Document:

Exhibit 10.49

 

CONTRIBUTION AGREEMENT

 

by and among

 

VORNADO REALTY TRUST,

 

VORNADO REALTY L.P.,

 

CESC ROSSLYN L.L.C.,

 

and

 

ROBERT H. SMITH and ROBERT P. KOGOD

 

 

Dated as of May 12, 2005

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE
  I THE TRANSACTION

  	
  2

  
	
   

  	
   

  
	
  1.1

  	
  Contribution
  and Conveyance of Interests

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Liabilities
  to be Assumed by the VNO Transaction Sub

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Closing

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Title

  	
  3

  
	
   

  	
   

  	
   

  
	
  1.5

  	
  Consideration

  	
  3

  
	
   

  	
   

  	
   

  
	
  1.6

  	
  Federal
  Income Tax Characterization

  	
  7

  
	
   

  	
   

  	
   

  
	
  1.7

  	
  Escrow;
  Appointment of Representatives

  	
  8

  
	
   

  	
   

  	
   

  
	
  1.8

  	
  Transfer
  Restrictions; Redemption Rights

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II THE STUDY PERIOD AND DEPOSIT ESCROW

  	
  10

  
	
   

  	
   

  
	
  2.1

  	
  Study
  Period

  	
  10

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Operating
  Information

  	
  10

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Termination

  	
  11

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Confidentiality

  	
  11

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Deposit

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III REPRESENTATIONS AND WARRANTIES OF VORNADO

  	
  12

  
	
   

  	
   

  
	
  3.1

  	
  Organization,
  Good Standing and Power of the Company and the Operating Partnership

  	
  12

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Capitalization

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Authorization
  of this Contribution Agreement

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Financial
  Statements

  	
  14

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Absence
  of Certain Changes or Events

  	
  14

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  Taxes

  	
  14

  

 

i

 

	
  3.7

  	
  Absence
  of Conflicts and Defaults

  	
  15

  
	
   

  	
   

  	
   

  
	
  3.8

  	
  Vornado
  SEC Documents

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.9

  	
  No
  Securityholder Vote Required

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.10

  	
  Definition
  of “Knowledge”

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNERS

  	
  16

  
	
   

  	
   

  
	
  4.1

  	
  Organization,
  Good Standing and Qualification

  	
  16

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Enforceability

  	
  17

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Capital
  Structure

  	
  17

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  No
  Subsidiaries

  	
  17

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Property;
  Equipment Leases

  	
  18

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Operating
  and Other Agreements

  	
  18

  
	
   

  	
   

  	
   

  
	
  4.7

  	
  Noncontravention

  	
  18

  
	
   

  	
   

  	
   

  
	
  4.8

  	
  Absence
  of Certain Changes or Events

  	
  19

  
	
   

  	
   

  	
   

  
	
  4.9

  	
  Litigation

  	
  19

  
	
   

  	
   

  	
   

  
	
  4.10

  	
  Intentionally
  Deleted

  	
  19

  
	
   

  	
   

  	
   

  
	
  4.11

  	
  Space
  Leases

  	
  19

  
	
   

  	
   

  	
   

  
	
  4.12

  	
  Intentionally
  Deleted

  	
  20

  
	
   

  	
   

  	
   

  
	
  4.13

  	
  Intentionally
  Deleted

  	
  20

  
	
   

  	
   

  	
   

  
	
  4.14

  	
  Environmental
  Compliance

  	
  20

  
	
   

  	
   

  	
   

  
	
  4.15

  	
  Compliance
  with Laws and Other Instruments

  	
  20

  
	
   

  	
   

  	
   

  
	
  4.16

  	
  Intentionally
  Deleted

  	
  20

  
	
   

  	
   

  	
   

  
	
  4.17

  	
  Taxes

  	
  21

  
	
   

  	
   

  	
   

  
	
  4.18

  	
  Vote
  Required; Consents

  	
  22

  
	
   

  	
   

  	
   

  
	
  4.19

  	
  Subject
  Entity Financial Statements; Undisclosed Liabilities

  	
  22

  
	
   

  	
   

  	
   

  
	
  4.20

  	
  Intentionally
  Deleted

  	
  23

  

 

ii

 

	
  4.21

  	
  Intellectual
  Property Rights

  	
  23

  
	
   

  	
   

  	
   

  
	
  4.22

  	
  Investment
  Company Act of 1940

  	
  23

  
	
   

  	
   

  	
   

  
	
  4.23

  	
  Intentionally
  Deleted

  	
  23

  
	
   

  	
   

  	
   

  
	
  4.24

  	
  Employees

  	
  23

  
	
   

  	
   

  	
   

  
	
  4.25

  	
  Related
  Party Transactions

  	
  24

  
	
   

  	
   

  	
   

  
	
  4.26

  	
  Contracts
  and Debt Instruments

  	
  24

  
	
   

  	
   

  	
   

  
	
  4.27

  	
  Standstill
  Agreements

  	
  25

  
	
   

  	
   

  	
   

  
	
  4.28

  	
  Brokers
  and Finders

  	
  25

  
	
   

  	
   

  	
   

  
	
  4.29

  	
  Definition
  of “Knowledge”

  	
  25

  
	
   

  	
   

  	
   

  
	
  4.30

  	
  Securities
  Law Matters

  	
  25

  
	
   

  	
   

  	
   

  
	
  4.31

  	
  Evidence
  of Partnership Interests

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V COVENANTS

  	
  25

  
	
   

  	
   

  
	
  5.1

  	
  Execution
  of Tax Reporting and Protection Agreement

  	
  25

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Information
  Statement

  	
  25

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Vornado
  Partnership Agreement Amendment

  	
  27

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Assignments
  of Interest; Limited Partner Acceptance Agreements for the Vornado
  Partnership Agreement

  	
  27

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Reservation
  of Vornado Common Shares

  	
  27

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Registration
  Rights Agreements

  	
  27

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Title
  Insurance

  	
  27

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Distributions

  	
  28

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Maintenance
  of Subject Entities

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI CERTAIN COVENANTS PENDING THE TRANSACTION

  	
  28

  
	
   

  	
   

  
	
  6.1

  	
  Restrictions
  on Transfers of Interests in the Subject Entities

  	
  28

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Consummation
  of Transaction

  	
  28

  

 

iii

 

	
  6.3

  	
  Conduct
  of Business by the Subject Entities Pending the Transaction

  	
  28

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Other
  Actions

  	
  31

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Commercially
  Reasonable Efforts; Notification

  	
  31

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  Public
  Announcements

  	
  32

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  Tax
  Matters

  	
  32

  
	
   

  	
   

  	
   

  
	
  6.8

  	
  Estoppels

  	
  32

  
	
   

  	
   

  	
   

  
	
  6.9

  	
  Permits

  	
  32

  
	
   

  	
   

  	
   

  
	
  6.10

  	
  Binding
  Commitments

  	
  32

  
	
   

  	
   

  	
   

  
	
  6.11

  	
  Certain
  Actions of General Partners

  	
  33

  
	
   

  	
   

  	
   

  
	
  6.12

  	
  No
  Negotiations

  	
  33

  
	
   

  	
   

  	
   

  
	
  6.13

  	
  Pre-Closing
  Disclosure of Breaches of Representations; Obligation to Cure

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII CONDITIONS TO THE CONSUMMATION OF TRANSACTION

  	
  35

  
	
   

  	
   

  
	
  7.1

  	
  Conditions
  to Each Party’s Obligation to Effect the Transaction

  	
  35

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Conditions
  to the VNO Transaction Sub’s Obligation to Consummate the Transaction

  	
  36

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Conditions
  to the Contributing Partners’ Obligation to Consummate the Transaction

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII SURVIVAL; INDEMNIFICATION

  	
  41

  
	
   

  	
   

  
	
  8.1

  	
  Survival
  of Representations and Warranties

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Indemnification
  of the Vornado Indemnified Persons

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Escrow
  Agreement; Release of Escrow Units

  	
  48

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Indemnification
  of the Contributing Partners

  	
  48

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  Costs
  of Enforcement

  	
  50

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  Exclusive
  Remedies

  	
  50

  

 

iv

 

	
  8.7

  	
  No
  Right of Offset

  	
  50

  
	
   

  	
   

  	
   

  
	
  8.8

  	
  Recovery
  From Insurance Policies and Third Parties

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX THE CLOSING

  	
  51

  
	
   

  	
   

  
	
  9.1

  	
  Transaction
  Expenses

  	
  51

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Prorations
  and Other Adjustments

  	
  53

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Prorations
  Procedures

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X TERMINATION

  	
  56

  
	
   

  	
   

  
	
  10.1

  	
  Termination

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI CASUALTY OR CONDEMNATION

  	
  57

  
	
   

  	
   

  
	
  11.1

  	
  Material
  Casualty or Condemnation

  	
  57

  
	
   

  	
   

  	
   

  
	
  11.2

  	
  Immaterial
  Casualty or Condemnation

  	
  57

  
	
   

  	
   

  	
   

  
	
  11.3

  	
  Materiality

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII GENERAL PROVISIONS

  	
  58

  
	
   

  	
   

  
	
  12.1

  	
  Notices

  	
  58

  
	
   

  	
   

  	
   

  
	
  12.2

  	
  Specific
  Performance

  	
  58

  
	
   

  	
   

  	
   

  
	
  12.3

  	
  Further
  Assurances

  	
  58

  
	
   

  	
   

  	
   

  
	
  12.4

  	
  Consents

  	
  59

  
	
   

  	
   

  	
   

  
	
  12.5

  	
  Binding
  Effect

  	
  59

  
	
   

  	
   

  	
   

  
	
  12.6

  	
  Construction

  	
  59

  
	
   

  	
   

  	
   

  
	
  12.7

  	
  Waiver
  of Jury Trial

  	
  59

  
	
   

  	
   

  	
   

  
	
  12.8

  	
  Governing
  Law; Submission to Jurisdiction; Service of Process

  	
  59

  
	
   

  	
   

  	
   

  
	
  12.9

  	
  Headings

  	
  60

  
	
   

  	
   

  	
   

  
	
  12.10

  	
  Assignment

  	
  60

  
	
   

  	
   

  	
   

  
	
  12.11

  	
  Counterparts

  	
  60

  
	
   

  	
   

  	
   

  
	
  12.12

  	
  Severability

  	
  60

  

 

v

 

	
  12.13

  	
  Entire
  Agreement; Amendment

  	
  60

  
	
   

  	
   

  	
   

  
	
  12.14

  	
  No
  Waiver

  	
  60

  

 

vi

 

ATTACHMENTS TO AGREEMENT

 

	
  ANNEXES

  	
   

  
	
   

  	
   

  
	
  Annex I

  	
  Description of
  Paris Property

  
	
  Annex II

  	
  Description of
  Geneva Property

  
	
   

  	
   

  
	
  DEFINED
  TERMS

  	
   

  
	
   

  	
   

  
	
  Table of Defined
  Terms

  	
   

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of
  Assignment of Interest

  
	
  Exhibit B

  	
  Form of Limited
  Partner Acceptance Agreement of Vornado Partnership Agreement

  
	
  Exhibit C-1

  	
  Form of Escrow
  Agreement

  
	
  Exhibit C-2

  	
  Form of Deposit
  Escrow Agreement

  
	
  Exhibit D

  	
  Securities Law
  Matters

  
	
  Exhibit E

  	
  Form of Tax
  Reporting and Protection Agreement

  
	
  Exhibit F

  	
  Form of
  Amendment to the Vornado Partnership Agreement

  
	
  Exhibit G- 1

  	
  Form of
  Registration Rights Agreement

  
	
  Exhibit G-2

  	
  Form of
  Amendment to Registration Rights Agreement

  
	
   

  	
   

  
	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  Schedule 1.1

  	
  List of
  Partners/Interest Holders of the Subject Entities

  
	
  Schedule 4.3

  	
  List of
  Partners/Interest Holders with Interests Outstanding

  
	
  Schedule 4.5(a)

  	
  Paris
  Encumbrances

  
	
  Schedule 4.5(b)

  	
  Geneva
  Encumbrances

  
	
  Schedule 4.5(e)

  	
  Equipment Leases

  
	
  Schedule 4.7

  	
  Consents -
  Noncontravention

  
	
  Schedule 4.8

  	
  Distributions of
  Net Cash

  
	
  Schedule 4.9

  	
  Litigation

  
	
  Schedule 4.10

  	
  Governmental
  Notices

  
	
  Schedule 4.11(d)

  	
  Leasing
  Commissions

  
	
  Schedule 4.11(e)

  	
  Tenant Improvement
  Allowances

  
	
  Schedule 4.17(a)

  	
  Tax Returns

  
	
  Schedule 4.18

  	
  Consents
  Required

  
	
  Schedule 4.21

  	
  Intellectual
  Property

  
	
  Schedule 4.25

  	
  Related Party
  Agreements

  
	
  Schedule 4.26(a)

  	
  Derivative
  Instruments

  
	
  Schedule 4.26(b)

  	
  Prepayment
  Penalty

  
	
  Schedule 6.3

  	
  Conduct of
  Business by Subject Entities

  
	
  Schedule 7.1(c)

  	
  Modifications to
  Governing Documents

  

 

vii

 

	
  Schedule 7.1(d)

  	
  Modifications to
  Geneva LP Governing Documents

  
	
  Schedule 12.1

  	
  Notice Addresses

  

 

viii

 

CONTRIBUTION
AGREEMENT

 

THIS CONTRIBUTION AGREEMENT
(this “Agreement”) is made and entered into as of May 12, 2005, by and among
VORNADO REALTY TRUST (the “Company”), a Maryland real estate investment trust
and the sole general partner of Vornado Realty L.P., a Delaware limited
partnership (the “Operating Partnership”), the OPERATING PARTNERSHIP, CESC
ROSSLYN L.L.C., a Delaware limited liability company and wholly-owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub” and,
together with the Company and the Operating Partnership, “Vornado”), and ROBERT
H. SMITH and ROBERT P. KOGOD, as members, general partners and limited partners
of the Subject Entities (each, a “General Partner” and, collectively, the “General
Partners”), as Representatives (as defined herein), and, for purposes of ARTICLE VIII only, each of Mr. Smith and Mr. Kogod,
individually.

 

RECITALS

 

WHEREAS, Paris Associates
Limited Partnership, a Virginia limited partnership (“Paris LP”) is the owner
of certain real property and improvements located in Arlington County, Virginia
at 1601 North Kent Street, 1611 North Kent Street, 1621 North Kent Street, 1701
North Kent Street and 100 Wilson Boulevard, as more particularly described on
Annex I, as well as a limited partner interest in Geneva LP;

 

WHEREAS, Geneva Associates
Limited Partnership, a Virginia limited partnership (“Geneva LP”) is the owner
of certain real property and improvements located in Arlington County, Virginia
at 1777 North Kent Street, as more particularly described on Annex II;

 

WHEREAS, Rome Associates Limited
Partnership, a Virginia limited partnership (“Rome LP”) is the owner of a
limited partner interest in Geneva LP;

 

WHEREAS, Paris LLC, a Virginia
limited liability company (“Paris LLC,” and together with Paris LP, Geneva LP
and Rome LP, the “Subject Entities”), is the owner of the general partner
interest in Paris LP;

 

WHEREAS, the Operating
Partnership desires to cause the VNO Transaction Sub (which is a disregarded
entity for federal tax purposes) to acquire (i) from the General Partners, all
member, general partner and limited partner interests of the General Partners
in the Subject Entities, and (ii) from the Other Partners, all member, general
partner and limited partner interests of the Other Partners in the Subject
Entities to the extent that such Other Partners elect to contribute such
interests to the VNO Transaction Sub in accordance with this Agreement, all in
exchange for Class A Units of limited partnership interest of the Operating
Partnership (each, a “Unit” and, collectively, the “Units”; such exchange, the “Transaction”);

 

 

WHEREAS;
the parties hereto wish to set forth the terms and conditions on and subject to
which they shall carry out the Transaction.

 

NOW,
THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, the parties hereto do hereby agree as
follows:

 

ARTICLE I

 

THE
TRANSACTION

 

1.1                               Contribution
and Conveyance of Interests. 
On the Closing Date, on the terms and subject to the satisfaction or
waiver of the applicable conditions set forth herein, the General Partners and
all other members, general partners and limited partners of the Subject
Entities who are listed on Schedule 1.1 and
who elect to participate in the Transaction in accordance with the terms of
this Agreement (the “Other Partners,” and collectively with the General
Partners, the “Contributing Partners”) shall contribute and convey to the VNO
Transaction Sub, and the VNO Transaction Sub shall accept from the Contributing
Partners, all of the Contributing Partners’ right, title and interest in and to
the member, general partner and limited partner interests in the Subject
Entities (collectively, “Contributed Interests”).

 

1.2                               Liabilities
to be Assumed by the VNO Transaction Sub.  On the terms and subject to the conditions
set forth herein, the VNO Transaction Sub shall assume only the following
liabilities of the Contributing Partners relating to the Contributed Interests
that they convey to the VNO Transaction Sub on the Closing Date (collectively,
the “Assumed Liabilities”), such assumption to be effective as of the Effective
Date, except as noted below:  all
liabilities in respect of the Contributed Interests arising under the Governing
Documents on or after the Closing Date.

 

1.3                               Closing.  The consummation of the Transaction described
in Section 1.1 (“Closing”) shall take
place on such date and time as the Company and the Operating Partnership may
select by at least five (5) days’ prior notice to the General Partners but not
more than thirty (30) days following expiration of the later of (i) the Study
Period, and (ii) the solicitation period specified in the Information Statement
(as defined herein) and the satisfaction or waiver of the applicable conditions
to the Closing set forth in ARTICLE VII;
provided, however, that (subject to the satisfaction or waiver of such
conditions to the Closing) the Closing Date shall be no later than July 29,
2005, unless the Operating Partnership and the General Partners shall otherwise
agree (the “Closing Date”); provided, however, that, subject to Section 1.5(b)(iii), such date may be extended by
Vornado by such additional period, not to exceed 60 days in the aggregate, as
may reasonably be necessary to allow the satisfaction of the conditions set
forth in Sections 7.1 and 7.2.  The
Closing shall be effective as of 12:01 A.M. on the Closing Date unless the
parties otherwise agree (“Effective Date”). 
The Closing shall be held at the offices of Arnold & Porter LLP, 555
12th Street, N.W., Washington, D.C. 20004, or at such other location as the
parties may agree.

 

2

 

1.4                               Title.  On the Closing Date, the VNO Transaction Sub
shall acquire good and indefeasible title to the Contributed Interests, free of
any Lien, mortgage, deed of trust, reservation, assignment, agreement,
condition, restriction, or title defect (each, an “Exception”), other than
Permitted Exceptions.  For purposes of
this Agreement, a “Lien” shall mean any lien, charge, encumbrance, security
interest, assignment (whether absolute, present, future, conditional,
collateral or otherwise), pledge, option, transfer restriction, agreement,
covenant, adverse claim, order, decree or judgment.  For purposes of this Agreement, “Permitted
Exceptions” shall mean, as to the Contributed Interests, the terms and
conditions of the Governing Documents.

 

1.5                               Consideration.

 

(a)                                  Issuance of Units - General.  The
Units to be issued by the Operating Partnership at Closing shall be calculated
separately with respect to the Geneva Property (as set forth in Section 1.5(b)) and the Paris Property (as set forth in
Section 1.5(c)).  The gross aggregate value of the Geneva
Property and Paris Property, not including the adjustment for cash held by the
Subject Entities or other prorations and adjustments, all as provided in this Section 1.5 and Section 9.2,
is $170,200,000 (“Exchange Value”).  For
purposes of this Agreement:

 

(i)                                     the
term “Paris Interest” means a Contributed Interest that is a limited
partnership interest in Paris LP or a membership interest in Paris LLC;

 

(ii)                                  the
term “Paris Percentage” means, with respect to a given Paris Interest:

 

(A)                              if
such Paris Interest is a limited partnership interest in Paris LP, the percentage
ownership in Paris LP represented by such interest; and

 

(B)                                if
such Paris Interest is a membership interest in Paris LLC, the product of
(x) the percentage ownership in Paris LLC represented by such interest and
(y) the percentage ownership in Paris LP held by Paris LLC. 

 

(iii)                               the
term “Geneva Percentage” means, with respect to a given Contributed Interest:

 

(A)                              if
such Contributed Interest is a limited partnership interest in Geneva LP, the
percentage ownership in Geneva LP represented by such interest; 

 

(B)                                if
such Contributed Interest is a Paris Interest, the product of (x) the
Paris Percentage of such interest and (y) the percentage ownership in
Geneva LP held by Paris LP; and

 

3

 

(C)                                if
such Paris Interest is a membership interest in Rome LP, the product of
(x) the percentage ownership in Rome LP represented by such interest and
(y) the percentage ownership in Geneva LP held by Rome LP;

 

(iv)                              the
term “Paris Allocation” means 58.871915%, unless such percentage is modified
pursuant to Section 5.2(b); and

 

(v)                                 the
term “Geneva Allocation” means 41.128085%, unless such percentage is modified
pursuant to Section 5.2(b).

 

(b)                                 Issuance of Units – Geneva Property. 

 

(i)                                     At
Closing, subject to Section 1.5(d),
the Contributing Partners shall receive from the Operating Partnership on
behalf of the VNO Transaction Sub, as consideration for the contribution to the
VNO Transaction Sub of the Contributed Interests, subject to the Assumed
Liabilities, at Closing, a number of Units, equal to (with the following
operations being performed in the order set forth):

 

(v)           an amount equal to the Geneva
Allocation multiplied  by the Exchange Value (the “Geneva Exchange
Value”) less (a) the outstanding principal under the Permitted Mortgage
Debt allocable to the Geneva Property as of the Closing Date, less (b)
the net aggregate credit to Vornado, if any, as a result of the prorations and
adjustments made on the Closing Date pursuant to Section 9.2
allocable to the Geneva Property (the “Geneva Closing Date
Prorations”), plus (c) the net aggregate debit, if any, to Vornado as a
result of the Geneva Closing Date Prorations,

 

multiplied by

 

(w) the sum of the Geneva
Percentages represented by the Contributed Interests,

 

less

 

(x) the Specified Vornado
Transaction Costs multiplied  by the Geneva Allocation,

 

plus

 

(y) the Specified General
Partner Transaction Costs multiplied  by the Geneva Allocation,

 

4

 

divided
by

 

(z)
the Deemed Value per Unit.

 

For purposes of this Agreement, the “Deemed Value” per
Unit shall be $74.00, subject to Section 1.5(b)(iii).  

 

(ii)                                  Notwithstanding
the foregoing, a number of Units otherwise entitled to be received by the
Contributing Partners pursuant to this Section 1.5(b)
in exchange for the contribution of the Contributed Interests (collectively,
the “Geneva Escrow Units”) shall be retained and held pursuant to the Escrow
Agreement in accordance with the terms of this Agreement and the Escrow
Agreement.  The number of Geneva Escrow
Units shall be calculated as follows: 
$1,000,000.00 divided by the Deemed Value per Unit, multiplied by the
Geneva Allocation, and rounded in accordance with Section 1.5(d).

 

(iii)                               Notwithstanding
any other provision of this Agreement, if the Closing Date is extended by
Vornado pursuant to Section 1.3 to
a date after July 29, 2005, then:

 

(w)                               if
the VNO Stock Price (as defined below), calculated as of the Closing Date, is
greater than or equal to $70.30 and less than or equal to $77.70, then this Section 1.5(b)(iii) shall have no effect.;

 

(x)                                   if
the VNO Stock Price, calculated as of the Closing Date, is less than $70.30,
then the Deemed Value per Unit shall equal $70.30;

 

(y)                                 if
the VNO Stock Price, calculated as of the Closing Date, is greater than $77.70,
then the Deemed Value per Unit shall equal $77.70; and

 

(z)                                   for
purposes of this Agreement, the term “VNO Stock Price” as a of a given date
shall mean the average closing price on the New York Stock Exchange of common
shares of Vornado Realty Trust (Ticker Symbol VNO) for the ten (10) consecutive
trading days ending on and including the trading day preceding such date.

 

(c)                                  Issuance of Units – Paris Specific Property. 

