereof, a pro rata share of Executive's annual
target bonus for the fiscal year of termination, (D) the benefits, fringes and
perquisites, including without limitation accrued vacation (provided that if the
termination is pursuant to Section 4(b) or 4(e) hereof, only such payment of
accrued vacation as is required by law or the Company's vacation policy),
provided pursuant to Section 2 hereof up to the effective date of such
termination and (E) any other amount due to Executive under any other program or
plan of the Company.
(ii) In the event of a termination of the Employment Term and
Executive's employment pursuant to Section 4(a) (such reference shall include,
without limitation, a nonextension by the Company pursuant to the terms of
Section 3 hereof) or 4(d) hereof, Executive shall also be entitled to receive an
amount (the "Severance Amount") equal to the sum of (x) three times Executive's
annualized Base Compensation (as in effect on the date of such termination or,
if greater, immediately prior to the Good Reason event, if any, based on which
the termination of employment occurs) and (y) three times
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<PAGE> 22
Executive's Bonus Severance Amount (as defined herein). The "Bonus Severance
Amount" shall mean an amount equal to the average of all annual bonuses earned
by the Executive from the Company in the two (2) fiscal years ending immediately
prior to Executive's termination; provided, however, that if Executive's
termination occurs prior to the end of fiscal 1997, the "Bonus Severance Amount"
shall mean an amount equal to Executive's annual target bonus for 1997 and if it
occurs during fiscal 1998, the "Bonus Severance Amount" shall be the higher of
Executive's annual bonus amount for the 1997 fiscal year or Executive's annual
target bonus for 1998. The Severance Amount shall be payable in a lump sum
within thirty (30) days of such termination. In the event of a termination
pursuant to Section 4(a), 4(c) or 4(d) hereof, Executive (his spouse and his
dependents, if applicable) shall also be entitled to continue to participate in
the medical, dental, hospitalization and life insurance programs existing on the
date of termination (or any replacement plans for any such plans) with regard to
senior executive officers of a similar level and in the noncontributory
wrap-around medical and dental plan referred to in Section 2(c) (or their cash
equivalents, and, if the Company provides a cash payment in lieu of such
benefits, it shall be calculated on a grossed-up tax basis as if Executive had
remained an employee) for three (3) years from the date of termination;
provided, that Executive shall be obligated to make all employee contributions
required to receive such benefits under the Company's programs (other than the
noncontributory wrap-around medical and dental
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arrangements) and that such continued benefits shall terminate on the date or
dates Executive receives equivalent coverage and benefits, without waiting
period or pre-existing conditions limitations, under the plans and programs of a
subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage or benefit-by-benefit, basis). Executive shall not be
entitled to any compensation or benefits pursuant to this Section 4(g)(ii) if
his employment hereunder is terminated pursuant to Section 4(b) or as a result
of Executive's voluntary termination pursuant to Section 4(e).
(iii) Executive shall have such rights under the Company's
Omnibus Share Plan or any other benefit plan, and any agreements entered into in
connection therewith, in accordance with the terms of such plans, grants
thereunder and agreements.
4(h) No Mitigation. All amounts due hereunder shall be paid
without any obligation to mitigate and such amounts shall not be reduced by or
offset by any other amounts earned by Executive or any claims of the Company
other than that the Company may set off any principal and interest then due and
payable with regard to the loan grants pursuant to Section 2(g).
