Document:

Exhibit
10(s)

 

05/06/03

THIRD AMENDMENT

OF

TCF DIRECTORS DEFERRED
COMPENSATION TRUST

 

THIS
AGREEMENT is made this 30th day of June, 2003 by and between
TCF Financial Corporation, a Delaware corporation, (the “Company”) and The
First National Bank in Sioux Falls (the “Trustee”).

 

WITNESSETH:

 

WHEREAS,
the Company and the Trustee have heretofore entered into a trust agreement,
dated as of October 1, 2000, (the “Agreement”) creating the TCF
Directors Deferred Compensation Trust, which Agreement, as amended, is now in
full force and effect;

 

WHEREAS,
the Company has reserved the power to amend the Agreement pursuant to Section
12(a) thereof; and

 

WHEREAS,
the Company and the Trustee wish to amend the Agreement in certain respects;

 

NOW,
THEREFORE, the parties agree that the Agreement is hereby
amended as follows:

 

1.             FUNDING OBLIGATION.  Effective January 1, 2003, Section 1(e) of
the Agreement is amended to read in full as follows:

 

(e)           From
time to time the Company shall make contributions of cash, the Company’s common
stock, and such other property as may be acceptable to the Trustee.

 

(1)           Each contribution
shall be accompanied by either (A) a statement designating the Plan participant
on behalf of whom such contribution is being made and, if more than one account
has been established for such participant, the account to which such
contribution will be credited, or (B) a statement that the contribution is not
designated for any participant’s account, but instead is to be applied to the
payment of future Trust expenses.

 

(2)           The amounts
contributed with respect to each Plan participant shall be such amounts as are
necessary to keep the accounts for such Plan participant sufficient at all
times to pay in full all benefits payable with respect to such Plan participant.

 

(3)           In addition, within
ten (10) business days following the occurrence of a Change in Control, the
Company shall contribute an amount equal to 300% of the aggregate expenses
incurred by the Company and the Trustee in administering the Plan and the Trust
during the last full calendar year immediately preceding the occurrence of

 

 

the Change in
Control.  This contribution will not be
designated for any participant’s account, but will instead be applied to the
payment of future trust expenses.  If
the aggregate expenses that were incurred by the Company and the Trustee in
administering the Plan and the Trust during the last full calendar year
immediately preceding the occurrence of the Change in Control cannot be
determined with reasonable certainty prior to the date on which this
contribution is due, the amount of the contribution shall be $150,000.

 

The Trustee shall be under no obligation to collect any such
contributions, and all responsibility for determining the amount, timing, and
types of contributions made to the Trustee shall be upon the Company or its
designees.

 

2.             PAYMENT OF BENEFITS.  Effective January 1, 2003, Section 2 of the
Agreement is amended to read in full as follows:

 

Section 2.               Payments
to Plan Participants and their Beneficiaries.

 

(a)           The
committee appointed to administer the Plan (the “Committee”) shall provide the
Trustee with complete instructions regarding the form and time of payment of
each account maintained under this Agreement for each Plan participant as soon
as administratively feasible after a contribution is first credited to that
account.  If a participant’s payment
instructions with respect to an account change, the Committee shall provide the
Trustee with revised instructions as soon as administratively feasible after
any such change.  Any such revised
instructions that are not immediately effective shall indicate the date on
which they become effective.

 

(b)           If
payment of a participant’s account has not already commenced and the Trustee
(1) has actual knowledge of the occurrence of an event that requires payment of
the account to commence (a “payment event”), (2) is notified by the Committee
that a payment event has occurred, (3) determines (in the absence of actual
knowledge and any notice from the Committee) that a Change in Control has
occurred as defined in Section 5.g. of the Plan, or (4) in the case of a
participant’s termination of service as a director, is notified in writing by
the participant that the participant’s termination of service has occurred, the
Trustee shall commence payment of the participant’s account in accordance with
the most recent applicable payment instruction unless payment must be suspended
due to the Company’s Insolvency as otherwise provided in this Agreement.  The Trustee shall make a determination with
respect to whether a Change in Control has occurred if the Trustee receives
notice that a Change in Control may have occurred from any source other than
the Committee.  Promptly after receiving
such notice of a possible Change in Control, the Trustee shall request from the
Committee all information relevant to the Trustee’s determination.  If the Committee fails to provide
information sufficient to demonstrate the absence of a Change in Control within
30 days after the Trustee’s request, and the other information received by the
Trustee indicates that a Change in Control has occurred, the Trustee shall
commence payment of accounts (that are not payable earlier) in the manner
required upon the occurrence of a Change in Control.

 

(c)           Payments
made by the Trustee from an account established for a participant shall be
debited against such account and shall cease when the balance credited to the
account has been reduced to zero or if earlier, when the Trustee determines,
based upon its review of the

 

2

 

records of the Plan, that payment of any additional amounts from the
participant’s account will result in the payment of benefits in excess of those
required under the Plan.  The Trustee
shall have no obligation to perform such a review and consider such a
determination until after (!) the Committee notifies the Trustee and the
participant (or, if the participant has died, the participant’s beneficiary) of
the potential excess payment, (2) the Trustee has been provided with all Plan
records that may be reasonably required by the Trustee to make its
determination, and (3) the participant (or beneficiary) has had a reasonable
time (not less than 30 days) to respond. 
Pending its determination, the Trustee shall continue payment of the
affected account(s) in accordance with the applicable payment instructions.