 

(i)                                     At
Closing, subject to Section 1.5(d),
and in addition to the Units to be transferred in accordance with Section 1.5(b), the Contributing Partners who are
contributing Paris

 

5

 

Interests shall receive
from the Operating Partnership on behalf of the VNO Transaction Sub, as
consideration for the contribution to the VNO Transaction Sub of the Paris
Interests, subject to the Assumed Liabilities, at Closing, a number of Units,
equal to (with the following operations being performed in the order set
forth):

 

(v) an amount equal to
the Paris Allocation multiplied  by the Exchange Value (the “Paris
Exchange Value”) less (a) the outstanding principal under the
Permitted Mortgage Debt allocable to the Paris Property (other than Paris LP’s
interest in Geneva LP) (the “Paris Specific Property”) as of the Closing Date, less
(b) the net aggregate credit to Vornado, if any, as a result of the
prorations and adjustments made on the Closing Date pursuant to Section 9.2 allocable to the Paris Specific Property
(the “Paris Closing Date Prorations”), plus (c) the net aggregate
debit, if any, to Vornado as a result of the Paris Closing Date Prorations,

 

multiplied by

 

(w) the sum of the Paris
Percentages represented by the Contributed Interests that are Paris Interests,

 

less

 

(x) the Specified Vornado
Transaction Costs multiplied  by the Paris Allocation,

 

plus

 

(y) the Specified General
Partner Transaction Costs multiplied  by the Paris Allocation,

 

divided
by

 

(z)
the Deemed Value per Unit.

 

(ii)                                  Notwithstanding
the foregoing, a number of Units otherwise entitled to be received by the
Contributing Partners pursuant to this Section 1.5(c)
in exchange for the contribution of the Contributed Interests that are Paris
Interests (collectively, the “Paris Escrow Units”) shall be retained and held
pursuant to the Escrow Agreement in accordance with the terms of this Agreement
and the Escrow Agreement.  The number of
Paris Escrow Units shall be calculated as follows:  $1,000,000.00 divided by

 

6

 

the Deemed Value per
Unit, multiplied by the Paris Allocation, and rounded in accordance with Section 1.5(d).

 

(d)                                 No Registration. 
Notwithstanding any other provision of this Agreement or any other
agreement, if the issuance of Units pursuant to this Section 1.5
would constitute an offering or issuance of securities which is required to be
registered with appropriate governmental authorities under the laws of any
applicable federal, state or other jurisdiction (other than the filing of a
notice Form D with the Securities and Exchange Commission (the “Commission”),
if applicable), the Operating Partnership shall not be obligated to deliver the
Units (and such Units shall not be considered to have been offered), this
Agreement shall terminate and no party hereto shall have any further liability
under or in respect of this Agreement to any other party hereto.

 

(e)                                  No Fractional Units. 
The Operating Partnership shall not issue or deliver any fractional
Units in the Transaction or upon the distribution of Units by the Escrow Agent
(as defined herein).  Prior to any
rounding of Units at Closing pursuant to this Section 1.5(e),
Units to be received by each Contributing Partner pursuant to Section 1.5(b) and, if applicable, Section 1.5(c),
shall be aggregated, and the aggregate amount of Geneva Escrow Units and, if
applicable, Paris Escrow Units, shall be calculated.  The aggregate Units so calculated to be
issued to a given Contributing Partner or to be withheld from a given Contributing
Partner pursuant to the Escrow Agreement shall be rounded such that
(i) fractions of a Unit otherwise issuable that are greater than or equal
to one-half of a Unit shall be rounded to the next largest integral number of
Units, and (ii) fractions of a Unit otherwise issuable that are less than
one-half of a Unit shall be rounded down to the next smallest integral number
of Units.

 

(f)                                    Admission to the Operating Partnership.  Notwithstanding any other provision contained
in this Agreement, upon the Closing, each Contributing Partner acquiring Units
shall be automatically admitted to the Operating Partnership as a limited
partner of the Operating Partnership, without any further act, approval or vote
of any Person.  Each Contributing Partner
shall, upon such admission, be subject to, and bound by, the Vornado
Partnership Agreement, including all of the terms and conditions of such
agreement, the power of attorney granted in Section 15.11 thereof and the
terms agreed to in the Limited Partner Acceptance Agreement executed by each
such Contributing Partner.  The name of
each such Contributing Partner and the number of Units issued to each such
Contributing Partner at the Closing shall be recorded by the Company, as
general partner of the Operating Partnership, in the books and records of the Operating
Partnership.

 

For
purposes of this Agreement, “Person” means any individual, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization or other form of business or legal entity.

 

1.6                               Federal
Income Tax Characterization. 
The General Partners and Vornado each intends that (i) the Transaction
shall be treated as a contribution of the Contributed Interests by the
Contributing Partners to the Operating Partnership solely in exchange for Units
and within the scope of Section 721 of the Internal Revenue Code of

 

7

 

1986, as amended (the “Code”),
and (ii) the VNO Transaction Sub and any other wholly-owned subsidiary of
the Operating Partnership that is involved in the Transaction shall be
disregarded for federal income tax purposes. 
Each Contributing Partner and Vornado shall treat the Transaction as set
forth in this Section 1.6 for all federal income tax purposes.

 

1.7                               Escrow;
Appointment of Representatives.

 

(a)                                  At
the Closing, the Operating Partnership shall deposit or cause to be deposited
in escrow with the escrow agent named in the Escrow Agreement (as defined
herein) (the “Escrow Agent”) the Geneva Escrow Units and the Paris Escrow Units
(collectively, the “Escrow Units”).  Such
Units shall be deposited by the Contributing Partners, and shall be held and
released in accordance with the terms of this Agreement and that certain Escrow
Agreement dated as of the Closing Date, among the Company, the Operating Partnership,
Messrs. Smith and Kogod, each in his capacity as an individual and a
Representative, and the Escrow Agent in substantially the form attached hereto
as Exhibit C-1 (the “Escrow Agreement”). 
The voting, distribution and other rights with respect to the Escrow
Units shall be as set forth in the Escrow Agreement.

 

(b)                                 The
General Partners are hereby authorized and appointed to act for, and on behalf
of, the representatives of any and all of the Contributing Partners (the “Representatives”),
(with full power of substitution) in connection with the Transaction or this
Agreement, including any assertion of any and all claims for satisfaction of a
loss by the Company, the Operating Partnership or certain affiliates pursuant
to the terms of this Agreement, the provisions of the Escrow Agreement and the
Deposit Escrow Agreement pertaining thereto and all actions and determinations
in connection therewith.  The General
Partners hereby agree that the Company and the Operating Partnership may rely
upon the authority of the Representatives to act without any inquiry.  Each Other Partner electing to become a
Contributing Partner hereby designates and appoints the General Partners
(either of whom may act) as its true and lawful attorney-in-fact to execute and
deliver, in its name, place and stead, the Tax Reporting and Protection
Agreement.  Each Other Partner electing
to become a Contributing Partner shall be bound by this Section 1.7(b)
and all other provisions in this Agreement.

 

1.8                               Transfer
Restrictions; Redemption Rights.

 

(a)                                  The
Contributing Partners shall not have the right, during the period commencing on
the Closing Date and ending on the first anniversary thereof, to sell, pledge,
hypothecate, transfer or otherwise dispose of, in whole or in part, directly,
indirectly or beneficially, any of the Units issued in connection with the
Transaction.  Notwithstanding the
foregoing, pursuant to Sections 11.3(A) of the Second Amended and Restated
Agreement of Limited Partnership of the Operating Partnership, as heretofore
amended and as further amended pursuant to Section 5.3
hereof (the “Vornado Partnership Agreement”), the Company, as general partner
of the Operating Partnership, hereby agrees that a Contributing Partner may
transfer all or a portion of its Units issued in connection with the
Transaction (i) in the case of a Contributing Partner who is an

 

8

 

individual, to his or her Immediate Family, any trust formed solely for
the benefit of such Contributing Partner and/or any member of his or her
Immediate Family, or any partnership, limited liability company, joint venture,
corporation or other business entity in which such Contributing Partner and/or
any member of his or her Immediate Family, directly or indirectly, own at least
seventy-five percent (75%) of the equity interests, (ii) in the case of a
Contributing Partner which is a trust, to the beneficiaries of such trust who
are accredited investors (each, an “Accredited Investor”), as such term is
defined pursuant to Rule 501 of Regulation D, (iii) in the case of a
Contributing Partner which is a partnership, limited liability company, joint
venture, corporation, or other business entity, to any of its partners,
members, joint venturers, stockholders, or other owners, as the case may be,
who directly or indirectly owned interests in the Contributing Partner at the
time of the proposed transfer and who are Accredited Investors,
(iv) pursuant to a gift or other transfer without consideration,
(v) pursuant to applicable laws of descent or distribution, and
(vi) to a charitable foundation established and maintained by or on behalf
of such Contributing Partner or a member of such Contributing Partner’s
Immediate Family.  In the case of any
transfer described in clauses (i) through (vi) of the preceding sentence, any
transfer must also comply with Sections 11.3(C), 11.3(D), 11.3(E), 11.4 and
11.6 of the Vornado Partnership Agreement and then only if the transferee
agrees in a writing satisfactory to the Company, as general partner of the
Operating Partnership, acting reasonably, to be bound by the transfer
restrictions contained in this Section 1.8(a).  A trust or other entity may be considered
formed “for the benefit” of a Contributing Partner’s Immediate Family member even
though some other Person has a remainder interest under or with respect to such
trust or other entity.  For purposes of
this Agreement “Immediate Family” means, in the case of a Partner or a
Contributing Partner who is an individual, his or her spouse, parents,
descendants (natural, adoptive or by re-marriage), nephews, nieces, brothers,
sisters and their respective spouses.

 

Notwithstanding
this Section 1.8(a), without the prior
written consent of the Operating Partnership, no Contributing Partner may
transfer or redeem Escrow Units (which will continue to be subject to the
limitations on transfers and redemptions in the Vornado Partnership Agreement)
prior to any release of such units pursuant to the terms of the Escrow
Agreement.

 

(b)                                 All
Units issued pursuant to this Agreement shall contain an appropriate
restrictive legend describing the restrictions on transfer that are applicable
to such Units.

 

(c)                                  The
Units issued pursuant to this Agreement shall have the redemption rights set
forth in the Vornado Partnership Agreement, as amended by the Amendment to the
Vornado Partnership Agreement attached as Exhibit F
hereto.

 

9

 

ARTICLE II

 

THE
STUDY PERIOD AND DEPOSIT ESCROW

 

2.1                               Study
Period.  The General Partners
shall, from the Execution Date until forty-five (45) days after the Execution
Date (the “Study Period”), and if Vornado elects to proceed to Closing under
the terms of this Agreement then through the Closing Date, provide to Vornado
and its representatives access to (x) all documents, contracts, books and
records in the possession of the General Partners or the Subject Entities
regarding the Property, (y) the employees, consultants and contractors with
responsibility for or material information regarding the Property, and (z) such
other information as Vornado reasonably deems necessary (the “Due Diligence”).  Notwithstanding the foregoing, the General
Partners shall be entitled to withhold documents relating solely to the
marketing for sale of the Property. 
Vornado may conduct physical inspections and testing of the Property;
provided that, Vornado shall promptly restore any damage caused by such testing
to its condition prior to such Due Diligence and shall indemnify and defend the
Subject Entities and the General Partners from any and all liability which may
arise as a result of the performance of the review of the Due Diligence.  The General Partners shall cooperate and
shall use commercially reasonable efforts to cause the Subject Entities’
representatives to cooperate fully with Vornado and its representatives in
permitting reasonable access to the Property to conduct the Due Diligence.  Such access may be either during normal
business hours or after normal business hours after the giving of reasonable
advance notice to either of the General Partners or any of their designated
representatives.

 

2.2                               Operating
Information.  The parties to
this Agreement hereby acknowledge that the General Partners delivered the
following to Vornado on or prior to the Execution Date, or shall deliver the
same to Vornado within one (1) week after the Execution
Date:  (i) an initial Rent Roll (as defined herein) dated as of
the Execution Date, (ii) a copy of every Space Lease in effect as of the
Execution Date, (iii) a list of all Equipment Leases and Operating
Agreements and all employees engaged in the management and operation of the
Property, including their salaries, and (iv) all surveys, title policies,
evidence of zoning and subdivision, development plans, structural plans and
specifications, operation and maintenance plans, ADA audits, environmental and
engineering reports and studies related to the Property available to the
Subject Entities and/or the General Partners (the “Preliminary Diligence
Materials”).  At Closing, the General
Partners shall represent and warrant that each Rent Roll is true, correct and
complete in all material respects.  Prior
to the termination of the Study Period, the General Partners will give the Operating
Partnership five (5) days’ prior notice of any proposed lease, renewal, option
or other modification with a tenant or any letter of intent with a prospective
tenant for space at the Property, other than leases of individual residential
units in the ordinary course of business. 
In addition, notwithstanding any other provision of this Agreement, the
parties acknowledge and agree that the Schedules to this Agreement have not
been attached hereto on the Execution Date; the General Partners shall use
commercially reasonable efforts to cause such Schedules to be prepared and
delivered to Vornado within one (1) week after the Execution Date.

 

10

 

2.3                               Termination.  If, in its sole and absolute discretion,
Vornado is not satisfied with any of the results of its review of the Due
Diligence or the Preliminary Diligence Materials, or if Vornado chooses, for
any reason or for no reason, not to proceed with the Transaction, then Vornado
shall have the right to terminate this Agreement by giving written notice (“Termination
Notice”) to the General Partners in the manner set forth in Section 12.1, on or before the expiration of the Study
Period.  Following such notice, Vornado
shall be entitled to recover any cash or letter of credit deposited, pursuant
to the Deposit Escrow Agreement and any earnings thereon.  In the event that this Agreement is
terminated pursuant to this Section 2.3,
the parties hereto (except with respect to the indemnification obligation set
forth in Section 2.1 and any other continuing obligations specifically
provided for in this Agreement) shall be relieved from all further obligation
or liability hereunder except that Vornado shall return all materials provided
to it pursuant to this ARTICLE II.  In the event that Vornado fails to deliver
the Termination Notice as and when required by ARTICLE X,
Vornado shall be deemed to have waived its termination right hereunder.

 

2.4                               Confidentiality.  The parties hereto each agree to, and to
cause each of its respective subsidiaries or affiliates that is an entity and
any employees, agents, officers, directors, shareholders, partners and advisors
of itself or any of its subsidiaries or affiliates that are entities to, hold,
any nonpublic information now or hereafter acquired from any of the parties in strict
confidence and not to use such information for any purpose except in connection
with the Transaction or the other transactions contemplated by this Agreement
and shall not disclose any such information to any Person other than its own
subsidiaries and directors, trustees, officers, employees, accountants,
counsel, financial advisors and other representatives and affiliates without
the prior written consent of the party whose nonpublic information would be
disclosed.  

 

2.5                               Deposit.  Concurrently with the execution of this
Agreement, the Operating Partnership shall deposit or cause to be deposited in
escrow with the escrow agent named in the Deposit Escrow Agreement the amount
of $1,250,000.00 in cash or an irrevocable letter of credit in a form reasonably
acceptable to the General Partners and expiring not less than six months after
issuance.  Any funds deposited pursuant
to the Deposit Escrow Agreement and all earnings thereon shall be held and
released in accordance with the terms of this Agreement and that certain
Deposit Escrow Agreement of even date herewith among the Company, the Operating
Partnership, the General Partners and Walker Title & Escrow Company, Inc.,
the escrow agent, in substantially the form attached hereto as Exhibit C-2 (the “Deposit Escrow Agreement”).  If the Operating Partnership elects to
terminate this Agreement pursuant to Sections 2.3
and 10.1(g), the deposit and all earnings
thereon shall be returned to the Operating Partnership.  If this Agreement is not terminated at or prior
to the expiration of the Study Period, the amount of the deposit under the
Deposit Escrow Agreement shall be increased to $2,500,000.00.  Thereafter, if this Agreement is terminated
pursuant to (i) Section 10.1(c)
as a result of a failure of the condition set forth in Section 7.3
(other than as a result of a failure of the condition set forth in Section 7.3(f)), or (ii) Section 10.1(e),
such deposit and all earnings thereon shall be released to the General
Partners.  If this Agreement is
terminated other than as set forth in the immediately preceding sentence,
including as a result of the failure of a condition to Closing

 

11

 

(including the failure to
obtain all necessary consents of the Vornado Board), the deposit and all
earnings thereon shall be released to the Operating Partnership in accordance
with the terms of the Deposit Escrow Agreement. 
At Closing the deposit and all earnings thereon shall be released to the
Operating Partnership in accordance with the terms of the Deposit Escrow
Agreement.

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES OF VORNADO

 

The
Company, the Operating Partnership and the VNO Transaction Sub, jointly and
severally, represent and warrant to the Contributing Partners as follows, which
representations and warranties will be true and will be given as of the date of
this Agreement (the “Execution Date”) and the Closing Date will survive the
Closing Date as set forth in Section 8.1:

 

3.1                               Organization,
Good Standing and Power of the Company and the Operating Partnership.  The Company is a real estate investment trust
(“REIT”) duly formed and existing under the laws of Maryland in good standing
with the State Department of Assessments and Taxation of Maryland, with the
trust power to own, lease and operate its properties and to conduct its
business as it is currently being conducted and to enter into and perform its
obligations under this Agreement.  The
Company is duly qualified as a foreign organization to transact business and is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the business, properties, assets, financial condition or
results of operations of the Company, the Operating Partnership and the
entities in which the Company or the Operating Partnership, directly or
indirectly, owns or controls 50% or more of the voting or economic interest
(each, a “Vornado Subsidiary” and collectively, the “Vornado Subsidiaries”),
taken as a whole (a “Vornado Material Adverse Effect”).  The Company has provided or made available to
the General Partners complete and correct copies of its Amended and Restated
Declaration of Trust (the “Declaration of Trust”) and Amended and Restated
Bylaws (the “Bylaws”), as amended or supplemented to the date of this Agreement
(which includes all resolutions of the Board of Trustees of the Company (the “Vornado
Board”) taken pursuant to the Declaration of Trust or Bylaws that have the
effect of changing or waiving provisions of those documents or designating the
terms of equity securities issued pursuant to the Declaration of Trust).  The Operating Partnership has furnished to
the General Partners true, correct and complete copies of its Certificate of
Limited Partnership and the Vornado Partnership Agreement, both as amended or
supplemented to the date of this Agreement.

 

(a)                                  The
Company is organized in conformity with the requirements for qualification as a
REIT under the Code and currently intends to operate in a manner which allows
the Company to continue to meet the requirements for taxation as a REIT under
the Code.

 

12

 

(b)                                 The
Operating Partnership has been duly formed and is validly existing as a limited
partnership in good standing under the laws of the State of Delaware and has
the partnership power and authority to own, lease and operate its properties
and to conduct its business as it is currently being conducted and is duly
qualified as a foreign organization to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a Vornado Material
Adverse Effect.  The Company is the sole
general partner of, and owned an approximately eighty-seven percent (87%)
common limited partner interest in, the Operating Partnership as of December
31, 2004.

 

(c)                                  Each
Vornado Subsidiary, other than the Operating Partnership, which is covered in
paragraph above, has been duly formed and is validly existing in good standing
under the laws of the jurisdiction of its organization and has the power and
authority to own, lease and operate its properties and to conduct its business
as it is currently being conducted and is duly qualified as a foreign
organization to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify would not have a Vornado Material Adverse Effect.

 

3.2                               Capitalization. Each of the Company and the Operating
Partnership has the capitalization disclosed in the respective Annual Reports
on Form 10-K of the Company and the Operating Partnership for the year ended
December 31, 2004 (including all documents incorporated therein by reference)
and any reports, schedules, forms, statements and other documents filed with
the Commission since January 1, 2005 (collectively, the “Vornado SEC Documents”).  All of the issued and outstanding shares of
beneficial interest, par value $.04 per share of the Company (“Vornado Common
Shares”) and the issued and outstanding units of beneficial interest in the
Operating Partnership have been duly and validly authorized and issued and are
fully paid and nonassessable.

 

3.3                               Authorization
of this Contribution Agreement. 
Each of the Company, the Operating Partnership and the VNO Transaction
Sub has the requisite trust, partnership or limited liability company, as the
case may be, power and authority to enter into this Agreement and, subject to
obtaining the necessary consent of the Vornado Board, to consummate the
transactions contemplated by this Agreement to which the Company, the Operating
Partnership or the VNO Transaction Sub (as the case may be) is a party.  The execution and delivery of this Agreement
by each of the Company, the Operating Partnership and the VNO Transaction Sub
and, subject to obtaining the necessary consent of the Vornado Board, the
consummation by the Company, the Operating Partnership and the VNO Transaction
Sub of the transactions contemplated by this Agreement to which the Company,
the Operating Partnership or the VNO Transaction Sub, as the case may be, is a
party have been duly authorized by all necessary trust, partnership or limited
liability company, as the case may be, action on the part of each of the
Company, the Operating Partnership and the VNO Transaction Sub.  This Agreement has been duly executed and
delivered by each of the Company, the

 

13

 

Operating Partnership and
the VNO Transaction Sub and constitutes a valid and binding obligation of each
of the Company, the Operating Partnership, and the VNO transaction Sub,
enforceable against each of the Company, the Operating Partnership and the VNO
Transaction Sub in accordance with its terms, except as such enforcement may be
limited by (i) applicable bankruptcy, insolvency reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, and (ii) equitable principles of general
applicability relating to the availability of specific performance, injunctive
relief, or other equitable remedies.

 

3.4                               Financial
Statements.  The consolidated
financial statements of the Company and the Operating Partnership included in
their respective Annual Reports on Form 10-K for the year ended December 31,
2004 (collectively, the “Vornado Financial Statements”) complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis during the
period involved (except as may be indicated in the notes thereto) and fairly
presented, in accordance with the applicable requirements of GAAP, the
consolidated financial position of the Company and the Vornado Subsidiaries,
taken as a whole, as of the dates thereof and the consolidated results of
operations and cash flows for the periods then ended, except for liabilities
and obligations which would not have a Vornado Material Adverse Effect.  Except as set forth in the Vornado Financial
Statements, to the knowledge of the Company, neither the Company nor any
Vornado Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
a consolidated balance sheet of the Company or which, individually or in the
aggregate, would have a Vornado Material Adverse Effect.

 

3.5                               Absence
of Certain Changes or Events. 
Except as disclosed in the Vornado SEC Documents, since December 31,
2004, neither the Company nor any of the Vornado Subsidiaries has sustained an
occurrence or circumstance that has had a Vornado Material Adverse Effect (a “Vornado
Material Adverse Change”), nor has there been any occurrence or circumstance
that with the passage of time would reasonably be expected to result in a
Vornado Material Adverse Change.

 

3.6                               Taxes.

 

(a)                                  As
used in this Agreement, “Taxes” will include all federal, state, local and foreign
income, property, sales, employee withholding, excise and other taxes, tariffs
or governmental charges of any nature whatsoever, together with penalties,
interest or additions to Tax with respect thereto.

 

(b)                                 The
Company, (i) beginning with its taxable year ended December 31, 1993 and
through the most recent December 31, has been subject to taxation as a REIT
within the meaning of the Code and has satisfied all requirements to qualify as
a REIT for such years, (ii) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for the tax year ending
December 31, 2005, and (iii) has not taken or omitted to take any action
which would reasonably be expected to result in a

 

14

 

challenge to its status as a REIT, and to the knowledge of Vornado, no
such challenge is pending or threatened.

 

(c)                                  The
Operating Partnership (i) beginning with its taxable year ended December
31, 1997 has qualified as a partnership for federal income tax purposes (and is
not classified as an association taxable as a corporation for federal income
tax purposes), (ii) has operated, and intends to continue to operate, in
such a manner as to qualify as a partnership and avoid classification as a
corporation and (iii) has not taken or omitted to take any action which
would reasonably be expected to result in a challenge to its status as a
partnership, and to the knowledge of Vornado, no such challenge is pending or
threatened.  VNO Transaction Sub is an
entity that is disregarded for federal income tax purposes with the Operating
Partnership treated for federal income tax purposes as owning all assets owned
by VNO Transaction Sub.