5. Noncompetition.
5(a) Noncompetition. During the Employment Term and for a
period of one (1) year thereafter (other than if the Employment Term ends as a
result of a termination pursuant to
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<PAGE> 24
Section 4(a), 4(c), or 4(d) hereof), Executive shall not engage in any way,
directly or indirectly, in the acquisition, operation, development, management,
leasing or disposition of any primarily commercial office real estate property
(mixed properties being determined primarily commercial office real estate
property or other by the relative square footage of each) or any improvements
thereof located in the Restricted Area (as defined below), other than in his
capacity as an employee, director, trustee, officer or equity owner of the
Company; provided, however, that this Section 5(a) shall not apply to (i)
Executive's activities with respect to any property listed in Exhibit A attached
hereto, provided that such activities are reasonably necessary to avoid a breach
of Executive's or the general partner's fiduciary or other duty to the owner or
other owners of such property (Executive agrees that the activities prohibited
by Section 5(c) are not reasonably necessary to avoid a breach of such duties),
(ii) the acquisition, operation, development, management, leasing or disposition
of any property by any entity in which Executive owns or acquires an equity
interest as a minority passive investor (including, but not limited to as a
limited partner or a non-operating member of a limited liability company, but
not including as a general partner) having no managerial or similar role with
respect to such property, (iii) Executive's or his spouse's or issue's
acquisition of any property or any interest in any property by inheritance, (iv)
advice and other limited assistance with regard to his spouse's and her family's
effectively passive interests in
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<PAGE> 25
real estate investments (including but not limited to MIL Equities) or his
spouse's effectively passive interests in real estate investments managed,
directly or indirectly, by her brother-in-law and his partners or (v)
Executive's performance of management company services for other entities while
employed by the Company which performance by Executive is authorized by an
agreement between the Company and such other entity or between the Company and
Executive. For purposes of this Agreement, the "Restricted Area" is any location
within fifty (50) miles of any commercial office building managed by the Mendik
Management Company, Inc. at the time of any action by Executive during the
Employment Term or at the date of Executive's termination of employment in the
event of any action by Executive following his termination of employment.
5(b) Reasonable and Necessary Restrictions. Executive
acknowledges that the restrictions, prohibitions and other provisions of this
Section 5 are reasonable, fair and equitable in scope, terms and duration, are
necessary to protect the legitimate business interests of the Company, and are a
material inducement to the Company to enter into this Agreement.
5(c) Non-Solicitation. Executive agrees that during the
Employment Term (i) and for a period of two (2) years following the date of
termination of Executive's employment hereunder, Executive will not solicit any
of the Company's or its affiliate's (within the meaning of Rule 12(b)-2 of the
Securities Exchange Act of 1934, but only if in addition such entity would
25
<PAGE> 26
be classified as a parent or subsidiary of the Company or of a parent, all
within the meaning of Section 424(e) or Section 424(f) of the Code, if twenty
five percent (25%) were substituted for fifty percent (50%) therein) (an
"Affiliate") non-clerical employees, agents or independent contractors to end
their relationship with the Company or its Affiliates, provided that the
provision of this Section 5(c) shall not apply to the giving of references (ii)
and for a period of one (1) year following the termination of Executive's
employment hereunder, Executive will not pursue or attempt to develop or to
direct to any other entity any project known to Executive which the Company is
or was pursuing, developing or attempting to develop during the Employment Term
or interfere or otherwise compete (other than in connection with performing
services for the Company or its Subsidiaries with regard to other properties
managed by the Company or its Subsidiaries or for other management companies
where Executive is performing services with the consent of the Company) with
active lease negotiations of the Mendik Division which the Executive is or was
actively involved in conducting or strategizing on behalf of the Company or its
Subsidiaries (in each case, a "Project"), unless such Project has been inactive
for over nine (9) months. Notwithstanding the foregoing, in the event of a
Change in Control and the Executive's employment terminating within one hundred
twenty (120) days thereafter, the determination of projects being "pursued,
developed or attempted to be developed" shall be limited to projects the Company
was pursuing, developing or attempting to develop prior to the Change
26
<PAGE> 27
in Control plus any project that Executive becomes materially involved in on
behalf of the Company after the Change in Control.
5(d) Confidential Information. Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets and
confidential information, knowledge or data relating to the Company and its
business and investments, which shall have been obtained by Executive during
Executive's employment by the Company and which is not generally available
public knowledge (other than by acts by Executive in violation of this
Agreement). Except as the Executive in good faith believes may be required,
appropriate or desirable in connection with his carrying out his duties under
this Agreement, Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or any legal process, or as is
necessary in connection with any adversarial proceeding against the Company (in
which case Executive shall cooperate with the Company, at the Company's expense,
in the Company seeking to obtain a protective order against disclosure by a
court of competent jurisdiction), communicate or divulge any such trade secrets,
information, knowledge or data to anyone other than the Company and those
designated by the Company or on behalf of the Company in furtherance of its
business or to perform duties hereunder.