 

(d)           The
Trustee shall make provision for the reporting and withholding of any federal,
state or local taxes that may be required to be withheld with respect to
payments from the Trust Fund, and shall pay amounts withheld to the appropriate
taxing authorities or determine that such amounts have been reported, withheld
and paid by the Company.

 

(e)           Distributions
pursuant to this Section 2 shall be deemed to have been sufficiently made if
they are sent by first class mail to the participant or beneficiary at the
address last provided to the Trustee by the Committee, the participant or the
beneficiary.  If any such distribution
is returned to the Trustee unclaimed, the Trustee shall notify the Committee
and shall not make any further distributions to such payee until a current
address for such payee is determined. 
If the payee cannot be located within twelve months after the Trustee’s
notice to the Committee is given, the Trustee shall solicit payment directions
from the Committee.

 

(f)            The
Trustee shall be held harmless and shall not be liable for its acts with
respect to distributions from the Trust Fund if it has acted in good faith in
accordance with the most recent payment instructions provided by the Committee
and the provisions of this Section 2.

 

3.             BORROWING.  Effective January 1, 2003, Section 5(b) of
the Agreement is amended to read in full as follows.

 

(b)           At
the direction of the Committee, to borrow money from any person and to pledge
assets of the Trust Fund as security for repayment of any such loan.

 

4.             INDEMNIFICATION.  Effective January 1, 2003, a new paragraph
(g) is added to Section 8 of the Agreement to read in full as follows:

 

(g)           The
Trustee shall be held harmless and shall be fully indemnified by the Company,
its successors and assigns from any liability, including reasonable legal and
professional services expenses, for any actions directed pursuant to this
Agreement by the Company, the Committee, or any Plan participant or
beneficiary.

 

5.             PAYMENT OF EXPENSES.  Effective January 1, 2003, Section 9 of the
Agreement is amended to read in full as follows:

 

Section 9.  Compensation
and Expenses of Trustee.  The
Company shall pay: (a) all broker fees and other expenses incurred in
connection with the sale or purchase of investments; (b) all personal property
taxes, income taxes, and other taxes of any kind at any time levied and
assessed under any present or future law upon, or with respect to, the Trust
Fund or any property

 

3

 

included in the Trust Fund (other than income tax amounts that are
reasonably required to be withheld from payments by the Trust to participants
and beneficiaries); and (c) the Trustee’s own compensation and all other
reasonable expenses of administering the Plan and Trust; provided, however,
that payment of legal and/or professional fees reasonably incurred by the
Trustee and/or the Trust in making determinations regarding Insolvency pursuant
to Section 3 of this Agreement shall be made only if the Company is notified in
advance of the Trustee’s retention of legal counsel and the Company consents to
such retention, which consent shall not be unreasonably withheld.  Amounts due and payable to the Trustee that
remain unpaid more than thirty days after the Trustee gives the Company notice
of such amounts shall incur interest at the highest rate of interest assessable
by the Trustee for overdue payments of any kind from any other customer.  In the event the Trustee files suit to
collect amounts due and unpaid under this Section 9, the Company shall
reimburse the Trustee for the full amount of the Trustee’s reasonable costs and
attorneys’ fees incurred in connection with the initiation, maintenance and
resolution of such suit.  In any dispute
regarding amounts payable to the Trustee by the Company pursuant to this
Section 9, the Company shall have no right to any reduction in the amounts
payable to the Trustee based on the Trustee’s performance of its duties under
the Agreement (or any alleged failure to perform those duties), unless the
Trustee’s actions are shown by the Company to have been arbitrary and
capricious.  Trust assets that are
attributable to contributions designated for the payment of plan expenses may
be used to pay the amounts payable pursuant to this Section 9.  None of the amounts payable pursuant to this
Section 9 shall be payable from Trust assets that have been designated for a
participant’s account unless and until the Trustee has exhausted all of its
other legal and equitable remedies.  In
the event all such remedies are exhausted, expenses shall be charged to the
Trust Fund without allocation among the accounts established for participants,
unless an expense is directly attributable to one or more accounts, in which
case such expense shall be charged directly to such accounts.  The Trustee may dispose of Trust
investments, if necessary, to provide cash assets for the payment of
expenses.  The Trustee shall not delay
or withhold payment to any participant or beneficiary on account of any dispute
regarding payments due under this Section 9.

 

6.             APPOINTMENT AND REMOVAL OF
TRUSTEES.  Effective January 1, 2003,
Section 10 of the Agreement shall be amended to read in full as follows:

 

Section 10.  Resignation
and Removal of Trustee.