 

3.7                               Absence
of Conflicts and Defaults. 
The execution and delivery of this Agreement and the compliance by
Vornado with all of the provisions of this Agreement, and the consummation of
the transactions contemplated herein, including the issuance of the Units by
the Operating Partnership, and any Common Shares issuable upon the redemption
of such Units, will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of the Company, the Operating Partnership, the
VNO Transaction Sub or any other Vornado Subsidiary under (i) the
Declaration of Trust or Bylaws or the comparable organizational documents of
any such entity, each as amended or supplemented to the date of this Agreement,
(ii) any loan or credit agreement, note, bond, mortgage, indenture,
reciprocal easement agreement, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company, the Operating Partnership, the
VNO Transaction Sub or any other Vornado Subsidiary or their respective
properties or assets, or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any law, ordinance,
governmental rule, permit, license, regulation, judgment, order or court decree
(collectively, “Laws”) applicable to the Company, the Operating Partnership,
the VNO Transaction Sub or any other Vornado Subsidiary or their respective
properties or assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate would not (x) have a Vornado Material Adverse Effect, or (y) prevent the
consummation of the Transaction.  No
consent, approval, order or authorization of, or registration, declaration or
filing with, any nation, government, state or political subdivision of or any
agency or department of any thereof (collectively, “Governmental Entity”) is
required by or with respect to the Company, the Operating Partnership, the VNO
Transaction Sub or any other Vornado Subsidiary in connection with the
execution and delivery of this Agreement or the consummation by the Company,
the Operating Partnership or the VNO Transaction Sub, as the case may be, of
any of the transactions contemplated by this Agreement, except for (1) the
filing with the Commission of such reports and filings under the Securities Act
and under Sections 13(a) and 13(d) of the Exchange Act (as defined herein), as
may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (2) such filings as may be required in

 

15

 

connection with the
payment of any transfer Taxes (as defined herein) and (3) such other consents,
approvals, orders, authorizations, registrations, declarations and filings as
(A) may be required under (x) federal, state or local environmental laws, or
(y) the “blue sky” laws of various states, or (B) which, if not obtained or
made, would not, in the aggregate, have a Vornado Material Adverse Effect or
prevent the consummation of the Transaction.

 

3.8                               Vornado
SEC Documents.  The Company
and the Operating Partnership have filed all reports, schedules, forms,
statements and other documents required to be filed by them with the Commission
since January 1, 2004.  The Vornado SEC
Documents, when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of the
Securities Act or Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.

 

3.9                               No
Securityholder Vote Required. 
No votes of the holders of any class or series of the Company’s shares
of beneficial interest or any of the unitholders of any class or series of
partnership units of the Operating Partnership is necessary (under applicable
law or any of such entity’s organizational documents or otherwise) to approve
this Agreement and the transactions contemplated hereby.  Other than the necessary consent of the
Vornado Board, no trust, partnership or limited liability company action is
necessary to approve this Agreement and the transactions contemplated hereby.

 

3.10                        Definition
of “Knowledge.”  As used in
this Agreement, “knowledge of Vornado,” “knowledge of the Company,” “knowledge
of each of the Company and the Operating Partnership” or “knowledge of any
Vornado Subsidiary” (or words of similar import) means the actual knowledge of
Joseph Macnow.

 

ARTICLE IV

 

REPRESENTATIONS
AND WARRANTIES OF

THE GENERAL PARTNERS

 

The
General Partners hereby represent and warrant to Vornado as follows, which
representations and warranties will be true and will be given as of the
Execution Date and the Closing Date and will survive the Closing Date is set
forth in Section 8.1.

 

4.1                               Organization,
Good Standing and Qualification. 
Each of Paris LP, Geneva LP and Rome LP has been duly formed and is
validly existing as a limited partnership in good standing under the laws of
the Commonwealth of Virginia with partnership power and authority to own, lease
and operate its properties and conduct the business in which it is
engaged.  Paris LLC has been duly formed
and is validly existing as a limited liability company in good standing under
the laws of the Commonwealth of Virginia with limited liability company power
and authority to own, lease and operate its properties and conduct the business
in which it is engaged.   Each Subject
Entity is duly qualified to transact business and is in good standing under the
laws of each jurisdiction

 

16

 

in which it owns or
leases properties, or conducts any business, so as to require such
qualification other than in such jurisdictions where the failure to be so
qualified or licensed, individually or in the aggregate, would not have a
Subject Entities Material Adverse Effect (as defined herein).  The General Partners have furnished or made
available to the Company and the Operating Partnership true, correct and
complete copies of its Certificate of Limited Partnership and the Limited
Partnership Agreement of Paris LP, Geneva LP and Rome LP, each as amended or
supplemented to the date of this Agreement, and the Articles of Organization
and Operating Agreement of Paris LLC, each as amended or supplemented to the
date of this Agreement (collectively, the “Governing Documents”).  The Subject Entities are not in violation of
the Governing Documents.

 

4.2                               Enforceability.  This Agreement has been duly executed and
delivered by the General Partners and constitutes the legal, valid and binding
agreement of the General Partners enforceable against them in accordance with
its terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, and (ii) equitable
principles of general applicability relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

 

4.3                               Capital
Structure.  The only interests
in the Subject Entities outstanding are those membership or partnership
interests indicated on Schedule 4.3 which
are held by the Persons that are identified as the holders of such interests on
Schedule 4.3.  Except as set forth in Schedule 4.3,
no interests of the Subject Entities are issued, reserved for issuance or
outstanding.  All outstanding interests
in the Subject Entities are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.  There are no bonds, debentures, notes or
indebtedness of the Subject Entities or any other entity which give the holder
thereof the right to vote (or which are convertible into, or exchangeable for,
securities having the right to vote) on any matters on which the holders of
interests in the Subject Entities may vote. 
Except as set forth in Schedule 4.3 or
in the Governing Documents, there are no outstanding securities, options,
warrants, calls, rights, convertible securities, commitments, agreements,
arrangements or undertakings of any kind to which any of the Subject Entities
is a party or by which any of the Subject Entities is bound, obligating any
Subject Entity to issue, deliver or sell, or cause to be issued, delivered or
sold, additional interests in the Subject Entity to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. 
Except as set forth in Schedule 4.3,
there are no outstanding contractual obligations of any Subject Entity to
repurchase, redeem or otherwise acquire any shares of beneficial interest or
other ownership interests in any Subject Entity or to make any material
investment (in the form of a loan, capital contribution or otherwise) in any
Person.

 

4.4                               No
Subsidiaries.  No Subject
Entity owns, directly or indirectly, any capital stock or other ownership
interest in any Person, other than (i) interests in Environmental Control
Associates, (ii) in the case of Paris LLC, an interest in Paris LP,
(iii) in the case of Rome LP, an interest in Geneva LP, and (iv) in the
case of Paris LP, an interest in Geneva LP.

 

17

 

4.5                               Property;
Equipment Leases.  Paris LP is
the sole owner of good and marketable title to all Paris Property other than
the Paris Real Property, free and clear of all Encumbrances other than the
Permitted Mortgage Debt and those Encumbrances set forth on Schedule 4.5(a).

 

(b)                                 Geneva
LP is the sole owner of good and marketable title to all Geneva Property other
than the Geneva Real Property, free and clear of all Encumbrances other than
the Permitted Mortgage Debt and those Encumbrances set forth on Schedule 4.5(b).

 

(c)                                  Paris
LLC has good and marketable title to its general partner interest in Paris LP
free and clear of all Exceptions.

 

(d)                                 Rome
LP has good and marketable title to its limited partner interest in Geneva LP
free and clear of all Exceptions.

 

(e)                                  Schedule 4.5(e) sets forth all Equipment Leases in effect on
the date hereof for equipment where the remaining payments under a given lease
total $10,000 or more, and the General Partners have made available to Vornado
true, accurate and complete copies of such Equipment Leases.  Each of the Equipment Leases is in full force
and effect and neither the applicable Subject Entity nor, to the knowledge of
the General Partners, any other party thereto, is in default in any material
respect thereunder and no event has occurred which, with the lapse of time or
the giving of notice, or both, would constitute a default in any material
respect thereunder.  The equipment owned
by the Subject Entities, together with such equipment, if any, as the Subject
Entities have the right to use under an Equipment Lease, is sufficient to
permit the full operation of the Property for its intended purpose.

 

4.6                               Operating
and Other Agreements.  The
General Partners have made available to Vornado a true, accurate and complete
copy of each maintenance, construction, service or supply contract that affect
any portion of the Paris Real Property, Paris Personal Property, Geneva Real
Property or Geneva Personal Property (collectively, “Operating Agreements”) in
effect as of the date hereof.  All of the
Operating Agreements are cancelable without penalty on not more than sixty (60)
days’ notice to the other party.  At the
Closing, there will be no agreement in effect relating to the provision of
management or leasing services to the Property other than the contracts
described on Schedule 4.6.

 

4.7                               Noncontravention.  Except in connection with consents set forth
in Schedule 4.7, the execution, delivery
and performance of this Agreement by the General Partners and the consummation
by the Contributing Partners of the Transaction and other transactions
contemplated by this Agreement will not conflict with, or result in any
violation of, or conflict with, or constitute a default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon the
Contributed Interests under (i) the Governing Documents, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, reciprocal easement

 

18

 

agreement, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
any Subject Entity or by which any property or asset of any Subject Entity is
bound or affected, or (iii) any Laws applicable to any Subject Entity or
by which any property or asset of any Subject Entity is bound or affected.  No consent, approval, order or authorization
of, or registration, declaration or filing with, any third party or
Governmental Entity (as defined herein) is required by or with respect to the
General Partners in connection with the execution and delivery of this
Agreement or the consummation by the Contributing Partners of any of the
transactions contemplated by this Agreement, except for (A) such filings as may
be required in connection with the payment of any transfer Taxes and (B) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings as are set forth in Schedule 4.7 or
which, if not obtained or made, would not, in the aggregate, have a Subject
Entities Material Adverse Effect (as defined herein) or prevent the
consummation of the Transaction.

 

4.8                               Absence
of Certain Changes or Events. 
Since December 31, 2003, each Subject Entity has conducted its business
in the ordinary course consistent with its past practices and there has not
been (i) any occurrence or circumstance affecting any Subject Entity that
has had, or that with the passage of time would reasonably be expected to have,
a material adverse effect on the results of operations, assets, business,
properties, or financial condition of the Subject Entities, taken as a whole (a
“Subject Entities Material Adverse Effect”), (ii) any damage, destruction
or loss not covered by insurance (subject to deductibles), (iii) any
change in accounting methods, principles or practices by any Subject Entity,
except insofar as required by a change in GAAP, (iv) except for
distributions of net cash in the ordinary course of business of the Subject
Entities, or as set forth in Schedule 4.8, or
as otherwise provided for in this Agreement, any declaration, setting aside or
payment of any distribution (whether in cash, stock or property) with respect
to any interests in any Subject Entity, or (v) any split, combination or
reclassification of any interests in any Subject Entity or any issuance or the
authorization of any issuance of any other securities in respect of, or in lieu
of or in substitution for, or giving the right to acquire by exchange or
exercise, its interests.

 

4.9                               Litigation.  Except as set forth in Schedule 4.9,
and other than personal injury, routine tort litigation that has arisen from
the ordinary course of operation of the Subject Entities and which are covered
by adequate insurance (other than deductibles), there is no action, suit or
proceeding pending or, to the knowledge of the General Partners, threatened
against or affecting the General Partners or Subject Entities which, if
determined adversely to the General Partners or Subject Entities, individually
or in the aggregate, could reasonably be expected to (A) have a Subject
Entities Material Adverse Effect, or (B) prevent the consummation of the
Transaction, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the General Partners or
Subject Entities having, or which, insofar as reasonably can be foreseen, in
the future would have either such effect.

 

4.10                        Intentionally
Deleted.

 

4.11                        Space
Leases.

 

19

 

(a)                                  With
respect to the residential portions of the Property, each of the rent roll
provided by the General Partners to the Company and the Operating Partnership
dated as of the Execution Date and the rent roll to be provided to the Company
and the Operating Partnership at or immediately prior to the Closing pursuant
to Section 7.2(a) (each a “Rent Roll”
and collectively, the “Rent Rolls”) is accurate and complete in all material
respects.  With respect to the non-residential
portions of the Property, the General Partners have made or will make available
to Vornado true, correct and complete copies of all of such leases or other
agreements affecting the occupancy of the Property, including all amendments,
modifications, supplements, renewals, extensions and guarantees related thereto
(collectively, the “Space Leases”).  

 

(b)                                 Except
as set forth on Schedule 4.11(b), there are no
leasing commissions or similar payments that are payable in respect of any of
the Space Leases.

 

4.12                        Intentionally
Deleted.

 

4.13                        Intentionally
Deleted. 

 

4.14                        Environmental
Compliance.  Except as
provided in any environmental report furnished to or obtained by the Company
and the Operating Partnership with respect to the Property, to the knowledge of
the General Partners (i) none of the Subject Entities nor any other Person
has caused or permitted (A) the unlawful presence of any Hazardous
Materials on the Property, which presence or occurrence would, in the
aggregate, have a Subject Entities Material Adverse Effect; or (B) any
unlawful spills, releases, discharges or disposal of Hazardous Materials to
have occurred or be presently occurring on or from the Property as a result of
any construction on or operation and use of the Property which would, in the
aggregate, have a Subject Entities Material Adverse Effect; and (ii) the
Property and the Subject Entities are in compliance with all applicable
Environmental Laws, except to the extent such failure to comply, in the
aggregate, would not have a Subject Entities Material Adverse Effect.

 

4.15                        Compliance
with Laws and Other Instruments. 
Except as set forth in Schedule 4.15,
to the knowledge of the General Partners, the Subject Entities are not
(i) in violation of any Governing Documents, (ii) in default, and no
event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which
it is bound or to which any of its properties or assets is subject or
(iii) in violation of, and the General Partners have not received any
notice of any alleged violation, which has not been cured, of any Laws to which
it or its property or assets may be subject or has failed to obtain any
license, certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or the conduct of its business,
except for any such violations, defaults or failures to comply described in
clauses (ii) or (iii) of this Section 4.15
which would not, in the aggregate, have a Subject Entities Material Adverse
Effect.

 

4.16                        Intentionally
Deleted.

 

20

 

4.17                        Taxes.

 

(a)                                  Except
as set forth in Schedule 4.17(a), the Subject
Entities have (i) duly and timely filed all tax returns and information
returns required to be filed by them (after giving effect to any filing
extensions properly granted by a Governmental Entity having the authority to do
so) and all such returns are accurate and complete in all material respects and
(ii) paid or withheld, as applicable, all Taxes required to be shown on
such returns and reports or otherwise required to be paid or withheld, as
applicable, by them, and the Subject Entity Financial Statements reflect an
adequate reserve for all material Taxes payable by the Subject Entities for all
taxable periods and portions thereof through the date of such financial
statements, except for such failures that do not have a Subject Entities
Material Adverse Effect.  Complete and
correct copies of all federal, state and local tax returns and reports for the
Subject Entities and all written communications relating thereto have been
provided or made available to Vornado. 
Since the date of the Subject Entity Financial Statements, the Subject
Entities have not incurred any material liability for Taxes other than Taxes
incurred in the ordinary course of business. 
To the knowledge of the General Partners, no event has occurred, and no
condition or circumstance exists, which presents a material risk that any
material Taxes described in the preceding sentence with respect to the period
described in the said sentence will be imposed upon the Subject Entities or the
Property.  Except as set forth in Schedule 4.17(a), or as are reserved for in the Subject
Entity Financial Statements, no deficiencies for any Taxes have been assessed
or, to the knowledge of the General Partners, proposed or asserted against the
Subject Entities or the Property and no requests for waivers of the time to
assess such Taxes are pending, except for such deficiencies that do not have a
Subject Entities Material Adverse Effect.

 

(b)                                 To
the knowledge of the General Partners, the Subject Entities as of the Closing
Date, do not own, in the aggregate, securities of any one issuer (other than
any other Subject Entity) having a value of more than 10% of the total value of
the outstanding securities of such issuer.

 

(c)                                  Each
of the Subject Entities and the General Partners, and to the knowledge of the
General Partners, the Other Partners, is a “United States person” within the
meaning of Section 7701(a)(30) of the Code.

 

(d)                                 To
the knowledge of the General Partners, all of the liabilities of the Subject
Entities expected to be outstanding as of the Closing qualify as “qualified
liabilities” as defined in Treasury Regulations § 1.707-5(a)(6).

 

(e)                                  To
the knowledge of the General Partners, the Subject Entities do not currently
and, prior to the Closing, will not and will not agree to, directly or
indirectly furnish or render services to the tenants of the Real Property or
Personal Property, or manage or operate, such property, other than either
(i) through an “independent contractor” with respect to the Subject
Entities (within the meaning of Section 856(d)(3) of the Code) from whom
or which the Subject Entities do not derive or receive any income within the
meaning of Section 856(d)(7) of the Code (treating each of the Subject
Entities for the purposes of this representation as if it were a “real estate

 

21

 

investment trust” as defined in Section 856(a) of the Code) or
(ii) services usually or customarily rendered in connection with the
rental of space for occupancy only within the meaning of Treasury Regulations
Section 1.512(b)-1(c)(5), or not rendered primarily for the convenience of
the occupant of the real property, within the meaning of Treasury Regulations
Section 1.512(b)-1(c)(5).

 

(f)                                    To
the knowledge of the General Partners, the Subject Entities do not currently
and, prior to Closing, will not and will not agree to receive or accrue rent
attributable to Personal Property except with respect to a lease of Real
Property where the average of the fair market values of the Personal Property
at Closing will not exceed 15 percent of the average of the aggregate fair
market values at Closing of the Real Property and the Personal Property leased
under such lease within the meaning of Section 856(d)(1) of the Code.

 

(g)                                 To
the knowledge of the General Partners, the Subject Entities do not currently
receive or accrue or have the right to receive or accrue, and, prior to
Closing, will not and will not agree to receive or accrue, directly or
indirectly, any rent or interest, where the determination of the amount of rent
or interest depends, in the case of rent, on the income or profits of any
Person from the Property, and, in the case of interest, upon the income or profits
of any Person, other than interest or rent that is based on a fixed percentage
or percentages of receipts or sales within the meaning of
Section 856(d)(2)(A) or Section 856(f)(l)(A) of the Code.

 

4.18                        Vote
Required; Consents.  If the
Transaction is consummated, other than the consents described on Schedule 4.18, no vote or consent of the holders of any
class or series of interests of any Subject Entity is necessary or required to
approve this Agreement, the Transaction and any other transaction contemplated
hereby.

 

4.19                        Subject
Entity Financial Statements; Undisclosed Liabilities.

 

(a)                                  The
audited financial statements for each of Paris LP and Geneva LP for the year
ended December 31, 2003 (the “Subject Entity Financial Statements”) have been
provided to Vornado, and the Subject Entity Financial Statements fairly present
the financial position of Paris LP and Geneva LP, respectively, as of the
respective dates, and present the results of operations and changes in
financial position for the respective periods, indicated therein, on a basis
consistent with prior accounting periods (except as may be stated in the notes
thereto).

 

(b)                                 Promptly
upon completion of the audited financial statements for each of Paris LP and
Geneva LP for the year ended December 31, 2004, the General Partners shall
provide to Vornado copies of such financial statements and such financial
statements shall be considered Subject Entity Financial Statements.

 

(c)                                  There
exist no liabilities (whether accrued, contingent, absolute or otherwise) of
the Subject Entities except (i) liabilities reflected in the most recent
balance sheets included in the Subject Entity Financial Statements,
(ii) liabilities incurred in the ordinary course of business by Paris LP
or Geneva LP since the date of such balance

 

22

 

sheet that would not be reasonably expected to have a Subject Entities
Material Adverse Effect, or (iii) liabilities that are of the type that
would not be required to be reflected on a combined balance sheet of the
Subject Entities, or in the notes thereto, if such balance sheet were prepared
in accordance with GAAP as of the date hereof.

 

(d)                                 The
Subject Entity Financial Statements, and any additions thereto with respect to
the quarterly periods in 2005, to be included in the Information Statement will
present the results of operations and changes in financial position for the
respective periods, indicated therein, on a basis consistent with prior
accounting periods (except as may be stated in the notes thereto).  Notwithstanding anything to the contrary
contained in this Agreement, this representation and warranty will be effective
as of the date of this Agreement, the date of the Information Statement and the
date of the Closing.  The Subject Entities
have, or as of the date of the distribution of the Information Statement will
have, received the necessary approvals, if any, of the Subject Entities’
auditors to the inclusion of such financials in the Information Statement.

 

4.20                        Intentionally
Deleted.

 

4.21                        Intellectual
Property Rights.  To the
knowledge of the General Partners, the Subject Entities own and possess all
right, title and interest in and to the intellectual property set forth on Schedule 4.21.  The
Subject Entities own and possess all right, title and interest in or have a
valid and enforceable license to use, all material intellectual property rights
used in connection with their businesses, and none of such intellectual
property rights is subject to any claim, judgment, injunction, order, decree,
pledge, encumbrance or agreement restricting in any material respect the use or
licensing thereof by the Subject Entities. 
Except as set forth in Schedule 4.21,
there are no pending, or, to the knowledge of the General Partners, threatened claims
or proceedings (i) alleging that the use or possession by the Subject
Entities of any of such intellectual property rights, infringes,
misappropriates or violates any third person’s rights; or (ii) challenging
the ownership, possession or use of any registration of any such intellectual
property rights, and the General Partners are not aware of any grounds for such
claims or proceedings.  To the knowledge
of the General Partners, no Person is infringing, misappropriating or violating
any of such intellectual property rights, except where any such infringement,
misappropriation or violation would not have a Subject Entities Material
Adverse Effect.

 

4.22                        Investment
Company Act of 1940.  No
Subject Entity is, or will be at the Closing, an “investment company” as
defined in the 1940 Act, and no Subject Entity is controlled by an investment
company.

 

4.23                        Intentionally
Deleted.

 

4.24                        Employees.  The Subject Entities have no employees (other
than any employees of the management companies retained by the Subject Entities
that may be deemed to be employees of the Subject Entities as a matter of
common law) and have not sponsored, maintained, contributed to or been required
to contribute to any “employee benefit plan” within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).

 

23

 

4.25                        Related
Party Transactions.  Except as set
forth in Schedule 4.25, there are no
arrangements, agreements or contracts entered into by the Subject Entities with
any General Partner or Person who is an executive officer, director of any
Subject Entity or any Person who owns more than a five percent (5%) economic or
voting interest of any Subject Entity, or any member of the immediate family or
affiliates of any of the foregoing.

 

4.26                        Contracts
and Debt Instruments.

 

(a)                                  Schedule 4.26(a) sets forth a list of each loan or
credit agreement, note, bond, mortgage, indenture or any other primary
agreement or instrument pursuant to which any indebtedness of the Subject
Entities is outstanding or may be incurred, true and correct copies of which
have been made available to Vornado (collectively, “Permitted Mortgage Debt”).  Except as set forth in Schedule 4.26(a),
the Subject Entities do not have any derivative instruments outstanding.

 

(b)                                 Except
as set forth in Schedule 4.26(b), the Subject
Entities are not a party to any agreement which would restrict any of them from
prepaying any of their indebtedness without premium or penalty at any time.

 

(c)                                  The
Subject Entities do not have any pending claim or, to the knowledge of the
General Partners, any threatened claims regarding material continuing
contractual liability (A) for indemnification under any agreement relating
to the sale of real estate previously owned, whether directly or indirectly, by
the Subject Entities or (B) to pay any additional purchase price for any
of the Property.

 

(d)                                 The
Subject Entities have not entered into, nor is any of them subject, directly or
indirectly, to, any tax protection agreements. 
As used herein, a “tax protection agreement” is an agreement, oral or
written, (A) that has as one of its purposes to permit a Person to take
the position that such Person could defer federal taxable income that otherwise
might have been recognized upon a transfer of property to the Subject Entity
that is treated as a partnership for federal income tax purposes, and that (i) prohibits
or restricts in any manner the disposition of any assets of any Subject Entity,
(ii) requires that any Subject Entity to maintain, put in place, or
replace, indebtedness, whether or not secured by any of the Property or (iii) requires
that any Subject Entity offer to any Person at any time the opportunity to
guarantee or otherwise assume, directly or indirectly (including through a “deficit
restoration obligation,” guarantee (including a “bottom” guarantee),
indemnification agreement or other similar arrangement), the risk of loss for
federal income tax purposes for indebtedness or other liabilities of any
Subject Entity, (B) that specifies or relates to a method of taking into
account book-tax disparities under Section 704(c) of the Code with
respect to one or more assets of any Subject Entity, or (C) that requires
a particular method for allocating one or more liabilities of any Subject
Entity under Section 752 of the Code. 
The Subject Entities have not entered into any agreements that specify a
method of taking into account book-tax disparities under Section 704(c) of
the Code with respect to appreciated assets that have been contributed to the
Subject Entities.

 

24

 

4.27                        Standstill
Agreements.  No Subject Entity
is a party to, or bound by, any confidentiality, standstill or similar
agreements.