5(e) Removal of Documents. All records, files, drawings,
documents, models, equipment, and the like relating to the Company's business,
which Executive has control over shall
27
<PAGE> 28
not be removed from the Company's premises without its written consent, unless
such removal is in the furtherance of the Company's business or is in connection
with Executive's carrying out his duties under this Agreement and, if so
removed, shall be returned to the Company promptly after termination of
Executive's employment hereunder, or otherwise promptly after removal if such
removal occurs following termination of employment. Executive's rolodex,
telephone directory and similar type items, and furniture, art work and property
owned by Executive or otherwise not owned by the Company shall not be deemed
Company property and shall not be covered by this Section 5(e). The Company
shall be the owner of all trade secrets and other products relating to the
Company's business developed by Executive alone or in conjunction with others as
part of his employment with the Company.
5(f) Specific Performance. Executive acknowledges that the
Company likely will have no adequate remedy at law if Executive shall fail to
perform any of his obligations hereunder, and the Executive therefore confirms
that the right of the Company to specific performance of the terms of this
Section 5 is essential to protect the rights and interests of the Company.
Accordingly, in addition to any other remedies that the Company may have at law
or in equity, the Company shall have the right to have all obligations,
agreements and other provisions of this Section 5 specifically performed by
Executive, and the Company shall have the right to obtain preliminary injunctive
relief to
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<PAGE> 29
secure specific performance and to prevent a breach of this Section 5 by
Executive.
6. Miscellaneous.
6(a) Integration; Amendment. This Agreement supersedes and
renders of no force and effect all prior understandings and agreements with
respect to the matters set forth herein. No amendments or additions to this
Agreement shall be binding unless in writing and signed by all of the parties.
6(b) Assignment. No rights or obligations of the Company under
this Agreement may be assigned or transferred, except in connection with a
merger, consolidation or sale of all or substantially all of the assets of the
Company or the Mendik Division, where the Company's successor expressly assumes
and agrees to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place, provided that the foregoing assignment shall not serve as a release of
the Company. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets or the
Mendik Division's business and/or assets, as the case may be, which executes and
delivers the agreement provided for in this Section 6(b) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law, and any assignment in accordance with the first sentence of this Section
6(b) shall not be deemed a termination without Cause by the
29
<PAGE> 30
Company. Executive may not assign this Agreement or any right or interest
therein, whether by operation of law or otherwise, without the prior written
consent of the Company, provided that Executive may name a beneficiary in the
event of his death of any amounts due to him hereunder.
6(c) Severability. If any provision of this Agreement shall be
deemed invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed and enforced as if it had never contained such invalid or
unenforceable provision. In addition, in place of such invalid or unenforceable
provision, there shall automatically be added hereto a provision as similar to
such invalid or unenforceable provision as may be possible and still be valid
and enforceable.
6(d) Waivers. The failure or delay of any party at any time to
require performance by any other party of any provision of this Agreement, even
if known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power, or remedy hereunder, and any
waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy under this Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to other or further notice or demand in
similar or other circumstances.
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<PAGE> 31
6(e) Power and Authority. The Company represents and warrants
to Executive that it has the requisite corporate power to enter into this
Agreement and its obligations hereunder; that the execution, delivery and
performance of this Agreement by it has been duly authorized by all appropriate
partnership or corporate action, as applicable; and that this Agreement
represents a valid and legally binding obligation with respect to it and its
enforceable against it in accordance with its terms.
6(f) Burden and Benefit. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and, subject to
Section 6(b) above, assigns. In the event of the death of Executive at or after
his termination, any amounts due hereunder shall be paid to his Estate unless he
has designated a beneficiary.
6(g) Legal Fees and Expenses. If any contest or dispute shall
arise between the Company and Executive regarding any provision of this
Agreement, the Indemnification Agreement or any equity grant or other agreement
or compensation arrangement specifically set forth or provided for herein, the
Company shall reimburse Executive for all legal fees and expenses reasonably
incurred by Executive in connection with such contest or dispute, but only if
Executive is successful in respect of substantially all of Executive's claims
brought and pursued in connection with such contest or dispute. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or
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<PAGE> 32
dispute (whether or not appealed) to the extent the Company receives reasonable
written evidence of such fees and expenses.