 

(a)           The
Trustee acting hereunder shall be one or more qualified corporations appointed
by the Company to serve in such capacity. 
The number of Trustees shall not be increased or decreased except with
the written consent of at least two-thirds of the aggregate of (1) the Plan’s
participants who are active directors, (2) the participants who are former
directors but who are entitled to benefits under the Plan and (3) the
beneficiaries of deceased participants who are entitled to benefits under the
Plan (counting the multiple beneficiaries of a single participant as one
beneficiary, whose consent is given only if a majority of such beneficiaries
give their consent).  Upon any
determination to increase the number of Trustees, or upon the removal or
resignation of any Trustee, the vacancy or vacancies so created shall be filled
by such qualified corporations as may be appointed by the Board of Directors of
the Company and approved in writing by at least two-thirds of the aggregate of
(1) the Plan’s participants who are active directors, (2) the participants who
are former directors but who are entitled to benefits under the Plan and (3)
the beneficiaries of deceased participants who are entitled to benefits

 

4

 

under the Plan (counting the multiple beneficiaries of a single
participant as one beneficiary, whose consent is given only if a majority of
such beneficiaries give their consent). 
If the Board of Directors of the Company fails to make such an
appointment or the appointed corporation fails to receive the required written
consent, and if there is no other Trustee then acting, a successor Trustee or
Trustees shall be appointed by a court of competent jurisdiction.  Any such appointment shall be effective upon
the acceptance thereof in writing by the qualified corporation so appointed and
delivery of a signed copy of such acceptance to the Trustee then in office.

 

(b)           The
Trustee, and any successor to any Trustee, may be removed by the Board of
Directors of the Company at any time upon the receipt by the Board of Directors
of the Company of the consent of at least two-thirds of the aggregate of (1)
the Plan’s participants who are active directors, (2) the participants who are
former directors but who are entitled to benefits under the Plan and (3) the
beneficiaries of deceased participants who are entitled to benefits under the
Plan (counting the multiple beneficiaries of a single participant as one
beneficiary, whose consent is given only if a majority of such beneficiaries
give their consent) to such removal and upon the giving of 30 days’ prior
written notice to such Trustee and to any other Trustee then acting.  Such removal shall be effective on the date
specified in such written notice; provided, that notice shall theretofore have
been given to the Trustee of the appointment of a successor Trustee or Trustees
in the manner hereinafter set forth.

 

(c)           The
Trustee, and any successor to any Trustee, may resign as Trustee hereunder by
filing with the Committee a written resignation which shall take effect 30 days
after the date of such filing, unless prior thereto a successor Trustee or
Trustees shall have been appointed.

 

(d)           All
of the provisions set forth herein with respect to the Trustee shall relate to
each successor Trustee so appointed with the same force and effect as if such
successor Trustee originally had been named herein as a Trustee.

 

(e)           Upon
the appointment of a successor Trustee, the removed or resigning Trustee shall
transfer and deliver those assets of the Trust Fund in its possession or under
its control to the remaining Trustee or Trustees, if any, or otherwise to the
successor Trustee or Trustees, together with all such instruments of transfer,
conveyance, assignment, and further assurance as the remaining or successor
Trustee may reasonably require.  Any
removed or resigning Trustee shall, at the request of the Committee, or may, in
its own discretion, file with the Committee an account of its actions as
Trustee.  The receipt and approval by
the Committee of the final account of the removed or resigning Trustee shall be
a full and complete acquittal and discharge from liability of such removed or
resigning Trustee, and any successor Trustee shall have no liability whatsoever
for the acts or omissions of any prior Trustee in which it did not
participate.  If the Committee shall
fail to express in writing its objections to any account delivered by any
removed or resigning Trustee within six months from the date of receipt by the
Committee of such account, such account shall be considered as approved by the
Committee.

 

5

 

7.             AMENDMENT OF TRUST.  Effective January 1, 2003, Section 12 of the
Agreement is amended to read in full as follows:

 

Section 12.  Amendment
or Termination.

 

(a)           This
Agreement may be amended at any time and from time to time upon the approval of
the Board of Directors of the Company; provided, however, that no amendment
shall be effective unless it has the written consent of all participants, all
participants who are former directors but who are entitled to benefits under
the Plan, and all beneficiaries of deceased participants who are entitled to
benefits under the Plan.  (If a single
participant has multiple beneficiaries, all of such beneficiaries shall be
deemed to have consented if a majority of such beneficiaries consent, and none
of such beneficiaries shall be deemed to have consented if less than a majority
of such beneficiaries consent.)  In the
event that all of the Plan’s participants and beneficiaries do not consent to a
proposed amendment, such amendment shall not take effect but the Trust assets
credited to the accounts of the consenting participants and beneficiaries shall
be transferred to a separate trust established pursuant to an agreement that is
identical to this Agreement in all respects except that it may include the
proposed amendment.

 

(b)           The
Trust shall not be terminated until such time as all of the Company’
obligations to make distributions pursuant to the Plan have been fully
discharged unless all of the participants and beneficiaries who are entitled to
benefits under the Plan consent in writing to an earlier termination.  (If a single participant has multiple
beneficiaries, all of such beneficiaries shall be deemed to have consented if a
majority of such beneficiaries consent, and none of such beneficiaries shall be
deemed to have consented if less than a majority of such beneficiaries consent.)  If all of such participants and
beneficiaries do not consent to an early termination, the Trust shall terminate
only with respect to the consenting participants and beneficiaries but shall
continue in effect with respect to the nonconsenting participants and
beneficiaries.  Upon a termination or
partial termination of the Trust, the Trust assets, if any, that remain in the
accounts established for the consenting participants and beneficiaries shall be
paid or distributed to the Company or its successors in interest.

 

*  *  *  *  *

 

6

 

IN
WITNESS WHEREOF, TCF Financial and the Trustee have executed
this instrument as of the date first written above.