 

4.28                        Brokers
and Finders.  No broker,
investment banker, financial advisor or other Person, other than Stanger &
Co., the fees and expenses of which have previously been disclosed to Vornado,
is entitled, or would, assuming the consummation of the Transaction, be
entitled, to any broker’s, finder’s, financial advisor’s or other similar fee
or commission in connection with the Transaction based upon arrangements made
by or on behalf of the General Partners or any Subject Entity.

 

4.29                        Definition
of “Knowledge.”  As used in
this Agreement, knowledge of the General Partners (or words of similar import)
means the actual knowledge of Robert H. Smith and Robert P. Kogod.

 

4.30                        Securities
Law Matters.  The General
Partners make those acknowledgments, representations, warranties, and
agreements of the “Investor” set forth on Exhibit D
which by the terms of Exhibit D
apply to the General Partners.

 

4.31                        Evidence
of Partnership Interests.  The
only document that has been distributed by any Subject Entity to any member or
partner of such Subject Entity evidencing such member’s or partner’s interest
in the Subject Entity is a copy of the Governing Documents, including a
then-current Schedule “A” thereto, and no certificates or other evidences
of interest in any Subject Entity has ever been issued to any member or partner
in any Subject Entity.

 

ARTICLE V

 

COVENANTS

 

5.1                               Execution
of Tax Reporting and Protection Agreement.  On the Closing Date, the Company, the
Operating Partnership and the VNO Transaction Sub shall enter into the Tax
Reporting and Protection Agreement in substantially the form attached hereto as
Exhibit E, with Messrs. Smith and Kogod, in their capacity as
Members, General Partners and Limited Partners of the Subject Entities and in
their capacity as the Representatives of and for the benefit of each
Contributing Partner (the “Tax Reporting and Protection Agreement”).

 

5.2                               Information
Statement.

 

(a)                                  Each
of the General Partners, the Company and the Operating Partnership shall use
its commercially reasonable efforts to cause the timely preparation and mailing
of an information statement in respect of the solicitation of the agreement of
each Other Partner to contribute its interests in the Subject Entities as part
of the Transaction (the “Information Statement”).  Vornado shall cause the preparation of the
Information Statement, subject to consent of the General Partners, not to be unreasonably
withheld, delayed or conditioned. 
Vornado’s obligation to mail the Information Statement shall be
conditioned on Vornado’s receiving a “comfort” letter from Hariton,

 

 

25

 

Mancuso & Jones, P.C., independent public accountants for
Paris LP and Geneva LP, of the kind contemplated by the Statement of Auditing
Standards with respect to Letters to Underwriters promulgated by the American
Institute of Certified Public Accountants (the “AICPA Statement”), dated as of
the date of the Information Statement, addressed to the Company, the Vornado
Board and the Operating Partnership, in form and substance reasonably
satisfactory to the Company and the Operating Partnership, concerning the
procedures undertaken by Hariton, Mancuso & Jones, P.C. with respect
to the financial statements and information of Paris LP and Geneva LP contained
in the Information Statement and the other matters contemplated by the AICPA
Statement and otherwise customary in scope and substance for letters delivered
by independent public accountants in connection with transactions such as those
contemplated by this Agreement.

 

(b)                                 The
General Partners shall recommend to each of the Other Partners that they
participate in the Transaction and shall use commercially reasonable efforts to
obtain in a timely manner the level of participation described in Section 7.2(c). 
Notwithstanding the foregoing, the General Partners’ obligations under
this Section 5.2(b) shall be
conditioned upon the receipt by the General Partners, on or before the
Expiration of the Study Period, of the fairness opinion of Robert A. Stanger &
Co., Inc. (“Stanger & Co.”), the General Partners’ financial
advisor (the “Fairness Opinion”), to the effect that, subject to the matters
and assumptions set forth in such opinion, (i) the consideration to be
received by Contributing Partners pursuant to the Transaction in the aggregate
is fair to such Contributing Partners from a financial point of view and (ii) the
allocation of the Exchange Value pursuant to this Agreement (i.e.,
a percentage equal to the Paris Allocation being allocated to the Paris
Specific Property and a percentage equal to the Geneva Allocation being
allocated to the Geneva Property, in each case without taking into account the
net Closing Date Prorations); provided, however, that Vornado
shall have the right, but not the obligation, to modify the Paris Allocation
and the Geneva Allocation to the extent necessary to cause the Fairness Opinion
to satisfy clause (ii) of the foregoing condition, so long as the sum of
the Paris Allocation and the Geneva Allocation is 100%.

 

(c)                                  The
General Partners shall (i) cause Paris LP and Rome LP, in their capacities
as limited partners of Geneva LP, to consent to the admission of the VNO
Transaction Sub as a general partner of Geneva LP and such other modifications
of the Geneva LP Governing Documents as are described on Schedule 7.2(d);
and (ii) recommend to each of the Other Partners who are limited partners
of Geneva LP that they consent to such matters and shall use commercially
reasonable efforts to obtain the consents to such matters described in Section 7.2(d).

 

(d)                                 Without
limiting the terms of Section 5.2(b), the General Partners shall cooperate
with the Company and the Operating Partnership in the preparation of the
Information Statement and shall provide such information regarding the Subject
Entities and the Other Partners as the Company and the Operating Partnership
may reasonably request for purposes of the Information Statement and for the
solicitation of participation by the Other Partners with respect to the
Transaction.  All such information shall,
to the knowledge of the General Partners, be true, accurate and complete in all
material respects.  The General Partners
shall promptly respond to inquiries and requests for

 

26

 

information from the Other Partners and inform the Operating
Partnership of such inquiries.

 

5.3                               Vornado
Partnership Agreement Amendment. 
The Company and the Operating Partnership shall cause the Vornado
Partnership Agreement to be amended at or prior to the Closing by approving,
executing and adopting an amendment to the Vornado Partnership Agreement
substantially in the form attached hereto as Exhibit F (the “Vornado
Partnership Agreement Amendment”).

 

5.4                               Assignments
of Interest; Limited Partner Acceptance Agreements for the Vornado Partnership
Agreement.  At the Closing,
each General Partner shall execute and deliver to the Operating Partnership (i) an
assignment of such General Partner’s Interests Contributed Interests, including
warranty of title, substantially in the form attached hereto as Exhibit A, and (ii) a Limited Partner Acceptance
Agreement, accepting the terms of such Limited Partner Acceptance Agreement,
including the terms of the Vornado Partnership Agreement, substantially in the
form attached hereto as Exhibit B.  The Operating Partnership and the General
Partners shall require that each Contributing Partner execute and deliver to
the Operating Partnership (i) an assignment of Contributed Interests
substantially in the form attached hereto as Exhibit A
and (ii) a Limited Partner Acceptance Agreement substantially in the form
attached hereto as Exhibit B,
as conditions to the delivery of any Units issued in the Transaction (including
units to be deposited pursuant to the Escrow Agreement) to such Contributing
Partner.

 

5.5                               Reservation
of Vornado Common Shares.  The
Company shall cause to be reserved a sufficient number of Vornado Common Shares
to satisfy its obligation to redeem Units (if the Company were to elect to
issue Vornado Common Shares upon such redemption) pursuant to the terms of the
Vornado Partnership Agreement; provided that the number of Vornado Common
Shares so reserved shall be subject to reduction as Units are redeemed (in
exchange for either Vornado Common Shares or cash) over time.

 

5.6                               Registration
Rights Agreements.  At the
Closing, the Company shall enter into (a) a Registration Rights Agreement
in substantially the form attached hereto as Exhibit G-1
between the Company and the Contributing Partners other than Messrs. Smith
and Kogod, Clarice R. Smith, Arlene R. Kogod and Charles E. Smith Management, Inc.,
and (b) an amendment in substantially the form of Exhibit G-2
to the Registration Rights Agreement dated as of January 1, 2002, as
amended, between the Company and Messrs. Smith and Kogod, Clarice R.
Smith, Arlene R. Kogod and Charles E. Smith Management, Inc., in each case
for the benefit of the parties named therein with respect to the Vornado Common
Shares issued upon redemption of the Units issued to such Persons (or their
beneficiaries) in connection with the Transaction (collectively, the “Registration
Rights Agreements”).

 

5.7                               Title
Insurance.  The General
Partners shall cooperate with Vornado in obtaining a survey update and title
insurance (including a commercially reasonable non-imputation endorsement) with
respect to the Property.

 

27

 

5.8                               Distributions. Prior to or following the Closing, the
General Partners shall not permit the Subject Entities to make any
distributions to the Partners other than regular monthly distributions of net
cash flow in the ordinary course of business and consistent with historical
practices, but specifically excluding special distributions in excess of
regular monthly distributions.

 

5.9                               Maintenance
of Subject Entities. 
Notwithstanding anything to the contrary contained in this Agreement,
from and after the Execution Date until the date on which each of the
Contributing Partners has executed and delivered a Limited Partner Acceptance
Agreement, the General Partners shall not dissolve the Subject Entities and
shall take all necessary actions to maintain the good standing and foreign
qualifications, as necessary, of the Subject Entities until such date.

 

ARTICLE VI

 

CERTAIN
COVENANTS PENDING THE TRANSACTION

 

The parties hereto hereby covenant and agree that
subsequent to the Execution Date and until the Closing:

 

6.1                               Restrictions
on Transfers of Interests in the Subject Entities.  To the extent permitted under the Governing
Documents, from the Execution Date until the Closing Date, the General Partners
shall prohibit or prevent any transfers by (i) any Other Partner of its
interest in any Subject Entity, (ii) Paris LLC, Paris LP and Rome LP of
their respects interests in Paris LP and/or Geneva LP, and (iii) Paris LP
or Geneva LP of any interest in the Property. 
Each of the General Partners hereby agrees that, from the date hereof until
the earlier of the Closing Date or the termination of this Agreement, he will
not consent to the substitution of a limited partner of any Subject Entity
pursuant to the Governing Documents without the prior written consent of
Vornado.

 

6.2                               Consummation
of Transaction.  Each of the
General Partners and Vornado shall in good faith use its commercially
reasonable efforts to fulfill or obtain the fulfillment of the conditions to
the Closing and to obtain all required consents or approvals necessary or desirable
for the consummation of the Transaction.

 

6.3                               Conduct
of Business by the Subject Entities Pending the Transaction.  During the period from the Execution Date to
the Closing, the General Partners shall use commercially reasonable efforts to
cause the Subject Entities to (i) maintain, repair, operate and lease
(subject to the express restrictions on leasing set forth in this Agreement)
the Property in substantially the same manner as heretofore conducted, subject
to such ordinary wear and tear as may, in the ordinary course of business
remain uncorrected at the Closing and except for such changes as are expressly
required or permitted by this Agreement, and, to the extent consistent
therewith, use commercially reasonable efforts to preserve intact their current
business organization, goodwill, and ongoing businesses, (ii) maintain
insurance policies on the Property of the same kind and same amount as the
insurance policies in effect with respect to the Property on the Execution
Date, (iii) confer on a regular basis with representatives of the
Operating

 

28

 

Partnership regarding material matters relating to such businesses, (iv) promptly
notify the Operating Partnership of any material emergency or other material
change in the condition (financial or otherwise), business, properties, assets,
liabilities, prospects or the normal course of its businesses or in the
operation of the Property, or of any material governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), and (v) duly and timely file all reports, tax returns and
other documents required to be filed with federal, state, local and other
authorities, subject to extensions permitted by law, provided such extensions
do not adversely affect the status of each Subject Entity as a partnership
under the Code.

 

Without limiting the generality of the foregoing,
during the period from the Execution Date to the Closing, except as set forth
in Schedule 6.3, or as otherwise contemplated by this Agreement, including
Section 5.10, without the written consent of the Operating Partnership,
the General Partners shall not cause or permit any Subject Entity to:

 

(a)                                  (i)                                     except
as expressly permitted by this Agreement or the distributions of the Subject
Entities in the ordinary course of their business and consistent with
historical practices, declare, set aside or pay dividends on, or make any other
distributions in respect of, the beneficial interests or any ownership
interests of the Subject Entities, (ii) split, combine or reclassify any
beneficial interests or any other ownership interests or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of such beneficial interest, partnership interests or other
ownership interests, or (iii) purchase, redeem or otherwise acquire any
shares of beneficial interest, partnership interests, “phantom units” or other
ownership or similar interests or any options, warrants or rights to acquire,
or security convertible into, shares of such beneficial interest, such
partnership interests or such other ownership interests;

 

(b)                                 issue,
deliver or sell, or grant any option or other right in respect of, any voting
securities, shares of beneficial interest, partnership interests or other
ownership interests of the Subject Entities or any securities convertible into,
or any rights, warrants or options to acquire, any such voting securities,
shares of beneficial interest, partnership interests, other ownership interests
or convertible securities;

 

(c)                                  amend
the Governing Documents;

 

(d)                                 merge
or consolidate with any other Person;

 

(e)                                  in
any transaction or series of transactions involving capital, securities or
other assets or indebtedness of any Subject Entity, without first obtaining the
prior written consent of the Operating Partnership: (i) sell, lease
(excluding tenant leases, letters of intent or agreements related thereto for
which a notice is required pursuant to this Agreement) or otherwise dispose of
the Property (or any interests therein or portions thereof) or any other
material assets or businesses, or assign or encumber the right to receive
income, dividends, distributions and the like from such assets or businesses;
or (ii) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or warrants
or other rights to acquire any

 

29

 

debt securities of the Subject Entities, enter into any “keep well” or
other arrangements to maintain any financial statement condition of another
Person or enter into any arrangement having the economic effect of any of the
foregoing, prepay or refinance any indebtedness or make any loans, advances or
capital contributions to, or investments in, any other Person;

 

(f)                                    make
any tax election (unless required by law or necessary to preserve the status of
each Subject Entity for federal income tax purposes either as a partnership or
an entity that is disregarded as a separate entity);

 

(g)                                 (i) change
in any material manner any of its methods, principles or practices of
accounting from those upon which the Subject Entity Financial Statements were
prepared or (ii) make or rescind any express or deemed election relating
to taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, except in
the case of settlements or compromises relating to certiorari proceedings with
respect to real estate taxes for any years for which the applicable real estate
tax returns are not closed, or change any of its methods of reporting income or
deductions for federal income tax returns for the most recently completed
taxable year except, in the case of clause (i), as may be required by the
Commission, applicable law or GAAP;

 

(h)                                 subject
to Section 6.3(i), pay, discharge,
settle or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted, contingent or otherwise), other than the payment, discharge or
satisfaction of any of the foregoing in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the Subject Entity
Financial Statements (or the notes thereto) or incurred in the ordinary course
of business consistent with past practice;

 

(i)                                     settle
any litigation claims against the Subject Entities that are not covered by
insurance (other than deductibles), including any class action or other claims
arising out of or in connection with the Transaction, except in the ordinary
course of business consistent with past practice;

 

(j)                                     make
any loans, advances or capital contributions to, or investments in, any other Person;

 

(k)                                  distribute
any casualty, condemnation or other disposition proceeds;

 

(l)                                     prior
to the termination of the Study Period, enter into, modify, renew or extend
(pursuant to an option agreement or otherwise) a lease with a tenant or enter
into a letter of intent with a prospective tenant for space at the Property
without providing at least five (5) days’ prior notice to the Operating
Partnership, other than leases of individual residential units in the ordinary
course of business;

 

(m)                               after
the termination of the Study Period, enter into or modify a lease with a tenant
or a letter of intent with a prospective tenant for space at the Property,

 

30

 

other than (i) leases for which a signed letter of intent has been
entered into and disclosed to the Company and the Operating Partnership prior
to the Execution Date and (ii) leases of individual residential units with
individual tenants in the ordinary course of business; or

 

(n)                                 enter
into or modify any Operating Agreements, except for any such agreements that
are cancelable by the Subject Entities without penalty on not more than sixty
(60) days’ notice to the other party.

 

6.4                               Other
Actions.  The General Partners
shall not, subject to the Governing Documents, loan agreements binding on the
Subject Entities and the fiduciary duties of the General Partners, take or omit
to take any action in bad faith that would result in (i) any of the
representations and warranties of the General Partners (without giving effect
to any “knowledge” qualifications) set forth in this Agreement that are
qualified as to materiality becoming untrue, (ii) any of such
representations and warranties (without giving effect to any “knowledge”
qualifications) that are not so qualified becoming untrue in any material
respect or (iii) except as contemplated by this Agreement, any of the
conditions to the Transaction set forth in ARTICLE VII not being
satisfied.

 

6.5                               Commercially
Reasonable Efforts; Notification

 

(a)                                  Subject
to the terms and conditions herein provided, Vornado and the General Partners
shall: (i) use all commercially reasonable efforts to cooperate with one
another in (A) determining which filings are required to be made prior to
the Closing with, and which consents, approvals, permits or authorizations are
required to be obtained prior to the Closing from, Governmental Entities and
any third parties in connection with the execution and delivery of this
Agreement and the consummation of the Transaction and the other transactions
contemplated hereby and (B) timely making all such filings and timely
seeking all such consents, approvals, permits and authorizations; (ii) use
all commercially reasonable efforts to obtain in writing any consents required
from third parties to effectuate the Transaction, such consents to be in form
reasonably satisfactory to Vornado and the General Partners; and (iii) use
all commercially reasonable efforts to take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the Transaction.  If at any time after the Closing, any further
action is necessary or desirable to carry out the purpose of this Agreement,
the proper officers and trustees of the Company, and, where appropriate, the
General Partners, shall take all such necessary or desirable action.

 

(b)                                 The
General Partners shall give prompt notice to the Company and the Operating
Partnership, and the Company and the Operating Partnership shall give prompt notice
to the General Partners, of the failure by it to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that no such notification shall affect the
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.

 

31

 

6.6                               Public
Announcements.  The General
Partners shall not issue any press release or make any written public statement
with respect to the Transaction without the consent of Vornado, except as may
be required, based upon advice of counsel, by applicable law or pursuant to
court process (in each of which event the disclosing party shall consult with
Vornado before issuing, and provide Vornado the opportunity to review and
comment upon, any such press release or other public statement).  The parties agree that any press release to
be issued with respect to the Transaction shall be prepared and issued by
Vornado.

 

6.7                               Tax
Matters.  Each of the Company
and the Operating Partnership and the General Partners shall use its
commercially reasonable efforts before and after the Closing to cause the
Transaction to be treated as described in Section 1.6 and
to obtain the opinions of counsel referred to in Sections 7.3(f) and
7.3(g).

 

6.8                               Estoppels.  The General Partners shall before the Closing
obtain (a) lease status reports for all General Services Administration
(the “GSA”) Space Leases as of the date of the Rent Roll (the “GSA Lease
Summaries”), and (b) certificates in form and substance reasonably
acceptable to the Operating Partnership from each of the tenants of the
Property as of the date of the Rent Roll (other than tenants of individual
residential units) (the “Tenant Estoppels”) certifying the term of such lease
(including all renewal options) and that, as of the date of the applicable
certificates, such tenant’s Space Lease is in full force and effect, there are
no existing defaults by any Subject Entity which are known to the tenant, that
there are no defaults by the tenants and containing certifications as to such
other matters as the Operating Partnership shall request.  If by the time the other conditions to
Closing are satisfied, the General Partners have only obtained GSA Lease
Summaries or Tenant Estoppels from tenants that in the aggregate lease at least
seventy-five percent (75%) of the leasable space in the Property (excluding,
for this purpose, any space that consists of individual residential units),
Vornado may elect to delay the Closing Date for a period of thirty (30) days to
enable the General Partners to obtain the remaining summaries and/or
estoppels.  If the General Partners
remain unable to obtain any such GSA Lease Summaries and/or Tenant Estoppels
after reasonable efforts, the General Partners may elect to substitute a
General Partner estoppel, in form and substance reasonably acceptable to the
Operating Partnership in lieu of Tenant Estoppel certificates from tenants that
individually lease less than five percent (5%) of the leasable space in the
Property and in the aggregate less than ten percent (10%) of the leasable space
in the Property (excluding, for these purposes, space that consists of
individual residential units).

 

6.9                               Permits.  The General Partners shall cause the Subject
Entities to (i) maintain all material Permits in full force and effect, (ii) make
timely filings of all reports, statements, renewal applications and other
required documents, and (iii) make timely payments of all fees and charges
in connection therewith that are required to keep such Permits in full force
and effect.

 

6.10                        Binding
Commitments.  Except as
otherwise expressly provided herein, the General Partners shall not permit any
Subject Entity to make any material commitments or representations to any
applicable government authorities, any adjoining

 

32

 

or surrounding property owners, any tenants, any civic association, any
utility or any other similar Person that would in any manner restrict the
current use of the Property and be binding upon any Subject Entity or the
Property without the Company’s and the Operating Partnership’s prior written
consent in each case.

 

6.11                        Certain
Actions of General Partners. 
Each General Partner hereby consents to and approves the Transaction,
and the other transactions contemplated by this Agreement and agrees to grant,
execute and deliver such further consents, approvals and authorizations, and to
take such other actions, in his capacity as a member, general partner and/or
limited partner of the Subject Entities as shall be necessary or reasonably
requested by the Operating Partnership or the VNO Transaction Sub at, prior to
or following the Closing in order to cause the compliance and performance with
the terms of this Agreement and to consummate and evidence the consummation (if
any) of the Transaction and the other transactions contemplated by this
Agreement.  Without limiting the
foregoing, each of the General Partners shall:

 

(a)                                  recommend
that the Other Partners agree to participate in the Transaction in accordance
with the Information Statement, subject to Section 5.2(b);

 

(b)                                 vote
in favor of the Transaction and the other transactions contemplated by this Agreement,
to the extent that any such vote is required under the Governing Documents and
if and to the extent such General Partner is entitled to do so; and

 

(c)                                  repay
any and all outstanding promissory notes, loans or other indebtedness of such
General Partner to the Subject Entities on or prior to the Closing Date.

 

Notwithstanding anything to the contrary contained in
this Agreement, the General Partners shall not be obligated to perform any
action required by the terms of this Section 6.11
or of Section 5.2(a) if and to the
extent that the General Partners determine in good faith, based upon the advice
of outside counsel to the General Partners, that the performance of such action
by them would cause them to violate their duties to the Other Partners imposed
by the Governing Documents or applicable law.

 

6.12                        No
Negotiations.  So long as this
Agreement remains in effect, the General Partners shall not, and shall use
commercial reasonable efforts to cause each Subject Entity not to, (i) consider
any offer from any other Person for the purchase or other acquisition, directly
or indirectly, of the beneficial ownership interests in the Subject Entities,
the Property or any interest therein (an “Acquisition Proposal”); (ii) solicit
any offer from any Person or enter into any negotiations with respect to any
such purchase or other acquisition, directly or indirectly, of the Property or
any interest therein; (iii) provide any confidential or non-public
information or data to, or afford access to properties, books or records to,
any Person relating to, or that may reasonably be expected to lead to, an
Acquisition Proposal; or (iv) enter into any letter of intent, agreement
in principle or agreement relating to an Acquisition Proposal, or propose
publicly to agree to do any of the foregoing, or otherwise facilitate or
cooperate in any

 

33

 

effort or attempt to make or implement an Acquisition Proposal.  The General Partners acknowledge that they
have concluded that the Transaction proposed by the Company and the Operating
Partnership and as provided for herein is the most favorable to the members and
partners of each of the Subject Entities, and that it is fair and reasonable in
such circumstances for the Company and the Operating Partnership to require
this covenant as a condition and inducement to its entering into this
Agreement.

 

6.13                        Pre-Closing
Disclosure of Breaches of Representations; Obligation to Cure.

 

(a)                                  Notification
by General Partner of their Breach. 
If (i) any General Partner obtains knowledge that any matter or
event shall have occurred between the date hereof and the Closing Date that is
not expressly permitted under any provision of this Agreement and that makes or
will make any warranty or representation of the General Partners untrue in any
material respect as of the Closing Date or (ii) any General Partner
discovers that any warranty or representation was inaccurate in any material
respect as of the date hereof, then, in either case, the General Partners shall
give Vornado notice thereof promptly after obtaining such knowledge and in any
event prior to the Closing.  If the
General Partners do so, they shall not be liable to Vornado following the
Closing for the breach of the warranty or representation in question that
results from the occurrence of such matter, event or inaccuracy.  Notwithstanding the delivery of such notice,
in no event shall Vornado be obligated to close hereunder unless the conditions
precedent to Vornado’s obligation to close set forth in this Agreement
(including in Section 7.2(a)) shall have
been fulfilled.