6(h) Governing Law; Headings. This Agreement and its
construction, performance, and enforceability shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to provisions of conflict of laws. Headings and titles herein are included
solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
6(i) Notices. All notices called for under this Agreement
shall be in writing and shall be deemed to be sufficient if contained in a
written instrument delivered (i) in person, (ii) by first class registered or
certified mail, postage prepaid and return receipt requested, (iii) by overnight
delivery by a recognized courier service providing a receipt, or (iv) by
facsimile transmission confirmed by transmission report, addressed to the
intended recipient at the address set forth on the signature page hereof (or at
such other address for a party as shall be specified by like notice). Any notice
delivered to the party hereto to whom it is addressed shall be deemed to have
been given on the day it was received; provided, however, that if such day is
not a business day, then the notice shall be deemed to have been given and
received on the business day next following such day. If the other party is
aware that the intended recipient is not at the notice location, either
permanently or temporarily, notice also shall be sent to such
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<PAGE> 33
location as the notifying party becomes aware (after reasonable inquiry) that
the intended recipient is then located.
6(j) Counterparts. This Agreement may be executed in one or
more counterparts, each of which counterparts shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
6(k) Joint and Several. The Company and the Operating
Partnership shall be jointly and severally liable for all liabilities and
obligations of each other hereunder or in connection herewith.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement, or
caused this Agreement to be duly executed on their behalf, as of the date first
above written.
VORNADO REALTY TRUST
By: /s/ Joseph Macnow
-----------------------------------
Name: Joseph Macnow
Title: Vice President
Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
THE MENDIK COMPANY, L.P.
By: Vornado Realty Trust,
a general partner
By: /s/ Joseph Macnow
------------------------------
Name: Joseph Macnow
Title: Vice President
Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
EXECUTIVE:
/s/ David R. Greenbaum
----------------------------------------
David R. Greenbaum
330 Madison Avenue
New York, New York 10017
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EXHIBIT A
Arden-Esquire Realty Company
(689 Fifth Avenue and 1320-20 Merrick Blvd, Springfield
Gardens, Queens)
Eleven Penn Plaza Company
E-M New York Properties L.P.
(100 Church Street)
Mendik Real Estate Limited Partnership
Mendik RELP Corp.
Two Park Company
909 Third Company
330 Madison Company
20 Broad Street Company
Broad 20 L.P.
Westport Office Company (55 Greens Farms Road,Westport, CT)
BMS Vail Limited Partnerships I and II
Silver Towers Associates
Great Neck Terrace Associates
M Newtown Associates
Mendik Realty Company, Inc.
Building Maintenance Service LLC
BMDG, Inc.
The Mendik Partnership, L.P.
Mendik Facilities Group, LLP
Guard Management Services Corp.
Building Maintenance Service Corp.
Chatby Associates
Jayby Associates
Melby Associates
Sonby Associates
11 West 42nd Street Associates
Wyby Associates
Stamford Ridgeway Associates
570 Seventh Avenue
521 Fifth Avenue
References to partnerships and other entities are also deemed to include
constituent partners or entities.
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EXHIBIT B
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into as of the day of 1997, by and between Vornado Realty Trust, a Maryland real
estate investment trust (the "Company") and David R. Greenbaum (the
"Executive").
WHEREAS, Executive has agreed to serve, at the request of the Company
as an executive and officer of the Company and, if elected, a director of the
Company; and
WHEREAS, Executive is willing to serve on behalf of the Company on the
condition that he be indemnified as set forth herein.
NOW, THEREFORE, in consideration of Executive's agreement to serve the
Company as set forth above, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
1. General. The Company agrees that if Executive is made a party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that Executive is or was a trustee, director, officer or employee of the
Company or any subsidiary or division of the Company or is or was serving at the
request of the Company or any subsidiary or
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division of the Company as a trustee, fiduciary, director, officer, member,
employee or agent of another corporation or a partnership, joint venture, trust
or other enterprise, including, without limitation, service with respect to
employee benefit plans, whether or not the basis of such Proceeding is alleged
action in an official capacity as a trustee, fiduciary, director, officer,
member, employee or agent while serving as a trustee, fiduciary, director,
officer, member, employee or agent, Executive shall be indemnified and held
harmless by the Company to the fullest extent authorized by the law of the State
of Maryland, as the same exists or may hereafter be amended, against all
Expenses incurred or suffered by Executive in connection therewith, and such
indemnification shall continue as to Executive even if Executive has ceased to
be an officer, director, trustee, fiduciary or agent, or is no longer employed
by the Company and shall inure to the benefit of his heirs, executors and
administrators. The indemnification hereunder shall not extend to cover any
Expenses arising out of (i) Executive's activities prior to the date hereof or
(ii) Executive's actions after the date hereof to the extent such actions are
with respect to matters that are covered by the indemnification obligations of
FW/Mendik REIT, L.L.C. and certain of its affiliates under the indemnification
agreement attached to the Merger Agreement as Exhibit R.