 

	
   

  	
  TCF
  FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Gregory J. Pulles

  	
   

  
	
   

  	
  Title:

  	
  Vice Chairman, General Counsel and

  	
   

  
	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  
	
  [NO SEAL]

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Diane O. Stockman

  	
   

  	
   

  
	
  As its:

  	
  General Counsel for Corporate Affairs

  	
   

  	
   

  
													

 

 

	
   

  	
  THE
  FIRST NATIONAL BANK IN SIOUX

  FALLS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dick J. Corcoran

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  
	
  [NO SEAL]

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Tom Mark

  	
   

  	
   

  
	
  As its:

  	
  Vice President and Trust Officer

  	
   

  	
   

  
												

 

7Exhibit 10.1

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of April 9, 2003, by and
between Vornado Realty Trust (the “Company”) and Mitchell N. Schear
(“Employee”).

WHEREAS, the Company, the Employee, Gretchen Dudney,
Laurie Kramer, Paul Sowter, Patrick Tyrrell, John Nicolosi and Amy Schear have
entered into a Contribution Agreement dated April 9, 2003 (the “Contribution
Agreement”), in accordance with which the Company will acquire all of the
membership interests in Kaempfer Management Services, LLC (“KMS”), and The
Kaempfer Company, Inc. as well as the Kaempfer Ownership Entities and the
Waterfront Option (as such terms are defined in the Contribution Agreement);

WHEREAS, Employee currently serves as President of
KMS; and

WHEREAS, the Company wishes to secure the continued
services of Employee to the Company following the completion of the
transactions authorized by the Contribution Agreement;

NOW THEREFORE, in consideration of the premises and
the mutual covenants set forth below, the parties hereby agree as follows:

1.             Employment.  The Company hereby agrees to employ Employee
as President of the Charles E. Smith Commercial Realty Division of the Company
(the “Smith Division”) and President of KMS and Employee hereby accepts such
employment, on the terms and conditions hereinafter set forth.

2.             Term.  The period of employment of Employee by the
Company hereunder (the “Employment Period”) shall commence as of the Closing
Date (as such term is defined in the Contribution Agreement, hereinafter
referred to as the “Commencement Date”), and shall continue until the fourth
anniversary thereof; provided that commencing on the fourth anniversary of the
Commencement Date, and upon each subsequent anniversary of the Commencement
Date, the Employment Period shall be automatically extended for one (1)
additional year unless either party gives written notice not to extend this
Agreement prior to three (3) months before such extension would otherwise be
effectuated.  Notwithstanding the foregoing
or anything to the contrary set forth herein, in the event Employee’s
employment earlier terminates in accordance with Section 6, the Employment
Period shall end upon such earlier termination.

3.             Duties
and Responsibilities.  During the
Employment Period, Employee will serve as President of the Smith Division in
charge of the Company’s Washington, D.C. metropolitan area office division,
will perform other executive duties on behalf of the Company consistent with
his position and shall report to the President of the Company, or such other
senior officer of the Company as designated by the President or

1

Chief
Executive Officer of the Company.  In
addition, Employee shall initially serve as President of KMS and shall continue
in such position for a period to be determined by the Company in its sole
discretion.  Employee shall devote
substantially all of his working time, attention and energies during normal
business hours (other than absences due to illness or vacation) to the
performance of his duties for the Company. 
Notwithstanding the foregoing or anything to the contrary set forth
herein, Employee shall, during the term of this Agreement, have the right to
engage in Items 6 and 7 on the list of “Excluded Activities” provided in
Attachment A hereto, provided that such activities do not impair Employee’s
ability to perform services to the Company as set forth herein.

4.             Place
of Performance.  The principal place
of employment of Employee shall be at the Smith Division’s offices in
Arlington, Virginia.

5.             Compensation
and Related Matters.

(a)   Base
Salary and Bonus.  During the
Employment Period the Company shall pay Employee a base salary at the rate of
not less than $500,000 per year (“Base Salary”).  Employee’s Base Salary shall be paid in approximately equal
installments in accordance with the Company’s customary payroll practices.  If Employee’s Base Salary is increased by
the Company, such increased Base Salary shall then constitute the Base Salary for
all purposes under this Agreement.  In
addition to Base Salary, the Employee (i) may be entitled to an annual
incentive bonus (“Bonus”) each fiscal year (at a target of 50% of Base Salary)
at the sole discretion of the Company, to be payable at the same time as
bonuses are paid to the senior executive officers of the Company listed on
Schedule 1 hereto (the “Senior Executive Officers”); and (ii) shall be entitled
to participate in extraordinary bonus plans and programs of the Company along
with other Senior Executive Officers eligible to participate in such
programs.  Notwithstanding the
foregoing, Employee shall receive a bonus of not less than $200,000 for the
Company’s fiscal year in which the Commencement Date occurs.

(b)   Share
Options. Employee shall be granted share options to purchase 125,000 common
shares of beneficial interest (“Stock”) of the Company pursuant to the terms of
the Company’s 2002 Omnibus Share Plan (the “2002 Plan”) at a purchase price per
share equal to the fair market value of the Stock on the date the options are
granted (the “Options”).  Such Options
shall be granted on the Commencement Date, and shall be subject to the general
terms of the 2002 Plan and the share option agreement thereunder in the form
attached hereto as Exhibit A.  The
Options shall become exercisable at a rate of one-third (33 1/2 %) after the
first anniversary of the date of grant, and an additional one-third (33 1/2 %)
on each of the second and third anniversaries of such date, provided Employee
remains an employee of the Company on such respective dates.  Notwithstanding the foregoing, the Options
will accelerate and become fully exercisable if (i) Employee is terminated
pursuant to Sections 6(e) or 6(f), or (ii) upon the sale or change in control
of the Company (collectively, a “Sale”). 
Any future share option grants shall be made to Employee on comparable
terms as such grants are made to other Senior Executive Officers.