 

(b)                                 Vornado
Knowledge of General Partner’s Breach. 
If Vornado has knowledge on the date hereof that any of the General
Partners’ warranties or representations is untrue in any respect, then the
breach by the General Partners of the warranties and representations as to
which Vornado shall have such knowledge shall be deemed waived by Vornado and
the General Partners shall not be deemed in default hereunder and shall have no
liability to Vornado or its successors or assigns in respect thereof.  If, after the date hereof and prior to the
Closing, Vornado obtains knowledge that any of the representations or
warranties made herein by the General Partners is untrue, inaccurate or incorrect
in any material respect (other than as a result of receipt of written notice
thereof from the General Partners), Vornado shall give the General Partners
notice thereof promptly after obtaining such knowledge and in any event prior
to the Closing and the General Partners shall not be liable to Vornado
following the Closing for the breach of such warranties or
representations.  Notwithstanding the
provisions of the preceding sentence, in no event shall Vornado be obligated to
close hereunder unless the conditions precedent to Vornado’s obligation to
close set forth in this Agreement (including in Section 7.2(a))
shall have been fulfilled.

 

(c)                                  General
Partners’ Obligation to Cure Breach. 
If, at or prior to the Closing, any General Partner knows or obtains
knowledge, by reason of notice from Vornado or otherwise, that any of the
representations or warranties made by the General Partners herein are untrue,
inaccurate or incorrect in any material respect, the General Partners shall be
obligated to use commercially reasonable efforts to cure or correct the

 

34

 

underlying circumstances as necessary to eliminate the adverse effect
on Vornado of such breaches or inaccuracies, which commercially reasonable
efforts shall include the expenditure of up to $575,000 in the aggregate for
the cure or correction of all such breaches or inaccuracies to the extent that
it is possible to effect such cure or correction through the expenditure of
funds.  Notwithstanding anything else in
this Agreement, the scheduled Closing hereunder shall be extended, but not
beyond August 31, 2005, in order to provide to the General Partners
sufficient time to effect such cure or correction.

 

(d)                                 Notification
by Vornado of its Breach.  If (i) Vornado
obtains knowledge that any matter or event shall have occurred between the date
hereof and the Closing Date that is not expressly permitted under any provision
of this Agreement and that makes or will make any warranty or representation of
Vornado untrue in any material respect as of the Closing Date or (ii) Vornado
discovers that any warranty or representation was inaccurate in any material
respect as of the date hereof, then, in either case, Vornado shall give the
General Partners notice thereof promptly after obtaining such knowledge and in
any event prior to the Closing.  If
Vornado does so, it shall not be liable to the General Partners following the
Closing for the breach of the warranty or representation in question that
results from the occurrence of such matter, event or inaccuracy.  Notwithstanding the delivery of such notice,
in no event shall the Contributing Partners be obligated to close hereunder
unless the conditions precedent to their obligation to close set forth in this
Agreement (including in Section 7.3(a))
shall have been fulfilled..

 

(e)                                  General
Partners’ Knowledge of Vornado’s Breach. 
If any General Partner has knowledge on the date hereof that any of
Vornado’s warranties or representations is untrue in any respect, then the breach
by Vornado of the warranties and representations as to which a General Partner
shall have such knowledge shall be deemed waived by the General Partners and
Vornado shall not be deemed in default hereunder and shall have no liability to
the Contributing Partners.  If, after the
date hereof and prior to the Closing, any General Partner obtains knowledge
that any of the representations or warranties made herein by Vornado is untrue,
inaccurate or incorrect in any material respect (other than as a result of
receipt of written notice thereof from Vornado), the General Partners shall
give Vornado notice thereof promptly after obtaining such knowledge and in any
event prior to the Closing and Vornado shall not be liable to the Contributing
Partners following the Closing for the breach of such warranties or
representations.  Notwithstanding the
provisions of the preceding sentence, in no event shall the Contributing
Partners be obligated to close hereunder unless the conditions precedent to
their obligation to close set forth in this Agreement (including in Section 7.3(a)) shall have been fulfilled.

 

ARTICLE VII

 

CONDITIONS TO THE

CONSUMMATION OF TRANSACTION

 

7.1                               Conditions
to Each Party’s Obligation to Effect the Transaction.  The respective obligation of each party to
effect the Transaction and to consummate the other

 

35

 

transactions contemplated to occur at the Closing is subject to the
satisfaction or waiver on or prior to the Closing of the following conditions:

 

(a)                                  No
Injunctions or Restraints.  No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Transaction or any other
transaction contemplated by this Agreement shall be in effect.

 

(b)                                 Blue
Sky Laws.  The Company and the
Operating Partnership shall have received all state securities or “blue sky”
permits and other authorizations necessary to issue the Units issuable in the
Transaction.

 

(c)                                  Consent
of Gould General Partners.  Kingdon
Gould, Jr. and Kingdon Gould III (collectively, “Gould General Partners”),
as members and general partners of the Subject Entities, shall have (i) consented
to the Transaction and the admission of the VNO Transaction Sub as a member of
Paris LLC, as a general partner of Geneva LP and Rome LP, and as a limited
partner of Paris LP, Geneva LP and Rome LP, (ii) waived any right of first
refusal or other right to purchase the interests of the Contributing Partners
arising as a result of the Transaction, and consented to the waiver of any such
right held by the Subject Entities, and (iii) agreed to the modifications
of the Governing Documents described on Schedule 7.1(c),
all in form and substance satisfactory to Vornado.

 

(d)                                 Consent
of Board of Trustees.  The Company
shall have received all necessary consents from the Vornado Board approving the
Transaction.  After the expiration of the
Study Period, if this Agreement is terminated as a result of the failure of the
Company to receive all necessary consents, the deposit and all earnings thereon
shall be released to the Operating Partnership in accordance with the terms of
the Deposit Escrow Agreement.

 

(e)                                  Consent
of Existing Lender.  Bayerische
Vereinsbank AG, New York Branch shall have issued to the General Partners and
Vornado such consents to the Transaction as may be required pursuant to the
terms of the Permitted Mortgage Debt.

 

7.2                               Conditions
to the VNO Transaction Sub’s Obligation to Consummate the Transaction.  Anything to the contrary notwithstanding, the
parties to this Agreement expressly agree that the obligation of the VNO
Transaction Sub to consummate the Transaction is conditioned upon the
satisfaction (or waiver by the VNO Transaction Sub in its sole discretion) of
each of the following conditions at or prior to the Closing (or such earlier
date as specified with respect to a particular condition):

 

(a)                                  Representations
and Warranties.  The representations
and warranties of the General Partners set forth in this Agreement shall be
true and correct in all material respects (determined without giving effect to
any materiality qualification or limitation in any individual representation or
warranty) as of the Closing Date, without reference to any modifications as to
which Vornado obtains knowledge after the date hereof and prior to the Closing,
by reason of any notice delivered by the General Partners

 

36

 

pursuant to Section 6.13
or otherwise, but subject to changes resulting from the operation of the
Property between the date hereof and the Closing Date in accordance with the
provisions of Section 6.3 and changes
expressly permitted pursuant to the terms of this Agreement.  The Company and the Operating Partnership
shall have received a certificate (which certificate may be qualified by “knowledge”
to the same extent as such representations and warranties are so qualified)
signed on behalf of the General Partners to such effect.  In addition, such certificate shall contain a
list and copies of any Space Leases, Equipment Leases, and Operating Agreements
entered into after the date hereof in accordance with the terms of this
Agreement, or otherwise not delivered to the Operating Partnership as of the
date hereof, and in effect as of the Closing Date, each of which the General
Partners shall certify to be true, correct and complete as of the Closing, and
a Rent Roll (in form similar to the Rent Roll provided as of the Effective
Date), dated as of the Closing Date, which the General Partners shall certify
to be true, correct and complete in all material respects as of such date.

 

(b)                                 Performance
of Obligations of the General Partners. 
The General Partners shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior
to the Closing and the Company and the Operating Partnership shall have
received a certificate signed by the General Partners, in such capacity,
certifying to such effect.

 

(c)                                  Participation
of Other Partners.  The Contributed
Interests owned by the Other Partners electing to participate in the
Transaction, together with the Contributed Interests of the General Partners,
shall represent an aggregate Paris Percentage of not less than thirty percent
(30%) and an aggregate Geneva Percentage of not less than thirty percent (30%).

 

(d)                                 Consent
of Geneva LP Partners.  All of the
partners of Geneva LP shall have consented to the admission of the VNO
Transaction Sub as a general partner of Geneva LP and such other modifications
of the Geneva LP Governing Documents as are described on Schedule 7.2(d).

 

(e)                                  Opinion.  Vornado shall have received an opinion letter
dated the Closing Date from Grossberg, Yochelson, Fox & Beyda, LLP in
the form as the parties reasonably shall agree.

 

(f)                                    Comfort
Letter.  Vornado shall have received
a comfort letter from Hariton, Mancuso & Jones, P.C., dated as of the
date of the Information Statement, as described in Section 5.2 and an
updated comfort letter dated as of the Closing Date.

 

(g)                                 Escrow
Agreement.  Messrs. Smith and
Kogod, in their capacities as General Partners and Representatives, shall have
executed and delivered the Escrow Agreement to the Operating Partnership.

 

(h)                                 Limited
Partner Acceptance Agreement.  Each
Contributing Partner shall have executed and delivered to the Operating
Partnership a Limited Partnership Acceptance Agreement.

 

37

 

(i)                                     Estoppels.  The General Partners shall have delivered to
the Company and the Operating Partnership the GSA Lease Summaries, the Tenant
Estoppels and substitute General Partner estoppels, if any, required pursuant
to Section 6.8.

 

(j)                                     Title
to Real Estate and Title Insurance. 
Paris LP and Geneva LP shall own good and indefeasible title to the
Paris Property and Geneva Property, respectively, free of any Lien, mortgage,
deed of trust, encroachment, reservation, right of way, easement, lease,
sublease, license, assignment, agreement, condition, restriction, tide defect
or any discrepancy in acreage, boundary line dispute or other matter that would
be disclosed by an accurate survey or inspection of the Property (each, an “Encumbrance”),
other than Permitted Encumbrances, with title to the Property being marketable,
good of record and in fact and insurable and insured without exceptions (other
than the Permitted Encumbrances), including a non-imputation endorsement and
such other reasonable and customary endorsements required by Vornado, at no
greater than standard rates by a recognized national title insurance company
(the “Title Company”) reasonably acceptable to Vornado and licensed to do
business in the Commonwealth of Virginia. 
For purposes of this Agreement, “Permitted Encumbrances” shall mean, as
to the Property, (i) Liens in respect of real estate taxes not yet due and
payable, (ii) rights of tenants, as tenants only under the Space Leases, (iii) Liens
created under the Permitted Mortgage Debt, and (iv) such other matters as
shall have been approved in writing by Vornado on or prior to the date that is
fifteen (15) days prior to the Closing Date.

 

(k)                                  Consents.  All other third-party consents required for
consummation of the Transaction shall have been obtained.

 

(l)                                     Reliance
upon Regulation D.  The Company and
the Operating Partnership shall, based on advice of its counsel, be reasonably
satisfied that the issuance of Units to the Contributing Partners may be made
without registration under the Securities Act in reliance upon
Regulation D promulgated under the Securities Act of 1933, as amended (the
“Securities Act”).

 

(m)                               Personal
Property.  The Subject Entities shall
own good title to all Personal Property, Space Leases, Equipment Leases,
Operating Agreements, Permits, Intangible Property, and any other Property to
be conveyed pursuant to this Agreement, free and clear of all Liens, except for
Permitted Exceptions and Permitted Encumbrances.

 

(n)                                 Records.  The delivery by the General Partners of, to
the extent in the General Partners’ possession or control, the original Space
Leases, Equipment Leases, Operating Agreements and Governing Documents; copies
or originals of all books and records of account; copies of correspondence with
tenants and suppliers; receipts for deposits; papers or documents which pertain
to the current or future operation of the Property; any unpaid bills to be paid
by the Subject Entities after such Closing; all advertising materials,
booklets, keys and other items, if any, used in the operation of the Property;
the original “as-built” plans and specifications and all other available plans
and specifications relating to the Property; and any additional documents that
the VNO

 

38

 

Transaction Sub or the Title Company may reasonably require for the
proper consummation of the Transaction.

 

(o)                                 Release
of Deposits from Deposit Escrow Agreement. 
The cash or letter of credit, including all earnings thereon, deposited
pursuant to the Deposit Escrow Agreement shall be released to Vornado at
Closing.  The General Partners shall
reimburse Vornado for the amount, if any, of any expenses of the escrow agent
that were due from but not paid by the General Partners in accordance with the
terms of the Deposit Escrow Agreement, and for which the escrow agent reduced
the amount of the escrow funds released to Vornado.

 

(p)                                 Condition
of the Property.  All fixtures,
mechanical systems and utilities required for the normal operation of the
Property must be present and in good working condition at the Closing.

 

(q)                                 Other
Documents.  Any such other documents
as may be requested by Vornado in its sole discretion, including a FIRPTA
certificate and an Owner’s Affidavit in form satisfactory to be delivered to
the Title Company.

 

(r)                                    Other
Conditions.  Any such other
conditions to the VNO Transaction Sub’s obligation to consummate the
Transaction as may be set forth in the Information Statement shall have been
satisfied on terms satisfactory to the VNO Transaction Sub in its sole
discretion.

 

7.3                               Conditions
to the Contributing Partners’ Obligation to Consummate the Transaction.  Anything to the contrary notwithstanding, the
parties to this Agreement expressly agree that the obligation of the
Contributing Partners to consummate the Transaction is conditioned upon the
satisfaction (or waiver by the General Partners in their sole discretion) of
each of the following conditions at or prior to the Closing (or such earlier
date as specified with respect to a particular condition):

 

(a)                                  Representations
and Warranties.  The representations
and warranties of Vornado set forth in this Agreement shall be true and correct
in all material respects (determined without giving effect to any materiality
qualification or limitation in any individual representation or warranty) as of
the Closing Date, without reference to any modifications as to which the
General Partners obtain knowledge after the date hereof and prior to the
Closing, by reason of any notice delivered by Vornado pursuant to Section 6.13 or otherwise.  The General Partners shall have received a
certificate (which certificate may be qualified by “knowledge” to the same
extent as such representations and warranties are so qualified) signed on
behalf of the Company and the Operating Partnership to such effect.

 

(b)                                 Performance
of Obligations of Vornado.  The
Company, the Operating Partnership and the VNO Transaction Sub each shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing and the General Partners
shall have received a certificate signed

 

39

 

on behalf of the Company, the Operating Partnership and the VNO
Transaction Sub certifying to such effect.

 

(c)                                  Tax
Reporting and Protection Agreement. 
The Company, the Operating Partnership and the VNO Transaction Sub shall
have executed and delivered the Tax Reporting and Protection Agreement to the
General Partners.

 

(d)                                 Registration
Rights Agreements.  The Company shall
have executed and delivered the Registration Rights Agreements to each of the
Persons identified therein.

 

(e)                                  Tax
Opinion Relating to Partnership Status. 
The General Partners shall have received the opinion of Sullivan &
Cromwell LLP or other counsel to Vornado reasonably satisfactory to the General
Partners, dated as of the Closing Date, that the Operating Partnership has been
during and since its taxable year ended December 31, 1997, and continues
to be, treated for federal income tax purposes as a partnership and not as a
corporation or association taxable as a corporation, and that, after giving
effect to the Transaction, the Operating Partnership’s proposed method of
operation will enable it to continue to be treated for federal income tax
purposes as a partnership and not as a corporation or association taxable as a
corporation (with customary exceptions, assumptions and qualifications and
based upon customary representations).

 

(f)                                    Tax
Opinion Relating to the Transaction. 
The General Partners shall have received an opinion dated the Closing
Date from Hogan & Hartson LLP or other counsel reasonably satisfactory
to the General Partners, based upon customary certificates and letters, which
letters and certificates are to be in a form to be agreed upon by the parties
and dated the Closing Date, to the effect that the Transaction will not result
in the recognition of taxable gain or loss, at the time of the Transaction, to
a Contributing Partner: (A) who is a “U.S. person” (as defined for
purposes of Sections 897 and 1445 of the Code); (B) who does not exercise
its redemption right with respect to the Units under the Vornado Partnership
Agreement on a date sooner than the date two years after the Closing for the
Transaction; (C) who does not receive a cash distribution in connection
with the Transaction (or a deemed cash distribution resulting from relief or a
deemed relief from liabilities, including as a result of the prepayment of
indebtedness of the Subject Entities in connection with or following the
Transaction) in excess of such Person’s adjusted basis in its interest in the
Subject Entities at the time of the Transaction; (D) who is not required
to recognize gain by reason of the application of Section 707(a) of
the Code and the Treasury Regulations thereunder to the Transaction, with the
result that the Transaction is treated as part of a “disguised sale”; and (E) whose
“at risk” amount does not fall below zero as a result of the Transaction.

 

(g)                                 Escrow
Agreement.  The Company, the
Operating Partnership and the VNO Transaction Sub shall have executed and
delivered the Escrow Agreement to the General Partners.

 

40

 

(h)                                 The
Vornado Partnership Agreement Amendment. 
The Vornado Partnership Agreement Amendment shall have been executed and
delivered to the General Partners.

 

(i)                                     Opinion.  The General Partners shall have received an
opinion letter dated the Closing Date from Arnold & Porter LLP in the
form as the parties reasonably shall agree.

 

ARTICLE VIII

 

SURVIVAL;
INDEMNIFICATION

 

8.1                               Survival
of Representations and Warranties.

 

(a)                                  The
representations and warranties of the General Partners contained in this
Agreement shall survive with respect to any claim for an alleged breach thereof
made by giving timely written notice pursuant to Section 8.2
hereof on or before the first anniversary of the Closing Date (such
notice date being referred to as the “Indemnity Notice Date” and the period
between the Execution Date and the Indemnity Notice Date being referred to as
the “Indemnity Period”).  Except for
written claims in respect thereof timely made in accordance herewith and
subject to the terms, conditions and limitations set forth in the Escrow
Agreement, the Operating Partnership shall not have any right to be compensated
for any Representation and Warranty Loss and Expenses (as defined herein),
Disclosure Loss and Expenses (as defined herein) or Transaction Loss and
Expenses (as defined herein).

 

(b)                                 The
representations and warranties of the Company and the Operating Partnership
contained in this Agreement shall survive with respect to any claim for an
alleged breach thereof made by giving timely written notice pursuant to Section 8.4 hereof to the Operating Partnership on or
before the Indemnity Notice Date.  Except
for written claims in respect thereof timely made in accordance with the
procedures of Section 8.4, no Contributing
Partner Indemnified Person shall have any right to be compensated for any the
Contributing Partner Loss and Expenses (as defined herein) incurred as a result
of any breach of any such representations and warranties.

 

8.2                               Indemnification
of the Vornado Indemnified Persons.

 

(a)                                  Indemnification.

 

(i)                                     Subject
to the terms and conditions of this ARTICLE VIII
and the Escrow Agreement, the Company and the Operating Partnership, and the
officers, directors, employees, equity owners, affiliates, successors and
permitted assigns of such indemnitee (excluding, however, the Subject Entities)
(each, a “Vornado Indemnified Person”) shall be indemnified and held harmless
from and against any and all damages, claims, losses, expenses,

 

41

 

costs, obligations
and liabilities (excluding all consequential damages except for indemnification
obligations for third party claims to which this indemnity would otherwise be
applicable, but including all reasonable attorneys’ fees and expenses,
including reasonable expert fees and expenses) (“Representation and Warranty
Loss and Expenses”) incurred by the Operating Partnership by reason of or
arising out of any breach as of the Closing Date of any representation and
warranty made by the General Partners in this Agreement (giving effect to any
modification made in accordance with Section 6.13
but without giving effect to qualifications with respect to a Subject Entities
Material Adverse Effect) solely by having the right to receive delivery of the
Escrow Units pursuant to the Escrow Agreement (the “Representation and Warranty
Indemnity”).  The Representation and
Warranty Indemnity shall exclude any representation and warranty made by the
General Partners to the extent they relate to any representation and warranty
contained in any General Partner estoppel delivered by the General Partners
pursuant to Section 6.8 or a Partner
Claim (as defined herein), claims for which are covered in Sections
8.2(a)(iii) and 8.2(a)(iv),
respectively.  Except as set forth in the
immediately preceding sentence, the indemnity rights afforded to the Operating
Partnership pursuant to this Section 8.2(a)(i) and
the Escrow Agreement shall be the exclusive remedy of the Operating Partnership
for a breach of any such representations and warranties.  For purposes of this ARTICLE VIII,
any litigation matters set forth on Schedule 4.9
or included as a modification in accordance with Section 6.13
shall be treated as if they had not been listed on such Schedule or
included as such a modification.

 

(ii)                                  Subject
to the terms and conditions of this Agreement, each Vornado Indemnified Person
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 (each a “Vornado
Disclosure Indemnified Person”) shall be indemnified and held harmless from and
against any and all damages, claims, losses, expenses, costs, obligations and
liabilities (excluding all consequential damages and including all reasonable
attorneys’ fees and expenses, including reasonable expert fees and expenses)
incurred by any Vornado Disclosure Indemnified Person by reason of or arising
out of any violation or alleged violation of any applicable securities laws or
regulations in connection with the Transaction or the issuance of the Units
therein,

 

42

 

including in
connection with any information statement, prospectus, private placement
memorandum, registration statement or other document filed with the Commission
or distributed to the Partners in connection with the Transaction insofar as
any such damages, claims, losses, expenses, costs, obligations and liabilities
(collectively, “Disclosure Loss and Expenses”) arise out of, or are based upon,
any untrue statement or alleged untrue statement of a material fact or any
omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not materially misleading,
in each case to the extent, but only to the extent, such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished by the General
Partners or their representatives (the “General Partner Provided Information”)
to be included and set forth in any information statement, prospectus, private
placement memorandum, registration statement or other document filed with the
Commission or distributed to the Other Partners in connection with the
Transaction (a “Disclosure Claim”), solely by having the right to receive
delivery of the Escrow Units pursuant to the Escrow Agreement (the indemnity
granted under this Section 8.2(a)(ii) being
referred to herein as the “Disclosure Indemnity”); provided,
however, that none of the Escrow Units
shall be used to provide indemnity to any of the Vornado Disclosure Indemnified
Persons under this Section 8.2
to the extent that any Disclosure Claim or any Disclosure Loss and Expenses
result from written information furnished by any Vornado Disclosure Indemnified
Person (“Vornado Provided Information”).

 

(iii)                               Subject
to the terms and conditions of this Agreement, each Vornado Indemnified Person
shall be indemnified and held harmless from and against any and all damages,
claims, losses, expenses, costs, obligations and liabilities (excluding all
consequential damages except for indemnification obligations for third party
claims to which this indemnity would otherwise be applicable) incurred by any
Vornado Indemnified Person by reason of or arising out of any inaccuracy or
omission in any general partner estoppels delivered by the General Partners to
Vornado pursuant to Section 6.8
(“Landlord Estoppel Loss and Expenses”) without regard to the threshold on
indemnity claims set forth in this ARTICLE VIII
solely by having the right to receive delivery of the Escrow Units pursuant to

 

43

 

the Escrow
Agreement (the indemnity granted under this Section 8.2(a)(iii) being
referred to herein as the “Landlord Estoppel Indemnity”).

 

(iv)                              From
and after the Execution Date, subject to the terms and conditions of this
Agreement and the Escrow Agreement, each Vornado Indemnified Person who is now
or is subsequently named a defendant in any of the Partner Claims (as defined
herein) or liability is otherwise asserted against such Vornado Indemnified
Person (or such Vornado Indemnified Person is made the subject of discovery or
evidentiary requests) by a claimant in any of the Partner Claims will be
indemnified and held harmless from and against any and all damages, claims,
losses, expenses, costs, obligations and liabilities (including all reasonable
attorneys’ fees and expenses, including reasonable expert fees and expenses)
incurred by such Vornado Indemnified Person (including liabilities of the
Operating Partnership arising under the indemnification provisions of the
Vornado Partnership Agreement (collectively, “Transaction Loss and Expenses”))
by reason of or arising out of any claim by any Contributing Partner (or any
Person claiming a direct or indirect interest in such Contributing Partner)
arising at or prior to the Closing out of the Transaction (each, a “Partner
Claim”), solely by having the right to receive delivery of the Escrow Units
pursuant to the Escrow Agreement (the indemnity granted under this Section 8.2(a)(iv) being referred to herein as the
“Partner Transaction Indemnity”).  For
purposes of this Agreement, Representation and Warranty Loss and Expenses,
Disclosure Loss and Expenses, Landlord Estoppel Loss and Expenses and
Transaction Loss and Expenses are hereinafter referred to as “Vornado Loss and
Expenses.”