2. Expenses. As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, losses,
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judgments, liabilities, fines, penalties, excise taxes, settlements, and costs,
attorneys' fees, accountants' fees, and disbursements and costs of attachment or
similar bonds, investigations and any expenses of establishing a right to
indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement is not paid
by the Company or on its behalf, within thirty (30) days after a written claim
or request has been received by the Company, Executive may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, Executive shall be
entitled to be paid also the expenses of prosecuting such suit. All obligations
for indemnification hereunder shall be subject to, and paid in accordance with,
the laws of the State of Maryland.
4. Partial Indemnification. If Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not however, for the total amount thereof, the
Company shall nevertheless indemnify Executive for the portion of such Expenses
to which Executive is entitled.
5. Advances of Expenses. Expenses incurred by Executive in connection
with any Proceeding shall be paid by the Company in advance upon request of
Executive that the Company pay such Expenses; but, only in the event that
Executive shall have
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delivered in writing to the Company (i) an undertaking to reimburse the Company
for Expenses with respect to which Executive is not entitled to indemnification
and (ii) an affirmation of his good faith belief that the standard of conduct
necessary for indemnification by the Company has been met.
6. Notice of Claim. Executive shall give to the Company notice of any
claim against him for which indemnification will or could be sought under this
Agreement at the address set forth on the signature page of this Agreement (or
such other address as provided by notice given as aforesaid). In addition,
Executive shall give the Company such information and cooperation as it may
reasonably require and as shall be within Executive's power and at such times
and places as are convenient for Executive.
7. Defense of Claim. With respect to any Proceeding as to which
Executive notifies the Company of the commencement thereof:
(a) The Company will be entitled to participate at its own
expense; and
(b) Except as otherwise provided below, to the extent that it
may wish, the Company will be entitled to assume the defense thereof,
with counsel reasonably satisfactory to Executive, which the Company's
sole discretion may be regular counsel to the Company and may be
counsel to other officers and directors of the Company or any
subsidiary. Executive also shall have the right to
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employ his own counsel in such action, suit or proceeding if he
reasonably concludes that failure to do so would involve a conflict of
interest between the Company and Executive, and under such
circumstances the fees and expenses of such counsel shall be at the
expense of the Company.
(c) The Company shall not be liable to indemnify Executive
under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty
or limitation on Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold or delay their
consent to any proposed settlement.
8. Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final disposition
conferred in this Agreement shall not be exclusive of any other right which
Executive may have or hereafter may acquire under any statute, provision of the
declaration of trust or certificate of incorporation or by-laws of the Company
or any subsidiary or any agreement, vote of shareholder or disinterested
directors or trustees or otherwise. In particular, Executive shall be a third
party beneficiary of the indemnity provided in Section 7.7 of the Partnership
Agreement creating The Mendik Company, L.P., a Delaware limited partnership (the
"Mendik Company").
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9. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns (including any direct or indirect successor by merger or
consolidation), heirs, executors and administrators.
10. Governing Law. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed, and governed by and in accordance
with the laws of the State of Maryland, except for the last sentence of Section
8 which shall be construed under the law that applies to the Partnership
Agreement forming The Mendik Company.
11. Amendment. No Amendments or additions to that Agreement shall be
binding unless in writing and signed by all of the parties.
12. Waiver of Breach. The failure or delay of either party at any time
to require performance by the other party of any provision of this Agreement,
even if known, shall not affect the right of such party to require performance
of that provision or to exercise any right, power, or remedy hereunder, and any
waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy under this Agreement. No notice to or demand on any party in any case
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shall, of itself, entitle such party to other or further notice or demand in
similar or other circumstances.