2

(c)   Benefit
Plans.  Employee shall be entitled
to participate in such 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, or which it
may adopt from time to time for its Senior Executive Officers, in accordance
with the eligibility requirements for participation therein.  Nothing herein shall be construed so as to
prevent the Company from modifying or terminating any employee benefit plans or
programs, or employee fringe benefits, it may adopt from time to time.  Notwithstanding the foregoing, to the extent
that the health benefits provided to the Employee by the Company hereunder are
not economically equivalent to those provided to Employee by his former
employer immediately prior to the date hereof (as a result of new or increased
co-pay arrangements, increased deductibles, or the like), the Company shall
make a monthly cash payment to Employee to compensate him for any reduction in
such benefits, provided, however, that the total of all such
monthly cash payments shall not exceed $10,000 per year.

(d)   Vacation.  Employee shall be entitled to the normal and
customary amount of paid vacation provided to the Company’s Senior Executive
Officers, but in no event less than four (4) weeks annually, beginning on the
Commencement Date.  In addition,
Employee shall be entitled to the same sick leave and holidays provided to
other Senior Executive Officers of the Company.

(e)   Expenses.  The Company shall promptly reimburse
Employee for all reasonable business expenses upon the presentation of
reasonably itemized statements of such expenses in accordance with the
Company’s policies and procedures now in force or as such policies and
procedures may be modified with respect to all Senior Executive Officers of the
Company.

(f)    Automobile.  The Company shall pay Employee a car
allowance equal to $1875 per month.

(g)   Restricted
Stock Agreement.  On the
Commencement Date, the Employee will be granted a number of shares of
restricted Stock (the “Restricted Shares”) pursuant to the terms of the
Company’s 2002 Plan and a restricted stock agreement in the form of Exhibit B
hereto equal to the result of dividing $1,000,000 by the fair market value of
one share of Stock on the Commencement Date. 
Such Restricted Shares shall vest in equal annual installments over a
four (4) year period commencing on the Commencement Date and shall earlier vest
if the Employee’s employment is terminated pursuant to Sections 6(b), 6(c),
6(e) or 6(f).  Notwithstanding the
foregoing, such Restricted Shares shall become fully vested upon a Sale.

6.             Termination.  Employee’s employment hereunder shall be
terminated upon the earliest of:

(a)   Expiration.  The expiration of the Employment Period.

(b)   Death.  The death of Employee.

3

(c)   Disability.  If, Employee shall be Disabled for a period
of six (6) consecutive months and within thirty (30) days after written Notice
of Termination is given by the Company after such six (6) month period, Employee
shall not have returned to the substantial performance of his duties on a
full-time basis, the Company shall have the right to terminate Employee’s
employment hereunder for “Disability”. 
For purposes of this Agreement, “Disability” or “Disabled” shall mean
“Total Disability” or “Totally Disabled” or such similar term as may be defined
in the Company’s long term disability plan; provided, that, if no
such plan exists, “Disability” or “Disabled” shall have the meaning provided in
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

(d)   Cause.  The Company terminates Employee for
Cause.  For purposes of this Agreement,
the Company shall have “Cause” to terminate Employee’s employment upon
Employee’s (i) willful and continued failure to substantially perform his
duties with the Company (other than any such failure resulting from his
incapacity due to physical or mental illness) which has not been cured within
thirty (30) days after delivery to Employee of a written notice that identifies
the manner in which the Company believes that Employee has willfully not
substantially performed his duties, (ii) willful misconduct which is
economically injurious to the Company or to any entity in control of,
controlled by or under common control with the Company (an “Affiliate”),
including, but not limited to, any breach of Sections 9 and 10 hereof which has
not been cured within thirty (30) days after delivery to Employee of a written
notice that identifies the manner in which the Company believes that Employee
has willfully engaged in misconduct that has economically injured the Company
or an Affiliate, or (iii) the conviction of, or plea of guilty or nolo  contendere
to, a felony, or (iv) habitual drug or alcohol abuse which materially impairs
Employee’s ability to perform his duties hereunder.

(e)   Material
Breach.  Employee terminates his
employment for a material breach of this Agreement by the Company.  For purposes of this Agreement, a “material
breach” shall be deemed to occur upon (i) a failure by the Company to comply
with any material provision of this Agreement or (ii) a relocation by the
Company of Employee’s principal place of employment to outside the Washington,
D.C. metropolitan area, which, in the case of clauses (i) and (ii) of this
Section 6(e) has not been reasonably cured within thirty (30) days after
written notice of such event has been given by Employee to the Company.  Notwithstanding the foregoing or anything to
the contrary set forth herein, in no event will the failure of the Company to
employ Employee as President of KMS constitute a “material breach” of this
Agreement.

(f)    Without
Cause.  The Company terminates his
employment hereunder without Cause by providing Employee with a Notice of
Termination.

(g)   Voluntary
Termination.  Employee terminates
this Agreement and Employee’s employment hereunder at any time upon ninety (90)
days prior written notice to the Company.