 

(v)                                 For
purposes of clarification, the amount of any Vornado Loss and Expenses shall be
calculated solely with respect to the damages, claims, losses, expenses, costs,
obligations and liabilities affecting Vornado Indemnified Persons, and if an
indemnified damage, claim, loss, expense, cost, obligation or liabilities is
incurred by a Subject Entity, then the amount of such Vornado Loss and Expense
shall be limited to the percentage share of ownership held, directly or
indirectly, by such Vornado Indemnified Person in such Subject Entity.

 

44

 

(b)                                 Third
Party Claims Procedures.  The
Operating Partnership shall promptly notify the Representatives in writing of
the commencement of any action or other assertion of a claim by a third party
for which the Operating Partnership believes indemnification is provided for
pursuant to Section 8.2(a) (as
distinguished from any claims under Section 8.2(a) which
do not involve any third party, as to which the indemnification procedures set
forth in this Section 8.2(b) shall be
inapplicable but the claims procedures set forth in Section 8.2(d) shall
apply); provided, however,
that the failure of the Operating Partnership so to notify the Representatives
of the commencement of any such action or such other claim shall not result in
the forfeiture by the Operating Partnership of its right to recover for such
claim from the Escrow Units in accordance with this Section 8.2
unless such failure is materially injurious to the ability of the Representatives
to defend any such action.  If any such
action is brought or claim is asserted against the Operating Partnership and
the Representatives are so notified, then (subject to the right to dispute such
claim as described in Section 8.2(d)),
the Representatives, through counsel selected by the Representatives and
reasonably acceptable to the Operating Partnership (and which counsel shall be
paid its reasonable fees and expenses by the Operating Partnership (which
amounts shall be included in the expenses subject to the Representation and
Warranty Indemnity, the Disclosure Indemnity, the Landlord Estoppel Indemnity
or the Transaction Indemnity, subject to the limitations set forth herein)
shall control the defense of any such action or claim; provided that the
Representatives assume the defense of such matter (and notify the Operating
Partnership accordingly) within fifteen (15) days of receiving notice of such
matter; and provided further, that if the Operating Partnership reasonably
concludes that there may be one or more legal defenses available to it that are
different from or in addition to (and are inconsistent with) those available to
the existing defendants, or that a conflict could reasonably be likely to exist
between the Operating Partnership and any of the Partners, the Representatives
shall not have the right to direct the defense of such action on behalf of the
Operating Partnership and the Operating Partnership shall direct the defense of
such matter through counsel reasonably satisfactory to the
Representatives.  The Operating
Partnership shall have the right to employ its own counsel with respect to the
action or claim, but the fees, expenses and other charges of such counsel shall
be at its own expense unless (i) the Operating Partnership has been named
as a defendant in any such matter and the Operating Partnership reasonably
concludes that there may be one or more legal defenses available to it that are
different from or in addition to (and are inconsistent with) those available to
the existing defendants or that a conflict could reasonably be likely to exist
between the Operating Partnership and any of the Partners, (ii) the
Representatives do not have the right to direct the defense on behalf of the
Operating Partnership in accordance with the prior sentence, or (iii) the
retention of counsel by such party has been authorized in writing by the
Representatives.  It is understood that
the Escrow Units shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be used for the fees, expenses and other
charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for the Operating Partnership.  The Representatives shall have the right to
settle any matter for which indemnification may be available pursuant to Section 8.2(a) without the consent of the
Operating Partnership, provided that (1) the settlement shall not include
any admission of wrongdoing on the part of the Operating Partnership or impose
my

 

45

 

decree, restriction or liability on the Operating Partnership or its
partners, and (ii) the settlement shall provide the Operating Partnership
(and its subsidiaries and partners) with a release from all liability with
respect to such matter.  Further, the
Representatives shall be required to obtain the consent of the Operating
Partnership for the settlement of any matter for which indemnification is
provided pursuant to Section 8.2(a) (which
consent shall not be unreasonably withheld or delayed) if (A) the
settlement or any related series of settlements would result in a draw equal to
or in excess of $45,000 under the Escrow Agreement with respect to such claim
(or related claims), or (B) a total of less than $575,000 is available to
be drawn under the Escrow Agreement with respect to any Vornado Loss and
Expenses immediately prior to such settlement. 
If and only if the Representatives fail to assume the defense of any
action brought or claim asserted against the Operating Partnership under this Section 8.2
in which it is entitled to do so, then the Operating Partnership shall be
entitled to settle such action or claim without the consent of the
Representatives.

 

(c)                                  Limitations
on Liability.

 

(i)                                     Threshold.  Notwithstanding anything in this Agreement to
the contrary, Escrow Units shall not be used to satisfy any Vornado Loss and
Expenses with respect to which indemnity is provided pursuant to this Section 8.2 until the cumulative amount of such Vornado
Loss and Expenses, as the case may be, shall exceed $45,000, in which case the
Escrow Units shall be applied to satisfy all such Vornado Loss and Expenses, as
the case may be (from the first dollar of such loss), subject to the
limitations set forth in Section 8.2(c)(ii).  The foregoing threshold shall not apply to
General Partner Estoppel Loss and Expenses. 
The provisions of this Section 8.2(c)(i) shall
not affect the rights of the parties hereto with respect to control of the
defense of any action or claim, which shall be governed by Section 8.2(b).

 

(ii)                                  Liability
Cap.  The recourse of the Vornado
Indemnified Persons under this Section 8.2
shall be limited to the Escrow Units, and no Contributing Partner shall have
any personal liability or indemnity under this Section 8.2.  Notwithstanding any other provision of this
Agreement, each Contributing Partner shall be fully liable to the extent of the
full value of Units received by such Contributing Partner for any and all
damages, claims, losses, expenses, costs, obligations and liabilities incurred
by reason of or arising out of any breach of a representation, warranty or
covenant contained in the assignment of Contributed Interest delivered by such
Contributing Partner pursuant to Section 5.4.

 

46

 

(iii)                               Pro
Rata Liability.  In the event that
any Vornado Indemnified Person suffers any Vornado Loss and Expenses with
respect to a claim for which indemnification is provided pursuant to this Section 8.2, the Escrow Units used to satisfy the
indemnification obligations pursuant to this Section 8.2,
shall be on a pro rata basis, based on each Contributing Partner’s
proportionate interest in the number of Escrow Units originally deposited with
the Escrow Agent (the “Pro Rata Share of Escrow Units”) as calculated pursuant
to the Governing Documents.

 

(d)                                 Claims
Procedure for Vornado Loss and Expenses. 
The Operating Partnership shall notify the Representatives in writing of
any claim that it reasonably believes constitutes a potential Vornado Loss and
Expenses to the extent not already indicated by means of a notice given under Section 8.2(b), describing in reasonable detail the
claim and the estimated amount of such claim. 
If the Representatives do not object in writing as to the applicability
of the Representation and Warranty Indemnity, the Disclosure Indemnity, the
General Partner Estoppel Indemnity or the Transaction Indemnity, as the case
may be, with respect to such claim within twenty (20) days after receiving such
notice, then the claim set forth in the notice by the Operating Partnership
shall be considered Vornado Loss and Expenses for all purposes of this
Agreement.  If the Representatives object
in writing to the applicability of the Representation and Warranty Indemnity,
the Disclosure Indemnity, the General Partner Estoppel Indemnity or the
Transaction Indemnity, with respect to such claim within such twenty (20) day
period, then either the Operating Partnership or the Representatives may seek
to have such dispute adjudicated by a court of competent jurisdiction.  No claim asserted by the Operating
Partnership that is disputed by the Representatives pursuant to this Section 8.2(d) shall be deemed to be a Vornado
Loss and Expenses for purposes of this Agreement until such dispute is finally
resolved by agreement between the Operating Partnership and the Representatives
or by a final, nonappealable order of a court of competent jurisdiction.

 

(e)                                  Satisfaction
of Vornado Loss and Expenses; Subrogation. 
Once the amount of Vornado Loss and Expenses arising out of any claim
has been established in accordance with Section 8.2(d) above
and the threshold set forth in Section 8.2(c)(i) has
been exceeded (except in the case of a General Partner Estoppel Loss and
Expenses, to which such threshold is not applicable), the sole remedy of the
Operating Partnership with respect to such Vornado Loss and Expenses shall be
to exercise its rights to recovery under the Escrow Agreement in accordance
with Section 8.3.  None of the Contributing Partners, the Representatives
or any of their shareholders, members or partners shall have any personal
liability with respect to the obligations set forth in this Section 8.2. 
Upon the satisfaction of any Vornado Loss and Expenses pursuant to this
Agreement and the Escrow Agreement, each Contributing Partner shall be
subrogated (but only to the extent of such satisfaction and at no risk or
liability to the Operating Partnership) to the rights (if any) of the Operating
Partnership against any third parties with respect to such Vornado Loss and
Expenses, and the Operating Partnership shall cooperate with the General

 

47

 

Partners (at no cost or liability to the Operating Partnership) in
pursuing such claims against any third parties.

 

(f)                                    Termination
of Representation and Warranty Indemnity, Disclosure Indemnity, Landlord
Estoppel Indemnity and Transaction Indemnity.  Notwithstanding anything in this Agreement to
the contrary, the indemnification under this Section 8.2
shall terminate and be extinguished forever on the date that is the last day of
the Indemnity Period, unless and to the extent a written claim has been
asserted and written notice thereof has been given to the Representatives
pursuant to this Section 8.2 on or prior to
such date.  If such a timely written
claim has been made, the indemnification shall continue beyond the Indemnity
Notice Date, but only with respect to such claim and only until the earlier of (i) the
date such claim is satisfied pursuant to the Escrow Agreement or otherwise
finally resolved, (ii) if legal action is taken with respect to such claim
during the Indemnity Period, the date on which such claim is satisfied pursuant
to the Escrow Agreement or otherwise finally resolved, or (iii) with
respect to a claim for which no legal action has been taken during the
Indemnity Period, twelve (12) months after the date on which the last
settlement or other substantive discussions have taken place with respect to
such claim, but in no event more than twenty-four (24) months after the end of
the Indemnity Period.

 

(g)                                 The
Operating Partnership to Act on Behalf of Vornado Disclosure Indemnified
Persons.  All Vornado Disclosure
Indemnified Persons agree to permit the Operating Partnership to represent them
with respect to any Disclosure Claim Indemnity arising out of this Section 8.2.

 

8.3                               Escrow
Agreement; Release of Escrow Units. 
At the Closing, the Escrow Units shall be delivered by the Operating
Partnership to the Escrow Agent under the Escrow Agreement, and such Escrow
Units shall be available as and to the extent provided in the Escrow Agreement
for satisfaction of (i) Representation and Warranty Loss and Expenses, (ii) Disclosure
Loss and Expenses, (iii) General Partner Estoppel Loss and Expenses, (iv) Transaction
Loss and Expenses, (v) the cost of enforcement pursuant to Section 8.5, and (vi) certain expenses of the
Escrow Agent.  The Escrow Units shall be
disbursed as provided in the Escrow Agreement.

 

8.4                               Indemnification
of the Contributing Partners.

 

(a)                                  Indemnification.  Subject to the terms and conditions of this
Agreement, the Company and the Operating Partnership jointly and severally
agree to indemnify the Contributing Partners and their officers, directors,
employees, shareholders, and affiliates, and their successors and permitted
assigns (collectively, the “Contributing Partner Indemnified Persons”), from
and against any and all damages, claims, losses, expenses, costs, obligations
and liabilities (excluding all consequential damages and including all
reasonable attorneys’ fees and expenses, including reasonable expert fees and
expenses) (the “Contributing Partner Loss and Expenses”) incurred by any of the
Contributing Partner Indemnified Person or entity by reason of or arising out
of (i) any breach as of the Closing Date of any representation and
warranty made by Vornado in ARTICLE III
of this Agreement, and (ii) any violation or alleged violation

 

48

 

of any applicable securities laws or regulations in connection with the
Transaction or the issuance of the Units therein, including in connection with
any information statement, prospectus or registration statement filed with the
Commission or distributed to the Partners in connection with the Transaction
insofar as such Contributing Partner Loss and Expense arises out of, or is
based upon, any untrue statement or alleged untrue statement or a material fact
or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not materially
misleading, in each case to the extent, but only to the extent, such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with Vornado Provided Information to be
included and set forth in any private placement memorandum, prospectus or
registration statement filed with the Commission or distributed to the Partners
in connection with the Transaction (the “Vornado Indemnity”); provided,
however, that neither the Company, the Operating Partnership nor the VNO
Transaction Sub shall be obligated to indemnify any of the Contributing
Partners, and their officers, directors, employees, shareholders, and
affiliates, and their successors and permitted assigns under this Section 8.4(a) to the extent that any the
Contributing Partners Loss and Expenses result from the General Partner
Provided Information.

 

(b)                                 Limitations
on Liability.  Notwithstanding
anything in this Agreement to the contrary, the Company, the Operating
Partnership and the VNO Transaction Sub shall not be responsible for any of the
Contributing Partner Loss and Expenses with respect to which indemnity is
provided pursuant to Section 8.4(a)(i) (other
than in respect of a breach of any such representation and warranty
attributable to any claims asserted by any Partner, including the
Representatives on behalf of the Partners, relating to violations or alleged
violations of any applicable securities laws by the Company, the Operating
Partnership or the VNO Transaction Sub in connection with the Transaction or
the issuance of Units therein, for which the limitations of this Section 8.4(b) shall not apply) until the
cumulative amount of such the Contributing Partner Loss and Expenses shall
exceed $45,000 in which case the Company, the Operating Partnership and the VNO
Transaction Sub shall be jointly and severally liable for all such Contributing
Partner Loss and Expenses (from the first dollar of loss), subject to the
limitation that the cumulative indemnity obligation of the Company, the
Operating Partnership and the VNO Transaction Sub under Section 8.4(a)(i) shall
not exceed $1,000,000 with respect to claims asserted in writing prior to the
Indemnity Notice Date, but only to the extent such asserted claim becomes an
actual Contributing Partner Loss and Expense.

 

(c)                                  Termination
of Vornado Indemnity. 
Notwithstanding anything in this Agreement to the contrary, the
obligations of the Company, the Operating Partnership and the VNO Transaction
Sub under Section 8.4(a) shall
terminate and be extinguished forever on the Indemnity Notice Date, unless, and
to the extent, in any such case written claim has been asserted on or prior to
such date.  If such a timely written
claim has been made, the indemnity obligations of the Company, the Operating
Partnership and the VNO Transaction Sub shall continue beyond the Indemnity
Notice Date, but only with respect to such claim and only until the earlier of
(x) the date such claim is satisfied or otherwise finally resolved, (y) if
legal action is taken with respect to 

 

49

 

such claim during the Indemnity Period, the date on which such claim is
satisfied or otherwise finally resolved, or (z) with respect to a claim for
which no legal action has been taken during the Indemnity Period, twelve (12)
months after the date on which the last settlement or other substantive
discussions have taken place with respect to such claim, but in no event more
than twenty-four (24) months after the end of the Indemnity Period.

 

8.5                               Costs
of Enforcement.  In the event
that any dispute arises between the parties hereto as to the validity of any
claim under Section 8.2, or any claim for
indemnification under the Vornado Indemnity under Section 8.4,
the non-prevailing party shall pay the reasonable legal fees and expenses of
the prevailing party incurred in connection with such dispute (including expert
and witness fees).  Any such legal fees
and expenses required to be paid in respect of any such claim shall be included
in any such loss and expenses satisfied as part thereof pursuant to the Escrow
Agreement.

 

8.6                               Exclusive
Remedies.

 

(a)                                  Notwithstanding
anything in this Agreement, the Escrow Agreement or otherwise to the contrary, except
for liabilities of the Contributing Partners under ARTICLE VIII
of this Agreement (as and to the extent provided in the Escrow Agreement) and
obligations that are intended to survive the Closing pursuant to the terms of
this Agreement or any other agreement, instrument or document executed and
delivered concurrently herewith or at or prior to the Closing, none of
Contributing Partners, the Representatives or any of their officers, directors,
employees, shareholders or affiliates shall have any liability after the
Closing to the Company, the Operating Partnership, the VNO Transaction Sub or
any of their affiliates with respect to any matters relating to the Transaction
or otherwise contemplated by this Agreement.

 

(b)                                 Notwithstanding
anything in this Agreement or otherwise to the contrary, except for liabilities
of the Company, the Operating Partnership and the VNO Transaction Sub under ARTICLE VIII of this Agreement, liabilities under
applicable securities laws and regulations and obligations that are intended to
survive the Closing pursuant to the terms of this Agreement or any other
agreement, instrument or document executed and delivered concurrently herewith
or at or prior to the Closing, none of the Company, the Operating Partnership
and the VNO Transaction Sub or any of their officers, directors, employees,
shareholders or affiliates shall have any liability after the Closing to the
Contributing Partners or any of their affiliates with respect to any matters
relating to the Transaction or otherwise contemplated by this Agreement.

 

8.7                               No
Right of Offset.  The parties
hereto agree that, notwithstanding anything contained in the Vornado
Partnership Agreement, as the same may be amended from time to time, in no
event shall the Company, the Operating Partnership or the VNO Transaction Sub
have any right of offset against any of the Contributing Partners or any of
their officers, directors, employees, shareholders or affiliates under the
Vornado Partnership Agreement or any other agreement to which they are a party
with respect to any claim under arising under this Agreement or any other
agreement, instrument or document executed and delivered concurrently herewith
or at or prior to the Closing

 

50

 

(including any claim with respect to Representation and Warranty Loss
and Expenses, Disclosure Loss and Expenses, General Partner Estoppel Loss and
Expenses or Transaction Loss and Expenses).

 

8.8                               Recovery
From Insurance Policies and Third Parties.  The amount of any Representation and Warranty
Loss and Expenses, Disclosure Loss and Expenses, General Partner Estoppel Loss
and Expenses or Transaction Loss and Expenses to be paid by any of the parties
pursuant to ARTICLE VIII of this
Agreement shall be reduced by the amount of recovery actually received by the
indemnified party with respect to any applicable insurance policies or from
persons or parties not parties to this Agreement or the Escrow Agreement.  If the Company or the Operating Partnership,
at its option, has made a claim under any applicable insurance policies to
recover any Representation and Warranty Loss and Expenses, Disclosure Loss and
Expenses, General Partner Estoppel Loss and Expenses or Transaction Loss and
Expenses, the Company or the Operating Partnership, as the case may be, shall
not be entitled to recover from an indemnifying party any Representation and
Warranty Loss and Expenses, Disclosure Loss and Expenses, General Partner
Estoppel Loss and Expenses or Transaction Loss and Expenses, as the case may
be, to the extent covered by such insurance claim, until such time as the
insurance carrier has made a determination on the amount of the insurance claim
coverage, if any (or, in the event a claim is made to an insurance carrier and
such insurance carrier does not make a determination of the amount of the
insurance claim coverage within one hundred eighty (180) days following the
date on which such claim is made, the 181st day after which such insurance
claim is made).  If the insurance carrier’s
determination for such insurance claim is less than the amount of the indemnity
claim claimed by the Company or the Operating Partnership, as the case may be,
then the difference between (1) such of indemnity amount claimed by the
Company or the Operating Partnership, as the case may be, and (ii) the
amount of claim for which such insurance carrier has made a determination,
shall be payable from the Escrow Units in accordance with this Agreement and
the Escrow Agreement (and subject to the limitations provided herein and
therein); provided, however, that once the insurance carrier has made a
determination as to the amount of the insurance claim, neither the Company nor
the Operating Partnership shall be obligated to pursue legal remedies to
recover any further amounts under the applicable insurance policy.  In the event that an insurance carrier does
not make a determination of the amount of the insurance claim coverage with
respect to which an insurance claim is made within one hundred eighty (180)
days of the date on which such claim is made, the Company and the Operating
Partnership shall be entitled to recover from an indemnifying party under the
terms of this Agreement and the Escrow Agreement from and after the 181st day
alter which such insurance claim is made.

 

ARTICLE IX

 

THE
CLOSING

 

9.1                               Transaction
Expenses.  The following
provisions shall apply to the allocation and payment of the following costs
associated with the closing of the

 

51

 

Transaction and other expenses incurred by the parties in connection
with this Agreement and the agreements, actions and transactions contemplated
hereby:

 

(a)                                  Vornado
shall pay the following expenses, and fifty percent (50%) of such expenses
shall be deemed to be “Specified Vornado Transaction Costs,” and a
corresponding adjustment to the number of Units issued to the Contributing
Partners shall be made in accordance with Section 1.5(a)(i)(x):

 

(i)                                     All
legal fees incurred by Vornado in connection with the Transaction (unless
otherwise so provided in this Agreement);

 

(ii)                                  all
of the transfer and recordation taxes in connection with the contribution of
the Contributed Interests;

 

(iii)                               the
fees and expenses payable to the respective escrow agent pursuant to the
Deposit Escrow Agreement and the Escrow Agreement;

 

(iv)                              the
fees and expenses of Hariton, Mancuso & Jones, P.C. relating to the
preparation and delivery of the Subject Entity Financial Statements (to the
extent that the same would not otherwise have been prepared by the Subject
Entities) and the preparation and delivery of the Information Statement
(including the cost of the “comfort letter” delivered to Vornado hereunder) in
connection with the Transaction;

 

(v)                                 any
other out-of-pocket fees and expenses incurred in the preparation and delivery
of the Information Statement;

 

(vi)                              the
fees and expenses payable to or at the direction of Bayerische Vereinsbank AG,
New York Branch in connection with obtaining the consents described in Section 7.1(e);

 

(vii)                           the
costs of all due diligence undertaken by Vornado in connection with the
Transaction, including the cost of title searches, title insurance, surveys,
environmental site assessments, engineering inspections and assessments, zoning
due diligence and similar matters; and

 

(viii)                        all
other out-of-pocket costs and expenses incurred by Vornado in connection with
consummating the Transaction.

 

(b)                                 The
General Partners shall pay the following expenses, and fifty percent (50%) of
such expenses shall be deemed to be “Specified General Partner

 

52

 

Transaction Costs,” and a corresponding adjustment to the number of
Units issued to the Contributing Partners shall be made in accordance with Section 1.5(a)(i)(y):

 

(i)                                     All
legal fees incurred by the General Partners in connection with the Transaction
(unless otherwise so provided in this Agreement);

 

(ii)                                  the
fees and expenses of Stanger & Co. relating to the preparation and
delivery of the Fairness Opinion; and

 

(iii)                               all
other out-of-pocket costs and expenses incurred by the General Partners in
connection with consummating the Transaction.

 

(c)                                  In
consideration for certain internal costs incurred by Vornado in connection with
the Transaction, an amount equal to one hundred percent (100%) of $200,000
shall be deemed a “Specified Vornado Transaction Cost,” and a corresponding
adjustment to the number of Units issued to the Contributing Partners shall be
made in accordance with Section 1.5(a)(i)(x).  If for any reason Closing shall fail to occur,
the General Partners shall pay to Vornado, in addition to any other amounts
that may be payable pursuant to this Agreement, a fee in the amount of
$100,000.

 

9.2                               Prorations
and Other Adjustments.  The
items in subparagraphs (a) through (g) of this Section 9.2,
and other customary items of income and expense, except as expressly provided
below, shall be prorated as of 12:01 a.m. local time on the Closing Date
(the “Proration Time”).  Each item shall
be calculated and prorated on a building-by-building basis, with each item
being allocated to (and only to) either the Geneva Property or the Paris
Specific Property.  If any item cannot
reasonably be allocated either to the Geneva Property or the Paris Specific
Property, then such item shall be allocated for purposes of this Agreement in
accordance with the Geneva Allocation (to the Geneva Property) and the Paris
Allocation (to the Paris Specific Property). 
If there is a credit to Vornado (i.e., a debit to the
Contributing Partners) as a result of the net aggregate prorations, then the
amount of such credit shall not be paid, but shall reduce the consideration to
the Contributing Partners pursuant to Section 1.5(b)(i)(v) (if
such credit is calculated with respect to the Geneva Property) or Section 1.5(c)(i)(v) (if such credit is calculated
with respect to the Paris Specific Property). 
If there is a debit to Vornado (i.e., a credit to the
Contributing Partners) as a result of the net aggregate prorations, then the
amount of such debit shall not be paid, but shall increase the consideration to
the Contributing Partners pursuant to Section 1.5(b)(i)(v) (if
such debit is calculated with respect to the Geneva Property) or Section 1.5(c)(i)(v) (if such debit is calculated
with respect to the Paris Specific Property).