13. Severability. The Company and Executive agree that the agreements
and provisions contained in this Agreement are severable and divisible, that
each such agreement and provision does not depend upon any other provision or
agreement for its enforceability, and that each such agreement and provision set
forth herein constitutes an enforceable obligation between the Company and
Executive. Consequently, the parties hereto agree that neither the invalidity
nor the unenforceability of any provision of this Agreement shall affect the
other provisions hereof, and this Agreement shall remain in full force and
effect and be construed in all respects as if such invalid or unenforceable
provision were omitted.
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IN WITNESS WHEREOF, the parties hereto have entered into this agreement
as of the date first above written.
EXECUTIVE:
-----------------------------------
David R. Greenbaum
[CORPORATE SEAL] VORNADO REALTY TRUST
By:
-------------------------
Name: Joseph Macnow
Title: Vice President
Agreed as to the last
sentence of Section 8:
The Mendik Company, L.P., a Delaware limited partnership, which intends to
change its name to Vornado Realty L.P.
By: Vornado Realty Trust, a general partner
By:
------------------------------
Name: Joseph Macnow
Title: Vice President
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EXHIBIT C
SHARE OPTION GRANTS MADE TO EXECUTIVE
1. A nonqualified stock option granted to Executive, as of March 12, 1997, to
purchase an aggregate of 285,000 common shares, par value $.04 per share, of the
beneficial interest in the Company, pursuant to a certain Share Option
Agreement, dated as of March 12, 1997, by and between the Company and the
Executive, and the provisions of the Company's 1993 Omnibus Share Plan.
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<PAGE> 1
Exhibit 99.1
CONTACT: JOSEPH MACNOW
(201) 587-1000
VORNADO
Realty Trust
Park 80 West, Plaza II
Saddle Brook, NJ 07663
FOR IMMEDIATE RELEASE -- April 15, 1997
SADDLE BROOK, NEW JERSEY -- VORNADO REALTY TRUST (NYSE:VNO) announced
today that it completed its previously announced combination with the Mendik
Company and certain of its affiliates. The Mendik Company owns and manages a
portfolio of commercial office properties in Manhattan. The consideration for
this combination is approximately $656 million, including $264 million in cash,
$177 million in privately placed Vornado UPREIT limited partnership units and
$215 million in indebtedness.
<PAGE> 1
Exhibit 99.2
CONTACT: JOSEPH MACNOW
(201) 587-1000
[VORNADO REALTY TRUST LETTERHEAD]
FOR IMMEDIATE RELEASE - April 18, 1997
- --------------------------------------
SADDLE BROOK, NEW JERSEY ... VORNADO REALTY TRUST (NYSE:VNO) announced
today that it has acquired The Montehiedra Town Center located in San Juan,
Puerto Rico from Kmart for $74 million of which $63 million is newly issued 10
year financing. The Montehiedra shopping center, which opened in 1994, contains
525,000 square feet, including a 135,000 square foot Kmart.
In addition, Vornado has agreed to acquire Kmart's 50% interest in the
Caguas Centrum Shopping Center (currently under construction) located in
Caguas, Puerto Rico (adjacent to San Juan). The Caguas shopping center will
contain 485,000 square feet including a 123,000 square foot Kmart and a 146,000
square foot Sears. This acquisition is expected to close in early 1998.
These purchases mark Vornado's first acquisitions in Puerto Rico.
Vornado Realty Trust is a fully-integrated equity real estate investment trust.
# # # #
<PAGE> 1
Exhibit 99.3
CONTACT: JOSEPH MACNOW
(201) 587-1000
[VORNADO REALTY TRUST LETTERHEAD]
FOR IMMEDIATE RELEASE - April 21, 1997
- --------------------------------------
SADDLE BROOK, NEW JERSEY ... VORNADO REALTY TRUST (NYSE:VNO) announced
today that it has signed an agreement to acquire a mortgage note for $185
million. The mortgage note is secured by 90 Park Avenue, a midtown Manhattan
office building containing approximately 875,000 square feet. The mortgage,
which is in default, has a face value of $193 million. The acquisition is
subject to approval by the loan participants and is expected to be completed
during the second quarter of 1997.
Vornado Realty Trust is a fully-integrated equity real estate
investment trust.