7.             Termination
Procedure.

4

(a)   Notice of
Termination.  Any termination of
Employee by the Company or by Employee (other than termination pursuant to (i)
Section 6(a) (which shall require the notice specified in Section 2) or (ii)
Section 6(b) hereof) shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 13.  For purposes of this Agreement, a “Notice of Termination” shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee under the
provisions so indicated.

(b)   Date of Termination.  “Date of Termination” shall mean (i) if
Employee’s employment is terminated by the expiration of this Agreement, the
date of expiration, (ii) if Employee’s employment is terminated by his death,
the date of his death, (iii) if Employee’s employment is terminated pursuant to
Section 6(c) hereof, thirty (30) days after Notice of Termination is given
(provided that Employee shall not have again become available for service on a
regular basis during such thirty (30) day period), (iv) if Employee’s
employment is terminated pursuant to Sections 6(d), 6(e), 6(f) or 6(g), the
date specified in the Notice of Termination, and (v) if Employee’s employment
is terminated for any other reason, the date on which a Notice of Termination
is given.

8.             Amounts
Due Upon Termination or During Disability. 
In the event Employee is Disabled or his employment terminates during
the Employment Period, the Company shall provide Employee with the payments set
forth below.  Employee acknowledges and
agrees that the payments set forth in this Section 8 constitute liquidated
damages for termination of his employment during the Employment Period, provided,
however, that such payments shall not limit any rights Employee may have
to payments arising from matters outside the terms of this Agreement.

(a)   During any
period that Employee is Disabled (“Disability Period”), Employee shall continue
to receive his Base Salary at the rate then in effect for such Disability
Period until his employment is terminated pursuant to Section 6(c) hereof.  Payments made to Employee pursuant to this
Section 8(a) during the first six (6) months of the Disability Period shall be
reduced by the sum of the amounts, if any, paid to the Employee at or prior to
the time of any such payment under disability benefit plans of the Company or
under the Social Security disability insurance program, and which amounts were
not previously applied to reduce any such payment, provided, however,
that if any disability plan of the Company provides for the reduction of
benefit payments thereunder as a result of payments that are made or may be
made under this Section 8(a), then there shall be no reduction of payments
under this Section 8(a) as a result of payments under such disability
plan.  Employee shall also be entitled
to any other benefits or payments provided pursuant to any plan or policy of
the Senior Executive Officers of the Company in accordance with such plan’s or
policy’s terms.

(b)   If
Employee’s employment is terminated pursuant to Sections 6(a), 6(b), 6(d)
or 6(g) the Company shall pay Employee (i) his accrued but unpaid Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is

5

given,
(ii) any annual earned but unpaid bonus for any completed fiscal year (plus a
pro rata share of Employee’s target bonus for the fiscal year of termination),
(ii) the benefits, fringes and perquisites, including, without limitation,
accrued vacation, up to the date of termination, and (iii) any other amount due
Employee under any other program or plan of the Company in which the Employee
participates.

(c)   If
Employee’s employment is terminated pursuant to Sections 6(e), or 6(f), the
Company shall pay to Employee his (A) accrued and unpaid Base Salary
through the Date of Termination and (B) a payment ( the “Severance
Payment”) equal to the sum of (i) Employee’s then current Base Salary and
(ii) the average of the Bonus earned by Employee, if any, in each of the
two fiscal years immediately preceding the Date of Termination; if Employee has
been employed less than two fiscal years, such average shall be deemed to be $200,000.  The payment described in clause (A) shall be
made as soon as administratively feasible following the Date of Termination and
the payment as described in clause (B) shall be paid ratably in accordance with
the Company’s customary payroll practices over the one year period following
the Date of Termination. 
Notwithstanding the forgoing or anything to the contrary set forth
herein, the payment described in clause (B) shall equal at least $750,000.

(d)   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 Employee or,
other than pursuant to Section 11 (to the extent applicable), claims by the
Company.

9.             Confidential
Information and Removal of Documents.

(a)   Employee
agrees to keep secret and retain in the strictest confidence all Confidential
Information which relates to the Company and any of its Affiliates.  “Confidential Information” (a) means
information (i) that is learned by Employee from the Company or any Affiliate
before or after the date of this Agreement (other than Confidential Information
that was known by Employee on a nonconfidential basis prior to the disclosure
thereof); (ii) that is commercially valuable to the Company and (iii) that is
not published or of public record or otherwise generally known (other than
through failure of Employee to fully perform his obligations hereunder), and
(b) includes, without limitation, customer lists, client lists, trade secrets,
pricing policies and other business affairs of the Company and any of its
Affiliates.  Employee agrees not to
disclose any such Confidential Information to anyone outside the Company or any
of its Affiliates, whether during or after his period of service with the Company,
except (x) as such disclosure may be required or appropriate in connection with
his service or (y) when required to do so by a court of law, by any
governmental agency or by any administrative or legislative body (including a
committee thereof) with apparent jurisdiction to order his to divulge, disclose
or make accessible such information. 
Employee agrees to give the Company advance written notice of any
disclosure pursuant to clause (y) of the preceding sentence and to cooperate
with any efforts by the Company to limit the extent of such disclosure.