 

(a)                                  Cash
and Cash Equivalents.  Vornado shall
be debited (i.e., the Contributing Partners shall be credited) an
amount equal to any cash and cash equivalents held by, on behalf of, or in
accounts for the benefit of, any Subject Entity as of the Proration Time,
including deposits made by any Subject Entity, reserves or escrows that

 

53

 

are held by or for the benefit of the Subject Entities (other than
security deposits as described in Section 9.2(e)).

 

(b)                                 Rentals
and Pass-Throughs.

 

(i)                                     Rentals
Received Prior to Closing.  Rentals
actually collected prior to Closing shall be prorated as of the Proration
Time.  Any such Rentals for the period
after the Proration Time shall be a credit to Vornado.  For purposes of this Agreement, “Rentals”
means fixed rentals, additional rentals, percentage rentals, escalation
rentals, retroactive rentals, operating cost pass-throughs, parking revenues
and other sums and charges payable by tenants under the Space Leases.

 

(ii)                                  Collection
of Rentals After Closing.  Any
Rentals collected after the Closing shall be retained by the Subject Entities
for the benefit of Vornado and the other continuing members or partners of the
Subject Entities.  For proration
purposes, only the following receivables for Rentals as of the Proration Time
shall be a debit to Vornado as follows: (1) the full face amount of such
receivable in the case of a GSA lease; and (2) the full face amount of
such receivable in the case of any other commercial lease, but only if there is
no monetary default under such lease; and (3) in the case of any
residential lease, if and only if such receivable is no more than one hundred
twenty (120) days past due, an amount equal to the face amount of such
receivable multiplied by the historical collection rate for receivables of like
age at the applicable building. 

 

(c)                                  Service
Contracts.  Vornado shall be debited
an amount equal to any regular charges under the Equipment Leases and the
Operating Agreements that have been paid by the Subject Entities to the extent
they are attributable to the period alter the Proration Time.  Vornado shall be credited an amount equal to
any regular charges under the Equipment Leases and the Operating Agreements
that have not been paid by the Subject Entities to the extent they are
attributable to the period prior to the Proration Time.

 

(d)                                 Utilities.  Vornado shall be credited an amount equal to
any unpaid charges for utilities at the Property as of the Proration Time
(other than charges paid directly by tenants). 
The General Partners shall use commercially reasonable efforts to cause
the meters, if any, for such utilities to be read within three (3) business
days before the Closing Date.  The
charges for such utilities shall be prorated on the basis of such meter
readings, except for the period after such meter readings until the Proration
Time (or if such meter readings are not available) such charges shall be
prorated on the basis of the most recently issued bills therefor which are
based on meter readings.

 

54

 

(e)                                  Security
Deposits.  All tenant security
deposits required under the Space Leases (and interest thereon if required by
law or contract to be earned thereon), shall remain on deposit with the Subject
Entities at Closing, and shall not result in any debit or credit to
Vornado.  To the extent that the Subject
Entities do not hold such security deposits (and interest thereon) in a
separate account, Vornado shall be credited an amount equal to such security
deposits (and interest thereon if required by law or contract to be earned
thereon).

 

(f)                                    Insurance
Premiums.  Vornado shall be debited
an amount equal to prepaid insurance premiums paid on insurance policies of the
Subject Entities and attributable to the period after the Closing Date.

 

(g)                                 Tenant
Improvements and Allowances.  Vornado
shall be credited an amount equal to (i) the unpaid cost of all initial
tenant improvements that arise in connection with the commencement of Space
Leases entered into on or prior to the Execution Date, and (ii) all
rebates, concessions, or offsets, and any and all other benefits and charges
accrued and payable or allowable to any party by the landlord on or before the
Closing Date under any Space Leases entered into on or before the Execution
Date.

 

(h)                                 Ad
Valorem Taxes and Other Operating Expenses. 
Real and personal property ad valorem taxes and other operating expenses
(except as otherwise provided herein) shall be prorated to the Proration Time,
based on the actual number of days involved. 
Any such taxes and operating expenses that are allocable to the period
prior to the Proration Time that have not been paid shall be credited to
Vornado, and Vornado shall be debited any such taxes and operating expenses
that are allocable to the period after the Proration Time that have been paid.

 

(i)                                     Permitted
Mortgage Debt.  Interest and other
charges (other than principal) payable in respect of the Permitted Mortgage
Debt shall be prorated to the Proration Time, based on the actual number of
days involved.  Any such interest and
other charges that are allocable to the period prior to the Proration Time that
have not been paid shall be credited to Vornado.  The principal amount of the Permitted
Mortgage Debt as of the Proration Time shall be a credit to Vornado as
described in Section 1.5(b)(i)(v) or Section 1.5(c)(i)(v), as applicable.

 

9.3                               Prorations
Procedures.  The General
Partners shall provide to the VNO Transaction Sub such information and
verification as may be reasonably requested by the VNO Transaction Sub in
connection with the prorations and adjustments to be performed pursuant to Section 9.2.  The
parties shall make these prorations and adjustments on the Closing Date
measured as of the Proration Time using the best available information.  At Vornado’s election, the net proration
amounts either (i) shall be finally estimated on the Closing Date and
reasonably agreed to by the General Partners and Vornado, with no further
adjustments after the Closing Date, or (ii) shall be estimated on the
Closing Date by Vornado and shall be reasonably agreed to by the General
Partners and Vornado as promptly as practicable after the Closing Date, with no
further adjustments after the Closing Date. 
If the parties proceed under clause (ii) of the preceding sentence,
then the number of Units to be issued to each of the Contributing Partners
shall be estimated on

 

55

 

the Closing Date, but such Units shall not finally be issued until the
final net prorations have been agreed upon, whereupon such Units shall be
issued effective as of the Closing Date. 

 

ARTICLE X

 

TERMINATION

 

10.1                        Termination.  At any time prior to the Closing, this
Agreement may be terminated by:

 

(a)                                  the
mutual written consent duly authorized by the Vornado Board and the General
Partners;

 

(b)                                 Vornado
(if none of the Company, the Operating Partnership or the VNO Transaction Sub
is in breach of any of its material obligations hereunder) if the conditions
set forth in Sections 7.1 or 7.2 for the consummation of the Transaction have not been
fully satisfied by October 31, 2005 (or such later date as may be mutually
agreed upon by the Company, the Operating Partnership and the General Partners)
upon written notice to the other parties and without any further liability or
obligation of any party to the other parties under this Agreement, except for
any obligation or liability arising hereunder prior to the date of such
termination, including in connection with any breach of this Agreement;

 

(c)                                  the
General Partners (if the Contributing Partners are not in breach of any of
their material obligations hereunder) if the conditions set forth in Sections 7.1 and 7.3 for the
consummation of the Transaction have not been fully satisfied by October 31,
2005 (or such later date as may be mutually agreed upon by the Company, the
Operating Partnership and the General Partners) upon written notice to the
other parties and without any further liability or obligation of any party to
the other parties under this Agreement, except for any obligation or liability
arising hereunder prior to the date of such termination, including in
connection with any breach of this Agreement;

 

(d)                                 Vornado
(if none of the Company, the Operating Partnership or the VNO Transaction Sub
is in breach of any of its material obligations hereunder) if there has been a
knowing misrepresentation or a knowing breach of any representation or warranty
as of the date hereof (or, with respect to representations which are expressly
by the terms of this Agreement to be true and to be made as of the Closing, at
any time) on the part of the General Partners set forth in this Agreement such
that the condition set forth in Section 7.2(a) would
not be satisfied; and

 

(e)                                  the
General Partners (if the Contributing Partners are not in breach of any of
their material obligations hereunder), if there has been a knowing
misrepresentation or knowing breach of any representation or warranty as of the
date hereof (or, with respect to representations which are expressly by the
terms of this Agreement to be true and to be made as of the Closing, at any
time) on the part of

 

56

 

Vornado set forth in this Agreement such that the condition set forth in
Section 7.3(a) would not be
satisfied;

 

(f)                                    either
Vornado or the General Partners if any judgment, injunction, order, decree or
action by any Governmental Entity of competent authority preventing the
consummation of the Transaction shall have become final and nonappealable;

 

(g)                                 Vornado
in accordance with the provisions of Section 2.3;
and

 

(h)                                 the
terms of Section 11.1, unless Vornado
elects to proceed to Closing as set forth in such section.

 

ARTICLE XI

 

CASUALTY OR CONDEMNATION

 

11.1                        Material
Casualty or Condemnation.  If
all or a material part (as hereinafter defined) of the Property is damaged or
destroyed by fire or other casualty, or is taken by power of condemnation or
eminent domain, or process or purchase in lieu thereof, prior to the Closing Date,
the General Partners shall promptly notify Vornado of the occurrence of such
event and this Agreement shall terminate twenty (20) days after the date of
such notice (or earlier if the Operating Partnership gives the General Partners
a notice of termination), in which event the deposit and all earnings thereon
deposited under the Deposit Escrow Agreement shall be released to the Operating
Partnership, and neither party shall have any further rights against or
obligations to the other hereunder except as expressly provided in this
Agreement; provided that the Operating Partnership
may elect by notice given to the General Partners within twenty (20) days of
the date notice of the occurrence of such casualty or taking shall have been
given to the Operating Partnership by the General Partners (and,
notwithstanding anything else in this Agreement, the scheduled Closing
hereunder shall be extended in order to provide to the Operating Partnership a
complete 20-day period within which to make such election) to close hereunder
without abatement or reduction of the Exchange Value (except to the extent of
the deductible under the Subject Entities’ insurance coverage in the case of
casualty, which deductible amount shall be a reduction in the Paris Exchange
Value for a casualty affecting the Paris Property and the Geneva Exchange Value
for a casualty affecting the Geneva Property).

 

11.2                        Immaterial
Casualty or Condemnation.  If
an immaterial part of one or more of the Property is damaged by fire or other
casualty, or is taken by power of condemnation or eminent domain, or process or
purchase in lieu thereof, prior to the Closing Date, this Agreement shall
remain in full force and effect, the Operating Partnership shall be obligated
to close hereunder without any abatement or reduction of the Exchange Value
(except to the extent of the deductible under the Subject Entities’ insurance
coverage in the case of casualty, which deductible amount shall be a reduction
in the Paris Exchange Value for a casualty affecting the Paris Property and the
Geneva Exchange Value for a casualty affecting the Geneva Property).

 

57

 

11.3                        Materiality.  For the purposes of this Section, “material”
means, as to any casualty, damage or destruction that is reasonably estimated
to cost more than $2,300,000 in the aggregate to repair, and, with respect to
any condemnation or other taking, a taking that includes any portion of any
building included within the Property or denies reasonable access to any Property
in accordance with applicable law.

 

ARTICLE XII

 

GENERAL PROVISIONS

 

12.1                        Notices.  All notices, demands, requests or other
communications that may be or are required to be given or made by either party
to the other party pursuant to this Agreement shall be in writing and shall be
hand delivered or transmitted by certified mail, express overnight mail or
delivery service, or facsimile transmission to the parties at the addresses
specified in Schedule 12.1 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
facsimile) confirmation of transmission being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.

 

12.2                        Specific
Performance.  The parties
agree that irreparable damages would occur if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached.  It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement or to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, in addition to any other remedy to which they are entitled at law
or in equity.

 

12.3                        Further
Assurances.  The General
Partners hereby agree that they shall, at any time, prior to, at or after the
Closing of the Transaction, duly execute and deliver to Vornado or VNO
Transaction Sub any additional conveyances, assignments, documents aid
instruments, and shall take or cause to be taken such further actions
(including the making of filings), which Vornado may reasonably determine are
necessary in connection with the consummation of the Transaction.  The failure of Vornado or VNO Transaction Sub
to demand such conveyances, assignments, documents, instruments or actions at
or before the Closing shall not affect the obligation of the General Partners
to execute and deliver such conveyances, assignments, documents or instruments,
or to take such actions, at any time, upon the demand of Vornado or VNO
Transaction Sub.  From and after the
Closing, each party shall afford to the other reasonable access to any and all
information in its possession concerning the use or operation of the Property
(including the right to copy same at the expense of the party desiring such
copy) if required for purposes of any tax examination or audit.

 

58

 

12.4                        Consents.  If, under this Agreement, the consent of a
party is required, the consent shall be in writing and shall be executed by a
duly authorized officer or agent.

 

12.5                        Binding
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 (including any
Contributing Partner) 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.

 

12.6                        Construction.  Each party hereto hereby acknowledges that
all parties hereto participated equally in the negotiation and drafting of this
Agreement and that, accordingly, no court construing this Agreement shall
construe it more stringently against one party than against the other.  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.  The terms “hereof,” “hereby,” “herein,” “hereunder”
and words of similar import shall be understood to refer to this Agreement as a
whole and not to any specific clause, provision, paragraph, Section or Article of
this Agreement.  The term “including”
shall be understood to mean “including, without limitation.” References to
Sections, Schedules, Exhibits and Annexes shall be understood to refer to the
Sections, Schedules, Exhibits and Annexes of this Agreement, unless otherwise
specified.

 

12.7                        Waiver of
Jury Trial.  THE PARTIES
HERETO EACH HEREBY WAIVE ANY RIGHT TO JURY TRIAL IN THE EVENT ANY PARTY FILES
AN ACTION RELATING TO THIS AGREEMENT OR TO THE TRANSACTIONS OR OBLIGATIONS
CONTEMPLATED HEREUNDER.

 

12.8                        Governing
Law; Submission to Jurisdiction; Service of Process.  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
Commonwealth of Virginia without regard to the conflicts of laws principles
thereof.  Each of the parties hereto
hereby (a) irrevocably and unconditionally submits to, the non-exclusive
jurisdiction of the courts of the Commonwealth of Virginia and of the federal
courts sitting in the Commonwealth of Virginia for the purposes of any action,
suit or proceeding (including appeals to their respective appellate courts)
arising out of this Agreement or the transactions contemplated hereby, and (b) (1) to
the extent such party is not otherwise subject to service of process in the
Commonwealth of Virginia to appoint and maintain an agent in the Commonwealth
of Virginia as such party’s agent for acceptance of legal process and (2) to
the fullest extent permitted by law, that service of process may also be made
on such party by prepaid certified mail with a proof of mailing receipt
validated by the United States Postal Service constituting evidence of valid
service, and that service made pursuant to (b) (1) or (2) above
shall have the same legal force and effect as if served upon such party
personally within the Commonwealth of Virginia. 
Each party irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the courts of the
Commonwealth of Virginia or

 

59

 

(ii) the United States District Court for the Eastern District of
Virginia (including appeals to their respective appellate courts), and hereby
further irrevocably and unconditionally to the fullest extent permitted by law
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an
inconvenient forum.

 

12.9                        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.

 

12.10                 Assignment.  None of the parties hereto shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of the other parties hereto.  Any purported assignment contrary to the
terms hereof shall be null, void and of no force and effect.

 

12.11                 Counterparts.  To facilitate execution, this Agreement may
be executed in as many counterparts as may be required.  It shall not be necessary that the signatures
of, or on behalf of, each party, or that the signatures of all persons required
to bind any party, appear on each counterpart, but it shall be sufficient that
the signature of, or on behalf of, each party, appear on one or more of the
counterparts.  All counterparts shall collectively
constitute a single agreement.  It shall
not be necessary in making 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 hereof.

 

12.12                 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 Transaction is not affected in any manner
materially adverse to either party.

 

12.13                 Entire Agreement;
Amendment.  The Annexes,
Schedules and the Exhibits to this Agreement constitute integral parts hereof
and are hereby incorporated into this Agreement as if fully set forth
herein.  This Agreement and the other
agreements to be entered into in accordance with the terms hereof contain the
final and entire agreement between the parties hereto with respect to the
Transaction, 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.  The General Partners and Vornado 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.

 

12.14                 No Waiver.  No delay or failure on the part of either
party hereto in exercising any right, power or privilege under this Agreement
or under any other

 

60

 

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.

 

[Signatures
on following pages]

 

61

 

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.

 

	
   

  	
  VORNADO REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO REALTY L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Vornado Realty Trust,

  	
   

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CESC ROSSLYN L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  
								

 

62

 

AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS AMENDMENT TO CONTRIBUTION AGREEMENT (“Amendment”)
is made as of June 27, 2005 among Vornado Realty Trust, a Maryland real
estate investment trust (the “Company”), Vornado Realty L.P., a Delaware
limited partnership (the “Operating Partnership”), Vornado Rosslyn LLC, a
Delaware limited liability company and wholly owned subsidiary of the Operating
Partnership (the “VNO Transaction Sub”), and Robert H. Smith and Robert P.
Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment other than the VNO Transaction Sub entered into a Contribution
Agreement dated May 12, 2005 (as amended to date, the “Existing Agreement”).

 

B.                                    The
parties to this Amendment desire to amend the Existing Agreement as set forth
in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       VNO Transaction Sub. 
The Existing Agreement was purportedly executed by CESC Rosslyn L.L.C.,
a Delaware limited liability company, as “VNO Transaction Sub.”  The correct name of the wholly owned
subsidiary of the Operating Partnership that has been formed, pursuant to a
Certificate of Formation filed with the Delaware Secretary of State on May 20,
2005, is “Vornado Rosslyn LLC.” 
Notwithstanding anything to the contrary in the Existing Agreement, (i) the
term “VNO Transaction Sub” shall refer exclusively to Vornado Rosslyn LLC, a
Delaware limited liability company, (ii) any representations or warranties
of Vornado in the Existing Agreement shall be qualified by the fact that the
VNO Transaction Sub was not formed prior to May 20, 2005, and (iii) the
VNO Transaction Sub confirms, by its execution of this Amendment, that it has
agreed to be bound by all of the provisions of the Existing Agreement, as
modified by this Amendment.

 

3.                                       Study Period. 
Notwithstanding Section 2.1
of the Existing Agreement, the Study Period shall be extended until July 8,
2005 for all purposes under the Agreement.

 

4.                                       Specified General Partner Transaction Costs.  Notwithstanding the provisions of the
Existing Agreement, including Sections 1.5(b)(i)(y),
1.5(c)(i)(y), and 9.1(b) thereof,
(i) Vornado shall pay the expenses listed in Section 9.1(b) of
the Existing Agreement, (ii) notwithstanding the foregoing clause (i), if
the

 

 

Agreement
shall terminate without consummation of Closing, then Vornado shall have no
further obligation to pay any expenses listed in Section 9.1(b) of
the Existing Agreement (regardless of whether such expenses are then due and
payable), and the General Partners shall be solely responsible for any such
expenses, and the General Partners shall promptly reimburse Vornado for any
amounts paid by Vornado in respect to the expenses listed in Section 9.1(b) of the Existing Agreement, and (iii) in
calculating the Units to be issued at Closing under Section 1.5
of the Existing Agreement, the Specified General Partner Transaction
Costs shall be treated as Specified Vornado Transaction Costs (i.e.,
an amount equal to 50% of the expenses payable by Vornado under the foregoing
clause (i) shall reduce the consideration payable by Vornado pursuant to Section 1.5(b)(i)(x) and Section 1.5(c)(i)(x)
of the Existing Agreement).

 

5.                                       Ratification.  Except
as expressly modified by this Amendment, the Existing Agreement shall continue
in full force and effect in accordance with its terms.  References in the Existing Agreement or in
this Amendment to the “Agreement” shall be deemed to be references to the
Existing Agreement as modified by this Amendment.

 

6.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

2

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  
					

 

3

 

SECOND
AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS SECOND AMENDMENT TO CONTRIBUTION
AGREEMENT (“Amendment”) is made as of July 8,
2005 among Vornado Realty Trust, a Maryland real estate investment trust (the “Company”),
Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”),
Vornado Rosslyn LLC, a Delaware limited liability company and wholly owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub”), and Robert
H. Smith and Robert P. Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment entered into a Contribution Agreement dated May 12, 2005, as
amended by an Amendment to Contribution Agreement dated June 27, 2005 (the
“Existing Agreement”).

 

B.                                    The
parties to this Amendment desire to further amend the Existing Agreement as set
forth in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       Study Period. 
Notwithstanding Section 2.1
of the Existing Agreement, the Study Period shall be extended until July 15,
2005 for all purposes under the Agreement.

 

3.                                       Ratification.  As
expressly modified by this Amendment, the Existing Agreement shall continue in
full force and effect in accordance with its terms.  References in the Existing Agreement or in
this Amendment to the “Agreement” shall be deemed to be references to the
Existing Agreement as modified by this Amendment.

 

4.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  
					

 

2

 

THIRD
AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS THIRD AMENDMENT TO CONTRIBUTION
AGREEMENT (“Amendment”) is made as of July 15,
2005 among Vornado Realty Trust, a Maryland real estate investment trust (the “Company”),
Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”),
Vornado Rosslyn LLC, a Delaware limited liability company and wholly owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub”), and Robert
H. Smith and Robert P. Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment entered into a Contribution Agreement dated May 12, 2005, as
amended by an Amendment to Contribution Agreement dated June 27, 2005 and
by a Second Amendment to Contribution Agreement dated July 8, 2005 (the “Existing
Agreement”).

 

B.                                    The
parties to this Amendment desire to further amend the Existing Agreement as set
forth in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       Study Period. 
Notwithstanding Section 2.1
of the Existing Agreement, the Study Period shall be extended until July 22,
2005 for all purposes under the Agreement.

 

3.                                       Ratification.  As
expressly modified by this Amendment, the Existing Agreement shall continue in
full force and effect in accordance with its terms.  References in the Existing Agreement or in
this Amendment to the “Agreement” shall be deemed to be references to the
Existing Agreement as modified by this Amendment.

 

4.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  
					

 

2

 

 

FOURTH
AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS FOURTH AMENDMENT TO CONTRIBUTION
AGREEMENT (“Amendment”) is made as of July 22,
2005 among Vornado Realty Trust, a Maryland real estate investment trust (the “Company”),
Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”),
Vornado Rosslyn LLC, a Delaware limited liability company and wholly owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub”), and Robert
H. Smith and Robert P. Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment entered into a Contribution Agreement dated May 12, 2005, as
amended by an Amendment to Contribution Agreement dated June 27, 2005 and
by a Second Amendment to Contribution Agreement dated July 8, 2005 and by
a Third Amendment to Contribution Agreement dated July 15, 2005 (the “Existing
Agreement”).

 

B.                                    The
parties to this Amendment desire to further amend the Existing Agreement as set
forth in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       Study Period. 
Notwithstanding Section 2.1
of the Existing Agreement, the Study Period shall be extended until July 29,
2005 for all purposes under the Agreement.

 

3.                                       Ratification.  As
expressly modified by this Amendment, the Existing Agreement shall continue in
full force and effect in accordance with its terms.  References in the Existing Agreement or in
this Amendment to the “Agreement” shall be deemed to be references to the
Existing Agreement as modified by this Amendment.

 

4.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  
					

 

2

 

FIFTH
AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS FIFTH AMENDMENT TO CONTRIBUTION
AGREEMENT (“Amendment”) is made as of July 29,
2005 among Vornado Realty Trust, a Maryland real estate investment trust (the “Company”),
Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”),
Vornado Rosslyn LLC, a Delaware limited liability company and wholly owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub”), and Robert
H. Smith and Robert P. Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment entered into a Contribution Agreement dated May 12, 2005, as
amended by an Amendment to Contribution Agreement dated June 27, 2005, a
Second Amendment to Contribution Agreement dated July 8, 2005, a Third
Amendment to Contribution Agreement dated July 15, 2005 and a Fourth Amendment
to Contribution Agreement dated July 22, 2005 (the “Existing Agreement”).

 

B.                                    The
parties to this Amendment desire to further amend the Existing Agreement as set
forth in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       Study Period. 
Notwithstanding Section 2.1
of the Existing Agreement, the Study Period shall be extended until August 5,
2005 for all purposes under the Agreement.

 

3.                                       Ratification.  As
expressly modified by this Amendment, the Existing Agreement shall continue in full
force and effect in accordance with its terms. 
References in the Existing Agreement or in this Amendment to the “Agreement”
shall be deemed to be references to the Existing Agreement as modified by this
Amendment.