6

(b)   All
records, files, drawings, documents, models, equipment, and the like relating
to the Company’s business, which Employee 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
Employee’s carrying out his duties under this Agreement and, if so removed,
shall be returned to the Company promptly after termination of Employee’s
employment hereunder, or otherwise promptly after removal if such removal
occurs following termination of employment. 
Employee’s rolodex, telephone directory and similar type items, and
furniture, art work and property owned by Employee or otherwise not owned by
the Company shall not be deemed Company property and shall not be covered by
this Section 9(b).  The Company shall be
the owner of all trade secrets and other products relating to the Company’s
business developed by Employee alone or in conjunction with others as part of
his employment with the Company.

10.           Non-Competition.

(a)   In
consideration of the benefits to be provided to Employee hereunder, Employee
covenants that he will not, without the prior written consent of the Company,
during the Employment Period and the period of one (1) year immediately
following his termination of employment for any reason other than pursuant to
Sections 6(a), 6(e) and 6(f) (the “Restriction Period”) engage, in the
Washington, D.C. metropolitan area, in any way, directly or indirectly, in the
financing, acquisition, operation, development, management, leasing or
disposition of any commercial office real estate property or any improvements
thereof on behalf of any public or non-public company, other than the
activities set forth in Attachment A hereto (the “Excluded Activities”).

(b)   Employee
hereby covenants and agrees that, at all times during the Restriction Period,
Employee shall not pursue or attempt to develop or to direct to any other
entity any project which the Company is or was pursuing, developing or
attempting to develop during the period of his employment or interfere or
otherwise compete (other than in connection with the Excluded Activities or performing
services for the Company or its Affiliates with regard to other properties
managed by the Company or its Affiliates with the consent of the Company) with
any active lease negotiations of the Company which the Employee is or was
actively involved in conducting or strategizing on behalf of the Company or its
Affiliates.

(c)   Employee
hereby covenants and agrees that, at all times during the Restriction Period,
Employee shall not (i) assist any other person or firm in counseling, advising,
encouraging or soliciting any person that within one (1) year immediately prior
to the end of the Employment Period was, a tenant of the Company or its
Affiliates (a “Tenant”) to terminate its lease with the Company or its
Affiliates, (ii) contact any Tenant or induce or attempt to induce or otherwise
counsel, advise, encourage or solicit any Tenant to terminate its lease with
the Company or its Affiliates, or (iii) employ or seek to employ any person
employed within one (1) year immediately prior to the end of

7

the
Employment Period by the Company or any of its Affiliates, or otherwise
encourage or entice such person or entity to leave such employment.

(d)   Employee
acknowledges that the restrictions, prohibitions and other provisions of this
Section 10 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.  It is the intention of the parties hereto
that the restrictions contained in this paragraph be enforceable to the fullest
extent permitted by applicable law. 
Therefore, to the extent any court of competent jurisdiction shall
determine that any portion of the foregoing restrictions is excessive, such
provision shall not be entirely void, but rather shall be limited or revised
only to the extent necessary to make it enforceable.

11.           Remedy.  Should Employee engage in or perform, either
directly or indirectly, any of the acts prohibited by Sections 9 and 10, it is
agreed that the Company shall be entitled to immediately withhold any payments
or benefits to be made to Employee under Section 8 of this Agreement and shall
be entitled to full injunctive relief, to be issued by any competent court of
equity, enjoining and restraining Employee and each and every other person,
firm, organization, association, or corporation concerned therein, from the
continuance of such violative acts.  The
foregoing remedy available to Company shall not be deemed to limit or prevent
the exercise by the Company of any or all further rights and remedies which may
be available to the Company hereunder or at law or in equity.

12.           Successors;
Binding Agreement.  This Agreement
shall be binding upon and shall inure to the benefit of Employee, his heirs,
executors, administrators, beneficiaries and assigns and shall be binding upon
and shall inure to the benefit of the Company and its successors.

13.           Notice.  For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered either
personally or by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:

If to Employee:

Mitchell N. Schear

6672 32nd Place, N.W.

Washington, D.C. 20015

With a copy to:

Jay A. Epstein,
Esq.

Piper Rudnick LLP

8

1200 19th Street,
N.W.

Washington, D.C. 20036

If to the Company:

Vornado Realty
Trust

888 7th Avenue

New York, NY 10019

Attention:     President; and

Vornado Realty
Trust

210 Route 4 East

Paramus, New Jersey  07652

Attention:     Chief Administrative
Officer

or to such other address
as any party may have furnished to the others in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.

 

14.           Resolution
of Differences Over Breaches of Agreement. 
The parties shall use good faith efforts to resolve any controversy or
claim arising out of, or relating to this Agreement or the breach thereof,
first in accordance with the Company’s internal review procedures, except that
this requirement shall not apply to any claim or dispute under or relating to
Sections 9 or 10 of this Agreement.  If
despite their good faith efforts, the parties are unable to resolve such
controversy or claim through the Company’s internal review procedures, then
such controversy or claim shall be resolved by arbitration in Manhattan, New York,  in accordance with the rules then obtaining
of the American Arbitration Association, and judgment upon the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof.  If any contest or dispute shall arise
between the Company and Employee regarding any provision of this Agreement, the
Company shall reimburse Employee for all legal fees and expenses reasonably
incurred by Employee in connection with such contest or dispute, but only if
Employee is successful in respect of substantially all of Employee’s claims
brought and pursued in connection with such contest or dispute.

15.           Governing
Law.  This Agreement is governed by,
and is to be construed and enforced in accordance with, the laws of the State
of New York, without regard to principles of conflicts of laws.  If, under such law, any portion of this
Agreement is at any time deemed to be in conflict with any applicable statute,
rule, regulation or ordinance, such portion shall be deemed to be modified or
altered to conform thereto or, if that is not possible, to be omitted from this
Agreement, and the invalidity of any such portion shall not affect the force,
effect and validity of the remaining portion hereof.

16.           Amendment.  No provisions of this Agreement may be amended,
modified, or waived unless such amendment or modification is agreed to in
writing signed by Employee and by a duly authorized officer of the Company, and
such waiver is

9

set
forth in writing and signed by the party to be charged.  No waiver by either party hereto at any time
of any breach by the other party hereto of any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

17.           Survival.  The respective obligations of, and benefits
afforded to, Employee and Company as provided in Sections 8, 9, 10, and 14 of
this Agreement shall survive the termination of this Agreement.

18.           No
Conflict of Interest.  During the
Employment Period, Employee shall not directly, or indirectly render service,
or undertake any employment or consulting agreement with another entity without
the express written consent of the Board. 
Notwithstanding the foregoing, it is expressly understood and agreed
that the Employee’s engaging in the Excluded Activities shall not constitute a
conflict of interest for purposes of this Agreement.

19.           Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

20.           Entire
Agreement.  This Agreement and the
attachments and exhibits hereto sets forth the entire agreement of the parties
hereto in respect of Employee’s employment by the Company and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written by any officer, employee
or representative of any party hereto in respect of such subject matter.  Any prior agreement of the parties hereto in
respect of the subject matter contained herein is hereby terminated and
canceled.

21.           Section
Headings.  The section headings in
this Agreement are for convenience of reference only, and they form no part of
this Agreement and shall not affect its interpretation.

10

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

	
  VORNADO REALTY TRUST

  
	
   

  
	
  By:

  	
  /s/ Joseph Macnow

  
	
   

  
	
  EMPLOYEE

  
	
   

  
	
  /s/ Mitchell N. Schear

  
	
  MITCHELL N. SCHEAR

  

 

11

Attachment A

Excluded Activities

1.                                       The right to engage, in the Washington,
D.C. metropolitan area (the “Non-Compete Area”), in any way, directly or
indirectly, in the financing, acquisition, operation, development, leasing or
disposition of any primarily (determined on a relative square foot basis)
commercial real estate property or any improvements thereof (“Ownership
Prohibited Activities”) on behalf of any private company (a “Prohibited
Company”) where the projects of the Prohibited Company directly related to
Ownership Prohibited Activities in the Non-Compete Area involve ownership
and control of operating properties of less than 3,500,000 rentable square feet
(not including any square footage with respect to properties listed in Item 7
below).

2.                                       The right to engage, in the Non-Compete
area, in any way, directly or indirectly, in the management and leasing of any
primarily (determined on a relative square foot basis) commercial office real
estate property or any improvements thereof (“Management Prohibited
Activities”) on behalf of any Prohibited Company where the projects of the
Prohibited Company directly related to Management Prohibited Activities in the
Non-Compete Area involve management of operating properties of less than
6,000,000 rentable square feet (not including any square footage with respect
to properties listed in Item 7 below).

3.                                       The right to engage in Ownership
Prohibited Activities and Management Prohibited Activities through a company
started by Employee following the termination of the Employment Period.

4.                                       The right to engage in lease brokerage
(representing only tenants (excluding any Tenant (as defined in Section 10(c)
of the Agreement)), sales brokerage or mortgage brokerage activities.

5.                                       The acquisition, ownership, development,
management, leasing or disposition of any property by any entity in which
Employee owns or acquires an equity interest as a minority passive investor
(including, without limitation, as a limited partner or a non-operating member
of a limited liability company) having no managerial or similar role with
respect to such property.

6.                                       (i) Oversight and involvement in, and
(ii) strategic control over the European “McArthur Glen” business, provided,
however, that for purposes of Section 3 hereof, Employee may exercise strategic
control over the European “McArthur Glen” business for a period not to exceed
180 days from the Commencement Date.

A-1

7.                                       Oversight of specified investments,
passive investments and investments not being transferred 100% to the Company
pursuant to the transactions authorized by the Contribution Agreement,
including the following:

a.     1925 K Street

b.     Waterfront

c.     Central Place

d.     French Holiday Investments, LLC

e.     RRI, LLC

f.      The Investment Building, 1501 K Street,
N.W.

g.     2099 Pennsylvania Avenue, N.W.

 

8.                                       Acting as consultant to governmental
entities of the District of Columbia in connection with real estate
developments.

 

A-2

Schedule 1

List of Senior Executive
Officers

1.                                       Melvyn H. Blum, Executive Vice President
- Development

2.                                       Michelle Felman, Executive Vice President
- Acquisitions

3.                                       Paul Larner, Executive Vice President -
Chief Administrative Officer and Secretary

4.                                       Joseph Macnow, Executive Vice President -
Finance and Administration and Chief Financial Officer

5.                                       Wendy Silverstein, Executive Vice
President - Capital Markets

6.                                       David R. Greenbaum, President of the New
York City Office Division

7.                                       Christopher Kennedy, President of the
Merchandise Mart Division

8.                                       Sandeep Mathrani, Executive Vice
President - Retail Real Estate

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