 

4.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  

 

2

 

SIXTH
AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS SIXTH AMENDMENT TO CONTRIBUTION
AGREEMENT (“Amendment”) is made as of August 3,
2005 among Vornado Realty Trust, a Maryland real estate investment trust (the “Company”),
Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”),
Vornado Rosslyn LLC, a Delaware limited liability company and wholly owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub”), and Robert
H. Smith and Robert P. Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment entered into a Contribution Agreement dated May 12, 2005, as
amended by an Amendment to Contribution Agreement dated June 27, 2005, a
Second Amendment to Contribution Agreement dated July 8, 2005, a Third
Amendment to Contribution Agreement dated July 15, 2005, a Fourth
Amendment to Contribution Agreement dated July 22, 2005 and a Fifth
Amendment to Contribution Agreement dated July 29, 2005 (the “Existing
Agreement”).

 

B.                                    The
parties to this Amendment desire to further amend the Existing Agreement as set
forth in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       Consideration.

 

a.                                       Exchange
Value.  Section 1.5(a) of
the Existing Agreement is hereby amended by deleting “$170,200,000” and
replacing it with “$166,700,000”.

 

b.                                      Paris
Allocation.  Section 1.5(a)(iv) of
the Existing Agreement is hereby amended by deleting “58.871915%” and replacing
it with “59.4481106%”.

 

c.                                       Geneva
Allocation.  Section 1.5(a)(v) of
the Existing Agreement is hereby amended by deleting “41.128085%” and replacing
it with “40.5518894%”.

 

3.                                       Deemed Value Per Unit. 
The last sentence of Section 1.5(b)(i) of
the Existing Agreement is hereby deleted in its entirety and replaced with the
following:  “For purposes of this
Agreement, the “Deemed Value” per Unit shall be $77.70.”  Section 1.5(b)(iii) of
the Existing Agreement is hereby deleted. 
Section 1.3 of

 

 

the Existing Agreement is hereby amended by deleting “, subject to Section 1.5(b)(iii),”.

 

4.                                       End of Study Period; Additional Deposit.

 

a.                                       Notwithstanding
Section 2.1 of the Existing
Agreement, the parties acknowledge and agree that the Study Period shall end on
August 3, 2005 for all purposes of the Agreement.  From and after the full execution and
delivery of this Amendment, Vornado shall be deemed to have waived its
termination right under Section 2.3
of the Agreement.

 

b.                                      Notwithstanding
anything to the contrary in Section 2.5
of the Agreement, Vornado shall increase the deposit under the Deposit Escrow
Agreement to $2,500,000 by transferring an additional cash deposit of
$1,250,000 to the escrow agent under the Deposit Escrow Agreement within two (2) business
days after full execution and delivery of this Amendment.

 

5.                                       Modification of Certain Dates and Time Periods.

 

a.                                       Section 1.3 of the Existing Agreement is hereby amended
by deleting “July 29, 2005” in the eighth line and replacing it with “September 9,
2005”.  Section 1.3
of the Existing Agreement is hereby amended by deleting “60 days” in the
eleventh line and replacing it with “30 days”.

 

b.                                      Section 6.13(c) of the Existing Agreement is
hereby amended by deleting “August 31, 2005” and replacing it with “October 10,
2005”.

 

c.                                       Sections 10.1(b) and 10.1(c) of
the Existing Agreement are each hereby amended by deleting “October 31,
2005” and replacing it with “October 10, 2005”.

 

6.                                       Ratification.  As
expressly modified by this Amendment, the Existing Agreement shall continue in
full force and effect in accordance with its terms.  References in the Existing Agreement or in
this Amendment to the “Agreement” shall be deemed to be references to the
Existing Agreement as modified by this Amendment.

 

7.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

8.                                       Business Day.  If the
last day of any time period under the Agreement, or the deadline for
performance of any obligation under the Agreement, falls on a day that is not a
business day, then such last day or deadline shall automatically be extended to
the next business day.

 

2

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  

 

3

 

SEVENTH
AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS SEVENTH AMENDMENT TO CONTRIBUTION
AGREEMENT (“Amendment”) is made as of October 7,
2005 among Vornado Realty Trust, a Maryland real estate investment trust (the “Company”),
Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”),
Vornado Rosslyn LLC, a Delaware limited liability company and wholly owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub”), and Robert
H. Smith and Robert P. Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment entered into a Contribution Agreement dated May 12, 2005, as
amended by an Amendment to Contribution Agreement dated June 27, 2005, a
Second Amendment to Contribution Agreement dated July 8, 2005, a Third
Amendment to Contribution Agreement dated July 15, 2005, a Fourth
Amendment to Contribution Agreement dated July 22, 2005, a Fifth Amendment
to Contribution Agreement dated July 29, 2005 and a Sixth Amendment to
Contribution Agreement dated August 3, 2005 (the “Existing Agreement”).

 

B.                                    The
parties to this Amendment desire to further amend the Existing Agreement as set
forth in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       Modification of Certain Dates and Time Periods.

 

a.                                       Section 1.3 of the Existing Agreement is hereby amended
and restated in its entirety to read as follows:

 

“1.3                         Closing.
The consummation of the Transaction described in Section 1.1
(“Closing”) shall take place on such date and time as the Company and the
Operating Partnership may select by at least five (5) days’ prior notice
to the General Partners; provided, however, that (subject to the satisfaction
or waiver of the applicable conditions to the Closing set forth in ARTICLE VII) the Closing Date shall be no later than November 11,
2005, unless the Operating Partnership and the General Partners shall otherwise
agree (the “Closing Date”).  The Closing
shall be effective as of 12:01 A.M. on the Closing Date unless the parties
otherwise agree (“Effective Date”).  The
Closing shall be held at the offices of Arnold & Porter LLP, 555 12th
Street, N.W., Washington, D.C. 20004, or at such other location as the parties
may agree.”

 

 

b.                                      Section 6.13(c) of the Existing Agreement is
hereby amended by deleting “October 10, 2005” and replacing it with “November 11,
2005”.

 

c.                                       Sections 10.1(b) and 10.1(c) of
the Existing Agreement are each hereby amended by deleting “October 10,
2005” and replacing it with “November 11, 2005”.

 

3.                                       Ratification.  As
expressly modified by this Amendment, the Existing Agreement shall continue in
full force and effect in accordance with its terms.  References in the Existing Agreement or in
this Amendment to the “Agreement” shall be deemed to be references to the
Existing Agreement as modified by this Amendment.

 

4.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

[signatures
on following page]

 

2

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  

 

3

 

EIGHTH
AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS EIGHTH AMENDMENT TO CONTRIBUTION
AGREEMENT (“Amendment”) is made as of November 11,
2005 among Vornado Realty Trust, a Maryland real estate investment trust (the “Company”),
Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”),
Vornado Rosslyn LLC, a Delaware limited liability company and wholly owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub”), and Robert
H. Smith and Robert P. Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment entered into a Contribution Agreement dated May 12, 2005, as
amended by an Amendment to Contribution Agreement dated June 27, 2005, a
Second Amendment to Contribution Agreement dated July 8, 2005, a Third
Amendment to Contribution Agreement dated July 15, 2005, a Fourth
Amendment to Contribution Agreement dated July 22, 2005, a Fifth Amendment
to Contribution Agreement dated July 29, 2005, a Sixth Amendment to
Contribution Agreement dated August 3, 2005 and a Seventh Amendment to
Contribution Agreement dated October 7, 2005 (the “Existing Agreement”).

 

B.                                    The
parties to this Amendment desire to further amend the Existing Agreement as set
forth in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       Modification of Certain Dates and Time Periods.

 

a.                                       Section 1.3 of the Existing Agreement is hereby amended
and restated in its entirety to read as follows:

 

“1.3                         Closing.
The consummation of the Transaction described in Section 1.1
(“Closing”) shall take place on such date and time as the Company and the
Operating Partnership may select by at least five (5) days’ prior notice
to the General Partners; provided, however, that (subject to the satisfaction
or waiver of the applicable conditions to the Closing set forth in ARTICLE VII) the Closing Date shall be no later than December 1,
2005, unless the Operating Partnership and the General Partners shall otherwise
agree (the “Closing Date”).  The Closing
shall be effective as of 12:01 A.M. on the Closing Date unless the parties
otherwise agree (“Effective Date”).  The
Closing shall be held at the offices of Arnold & Porter LLP, 555 12th
Street, N.W., Washington, D.C. 20004, or at such other location as the parties
may agree.”

 

 

b.                                      Section 6.13(c) of the Existing Agreement is hereby
amended by deleting “November 11, 2005” and replacing it with “December 1,
2005”.

 

c.                                       Sections 10.1(b) and 10.1(c) of
the Existing Agreement are each hereby amended by deleting “November 11,
2005” and replacing it with “December 1, 2005”.

 

3.                                       Transaction Costs.  To
the extent that any Specified Vornado Transaction Costs or Specified General
Partner Transaction Costs, as defined in Section 9.1 of the Existing
Agreement, are not finally established on the Closing Date, such amounts shall
be treated in the same manner as net proration amounts pursuant to Section 9.3
of the Existing Agreement; i.e., such transaction costs will be estimated on
the Closing Date using the best available information, and if the parties
proceed under clause (ii) of the third sentence of Section 9.3, the
number of Units will be finalized as promptly as practicable after the Closing
Date based on the final transaction costs as reasonably agreed by the General
Partners and Vornado.

 

4.                                       Ratification.  As
expressly modified by this Amendment, the Existing Agreement shall continue in
full force and effect in accordance with its terms.  References in the Existing Agreement or in
this Amendment to the “Agreement” shall be deemed to be references to the
Existing Agreement as modified by this Amendment.

 

5.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

[signatures
on following page]

 

2

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  

 

3

 

NINTH
AMENDMENT

TO

CONTRIBUTION
AGREEMENT

 

THIS NINTH AMENDMENT TO CONTRIBUTION
AGREEMENT (“Amendment”) is made as of December 8,
2005 among Vornado Realty Trust, a Maryland real estate investment trust (the “Company”),
Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”),
Vornado Rosslyn LLC, a Delaware limited liability company and wholly owned
subsidiary of the Operating Partnership (the “VNO Transaction Sub”), and Robert
H. Smith and Robert P. Kogod (each, a “General Partner”).

 

A.                                    The parties to this
Amendment entered into a Contribution Agreement dated May 12, 2005, as
amended by an Amendment to Contribution Agreement dated June 27, 2005, a
Second Amendment to Contribution Agreement dated July 8, 2005, a Third
Amendment to Contribution Agreement dated July 15, 2005, a Fourth
Amendment to Contribution Agreement dated July 22, 2005, a Fifth Amendment
to Contribution Agreement dated July 29, 2005, a Sixth Amendment to
Contribution Agreement dated August 3, 2005, a Seventh Amendment to
Contribution Agreement dated October 7, 2005 and an Eighth Amendment to
Contribution Agreement dated November 11, 2005 (the “Existing Agreement”).

 

B.                                    The
parties to this Amendment desire to further amend the Existing Agreement as set
forth in this Amendment.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                                       Definitions.  Each
capitalized term used but not defined in this Amendment shall have the meaning
assigned to it in the Existing Agreement.

 

2.                                       Modification of Certain Dates and Time Periods.

 

a.                                       Section 1.3 of the Existing Agreement is hereby amended
and restated in its entirety to read as follows:

 

“1.3                         Closing.
The consummation of the Transaction described in Section 1.1
(“Closing”) shall take place on such date and time as the Company and the
Operating Partnership may select by at least five (5) days’ prior notice
to the General Partners; provided, however, that (subject to the satisfaction
or waiver of the applicable conditions to the Closing set forth in ARTICLE VII) the Closing Date shall be no later than December 21,
2005, unless the Operating Partnership and the General Partners shall otherwise
agree (the “Closing Date”).  The Closing
shall be effective as of 12:01 A.M. on the Closing Date unless the parties
otherwise agree (“Effective Date”).  The
Closing shall be held at the

 

 

offices of Arnold & Porter LLP, 555
12th Street, N.W., Washington, D.C. 20004, or at such other location as the
parties may agree.”

 

b.                                      Section 6.13(c) of the Existing Agreement is
hereby amended by deleting “December 1, 2005” and replacing it with “December 21,
2005”.

 

c.                                       Sections 10.1(b) and 10.1(c) of
the Existing Agreement are each hereby amended by deleting “December 1,
2005” and replacing it with “December 21, 2005”.

 

3.                                       Ratification.  As
expressly modified by this Amendment, the Existing Agreement shall continue in
full force and effect in accordance with its terms.  References in the Existing Agreement or in
this Amendment to the “Agreement” shall be deemed to be references to the
Existing Agreement as modified by this Amendment.

 

4.                                       Counterparts; Execution By Facsimile.  This Amendment may be executed in any number
of counterparts with the same effect as if all of the parties had signed the
same document.  All counterparts shall be
construed together and shall constitute one agreement.  Execution and delivery of this Amendment by
facsimile shall be sufficient for all purposes and shall be binding on any
person who so executes and delivers this Amendment.

 

[signatures
on following page]

 

2

 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Amendment to be duly executed and delivered on its
behalf as of the date first above written.

 

 

	
   

  	
  VORNADO
  REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  REALTY L.P.

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO
  ROSSLYN LLC

  
	
   

  	
   

  
	
   

  	
  By:                              Vornado
  Realty L.P.

  
	
   

  	
  By:                              Vornado
  Realty Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL PARTNERS:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert H. Smith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert P. Kogod

  

 

3[SCHEDULE B]

 

 

 

 

[Listing
of Additional Indebtedness]

 

 

 

Exhibit
10.2

 

 

PROMISSORY NOTE

	
  To Master Security Agreement No.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Date)

  	
   

  
				

 

 

FOR
VALUE RECEIVED, Acusphere, Inc., a Delaware corporation, located at the
address stated below (“Maker”) promises,
jointly and severally if more than one, to pay to the order of Oxford Finance Corporation or any subsequent holder hereof
(each, a “Payee”) at its office located at 133 N. Fairfax Street, Alexandria, VA 22314 or at such other
place as Payee or the holder hereof may designate, the principal sum of                                
Dollars ($                                    ),
with interest on the unpaid principal balance, from the date hereof through and
including the dates of payment, at a fixed interest rate of                 percent
(                 %)
per annum, in                      
(                      )
consecutive                  installments
of principal and interest as follows:

 

Periodic

Installment Amount

 

 

each (“Periodic Installment”) and a final installment which shall
be in the amount of the total outstanding principal and interest.  The first Periodic Installment shall be due
and payable on                                 
and the following Periodic Installments and the final installment shall be due
and payable on the first day of each succeeding month (each, a “Payment Date”) beginning                             .  Such installments have been calculated on the
basis of a 360-day year of twelve 30-day months.  Each payment may, at the option of the Payee,
be calculated and applied on an assumption that such payment would be made on
its due date. Maker agrees to pay any initial partial month interest payment
from the date of this Note to the first day of the following month (“Interim
Interest”).

 

The
acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee’s
right to receive payment in full at such time or at any prior or subsequent
time.

 

The Maker hereby
expressly authorizes the Payee to insert the date value is actually given in
the blank space on the face hereof and on all related documents pertaining
hereto.

 

This
Note may be secured by a security agreement, chattel mortgage, pledge agreement
or like instrument (each of which is hereinafter called a “Security
Agreement” and any Security Agreement, this Note and any other document
evidencing or securing this loan is hereinafter called a “Debt Document”).

 

 

 

 

 

Time is of the essence
hereof.  If any installment or any other
sum due under this Note or any Security Agreement is not received when due
(subject to applicable cure periods, if any), the Maker agrees to pay, in
addition to the amount of each such installment or other sum, a late payment
charge of five percent (5%) of the amount of said installment or other sum, but
not exceeding any lawful maximum.  If (i)
Maker fails to make payment of any amount due hereunder ; or  (ii) Maker is in default under, or fails to
perform under any term or condition contained in any Security Agreement, in
either case, subject to applicable cure periods, if any, then the entire
principal sum remaining unpaid, together with all accrued interest thereon and
any other sum payable under this Note or any Security Agreement, at the
election of Payee, shall immediately become due and payable, with interest
thereon at the lesser of eighteen percent (18%) per annum or the highest rate
not prohibited by applicable law from the date of such accelerated maturity until
paid (both before and after any judgment).

 

Notwithstanding anything to the contrary contained
herein or in the Security Agreement, Maker may prepay in full, but not in part,
its entire Indebtedness hereunder by payment of the entire Indebtedness plus an
additional sum as a premium equal to the following percentages of the remaining
principal balance for the indicated period:

 

From the date of this Note until the first annual
anniversary date of this Note: six percent (6%)

 

From the first annual anniversary date of this Note
until the second annual anniversary date of this Note: five percent (5%)

 

From the second annual anniversary date of this Note
until the third annual anniversary date of this Note: four percent (4%)

 

From the third annual anniversary date of this Note
until the fourth annual anniversary date of this Note: two percent (2%)

 

Notwithstanding the
foregoing, Maker may prepay in full, but not in part, its entire Indebtedness
hereunder by payment of the entire Indebtedness without having to pay the
additional sums described above as premiums in the event that Payee does not
consent on a timely basis to (i) any of the distributions described in Section
3(i) of the Security Agreement, (ii) any of the payments described in Section
3(j) of the Security Agreement or (iii) any of the transactions described in
Section 7(a)(xiv) of the Security Agreement.

 

The Maker and all
sureties, endorsers, guarantors or any others (each such person, other than the
Maker, an “Obligor”) who may at any time become
liable for the payment hereof jointly and severally consent hereby to any and
all extensions of time, renewals, waivers or modifications of, and all
substitutions or releases of, security or of any party primarily or secondarily
liable on this Note or any Security Agreement or any term and provision of
either, which may be made, granted or consented to by Payee, and agree that
suit may be brought and maintained against any one or more of them, at the
election of Payee without joinder of any other as a party thereto, and that
Payee shall not be required first to foreclose, proceed against, or exhaust any
security hereof in order to enforce payment of this Note.  The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agrees to pay (if and to the
extent permitted by law) all expenses incurred in collection, including Payee’s
actual attorneys’ fees.  Maker and each
Obligor agrees that fees not in excess of twenty percent (20%) of the amount
then due shall be deemed reasonable.

 

Maker and Payee intend to
strictly comply with all applicable federal and Virginia laws, including
applicable usury laws (or the usury laws of any jurisdiction whose usury laws
are deemed to apply to the Note or any other Debt Document despite the
intention and desire of the parties to apply the usury laws of the Commonwealth
of Virginia).  Accordingly, the
provisions of this paragraph shall govern and control over every other
provision of this Note or any other Debt Document which conflicts or is
inconsistent with this Section, even if such provision declares that it
controls.  As used in this paragraph, the
term “interest” includes the aggregate of
all charges, fees, benefits or other compensation which constitute interest
under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an
expense or as compensation for something other than the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved, charged or received shall be amortized, prorated,
allocated and spread, in equal parts during the full term of the
obligations.  In no event shall Maker or
any other person be obligated to pay, or Payee have any right or privilege to
reserve, receive or retain, (a) any interest in excess of the maximum amount of
non-usurious interest permitted under the laws of the Commonwealth of Virginia
or the applicable laws (if any) of the United States or of any other state, or
(b) total interest in excess of the amount which Payee could lawfully have
contracted for, reserved, received, retained or charged had the interest been
calculated for the full term of the obligations.  On each day, if any, that the interest rate
(the “Stated Rate”) called for under this Note or any other Debt
Document exceeds the maximum non-usurious rate, the rate at which interest
shall accrue shall automatically be fixed by operation of this sentence at the
maximum non-usurious rate for that day. 
Thereafter, interest shall accrue at the Stated Rate unless and until
the Stated Rate again exceeds the maximum non-usurious rate, in which case, the
provisions of the immediately 

 

 

 

preceding sentence shall
again automatically operate to limit the interest accrual rate to the maximum
non-usurious rate.  The daily interest
rates to be used in calculating interest at the maximum non-usurious rate shall
be determined by dividing the applicable maximum non-usurious rate by the
number of days in the calendar year for which such calculation is being
made.  None of the terms and provisions
contained in this Note or in any other Debt Document which directly or
indirectly relate to interest shall ever be construed without reference to this
paragraph, or be construed to create a contract to pay for the use, forbearance
or detention of money at an interest rate in excess of the maximum non-usurious
rate.  If the term of any obligation is
shortened by reason of acceleration of maturity as a result of any Default or by
any other cause, or by reason of any required or permitted prepayment, and if
for that (or any other) reason Payee at any time, including but not limited to,
the stated maturity, is owed or receives (and/or has received) interest in
excess of interest calculated at the maximum non-usurious rate, then and in any
such event all of any such excess interest shall be canceled automatically as
of the date of such acceleration, prepayment or other event which produces the
excess, and, if such excess interest has been paid to Payee, it shall be credited
pro tanto against the then-outstanding principal balance of Maker’s
obligations to Payee, effective as of the date or dates when the event occurs
which causes it to be excess interest, until such excess is exhausted or all of
such principal has been fully paid and satisfied, whichever occurs first, and
any remaining balance of such excess shall be promptly refunded to its payor.

 

THE MAKER HEREBY UNCONDITIONALLY
WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS NOTE, ANY OF THE RELATED
DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE RELATING TO THE SUBJECT MATTER
OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT
IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. 
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS.)  THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION.  IN THE EVENT OF LITIGATION, THIS NOTE MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

This Note and any
Security Agreement constitute the entire agreement of the Maker and Payee with
respect to the subject matter hereof and supercedes all prior understandings,
agreements and representations, express or implied.

 

No variation or
modification of this Note, or any waiver of any of its provisions or
conditions, shall be valid unless in writing and signed by an authorized
representative of Maker and Payee.  Any
such waiver, consent, modification or change shall be effective only in the
specific instance and for the specific purpose given.

 

Any provision in this
Note or any Security Agreement which is in conflict with any statute, law or
applicable rule shall be deemed omitted, modified or altered to conform
thereto.

 

Upon receipt of an
affidavit of an officer of Payee as to the loss, theft, destruction or
mutilation of this Note or any Debt Document which is not of public record,
and, in the case of any such loss, theft, destruction or mutilation, upon
surrender and cancellation of such Note or other Debt Document, Maker will
issue, in lieu thereof, a replacement Note or other Debt Document in the same
principal amount thereof and otherwise of like tenor.

 

It is understood
and agreed that this Note and all of the Debt Documents were negotiated and
have been or will be delivered to Payee in the Commonwealth of Virginia, which
State the parties agree has a substantial relationship to the parties and to
the underlying transactions embodied by this Note and the Debt Documents. Maker
agrees to furnish to Payee at Payee’s office in Alexandria, VA, all further
instruments, certifications and documents to be furnished hereunder.    The parties also agree that if collateral
is pledged to secure the debt evidenced by this Note, that the state or states
in which such collateral is located each have a substantial relationship to the
parties and to the underlying transaction embodied by this Note and the Debt
Documents.

 

MAKER AGREES THAT THE
PAYEE OF THIS NOTE SHALL HAVE THE OPTION BY WHICH STATE LAWS THIS NOTE SHALL BE
GOVERNED AND CONSTRUED: (A) THE LAWS OF THE COMMONWEALTH OF VIRGINIA; OR (B) IF
COLLATERAL HAS BEEN PLEDGED TO SECURE THE DEBT EVIDENCED BY THIS NOTE, THEN BY
THE LAWS OF THE STATE OR STATES WHERE THE COLLATERAL IS LOCATED, AT PAYEE’S
OPTION.  THIS CHOICE OF STATE LAWS IS
EXCLUSIVE TO THE PAYEE OF THIS NOTE. 
MAKER SHALL NOT HAVE ANY OPTION TO CHOOSE THE LAWS BY WHICH 

 

 

 

THIS NOTE SHALL BE
GOVERNED.  MAKER AND GUARANTORS HEREBY
CONSENT TO THE EXERCISE OF JURISDICTION OVER IT BY ANY FEDERAL COURT SITTING IN
VIRGINIA OR ANY VIRGINIA COURT SELECTED BY PAYEE, FOR THE PURPOSES OF ANY AND ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTE, THE LOAN AGREEMENT
AND ALL OTHER  DOCUMENTS.  MAKER AND GUARANTORS IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN ANY
SUCH COURT, ANY CLAIM BASED ON THE CONSOLIDATION OF PROCEEDINGS IN SUCH COURTS
IN WHICH PROPER VENUE MAY LIE IN DIVERGENT JURISDICTIONS, AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.  MAKER AND GUARANTORS
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE, THE OTHER DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

 

	
   

  	
  Acusphere, Inc. 

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
  (Witness) 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
  (Print name)

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
  (Address) 

  	
   

  	
   

  
	
   

  	
  Federal Tax ID
  #:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

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