Document:

Exhibit 10.4

 

EMPLOYEE MATTERS AGREEMENT
 BY AND BETWEEN 
  VORNADO REALTY TRUST,
 VORNADO REALTY L.P.,
 URBAN EDGE PROPERTIES
 AND 
 URBAN EDGE PROPERTIES LP

 

DATED AS OF JANUARY 15, 2015

 

EMPLOYEE MATTERS AGREEMENT

 

This EMPLOYEE MATTERS AGREEMENT (the “Agreement”), dated as of January 15, 2015, is by and among  Vornado Realty Trust, a Maryland real estate investment trust (“VNO”), Vornado Realty L.P., a Delaware limited partnership (“VRLP”), Urban Edge Properties, a Maryland real estate investment trust (“UE”), and Urban Edge Properties LP, a Delaware limited partnership (“UELP” and together with VNO, VRLP and UE, each a “Party” and collectively, the “Parties”).

 

WHEREAS, the board of trustees of VNO (the “VNO Board”) has determined that it is in the best interests of VNO and its shareholders to create a new publicly traded company that will operate the UE Business (as defined below);

 

WHEREAS, in furtherance of the foregoing, the VNO Board has determined that it is appropriate and desirable to separate the UE Business from the VNO Business (the “Separation”);

 

WHEREAS, in furtherance of the foregoing, the Parties have entered into a Separation and Distribution Agreement, dated as of January 14, 2015 (the “Separation Agreement”), and have entered or will enter into other Transaction Documents that will govern certain matters relating to the Distribution (as defined below) and the relationship of VNO, UE and their respective Affiliates prior to and following the Distribution Date (as defined below); and

 

WHEREAS, pursuant to the Separation Agreement, the Parties have agreed to enter into this Agreement for the purpose of allocating assets, liabilities and responsibilities with respect to certain human resources, employee compensation and benefits matters between them to the extent not provided in, or that vary from, the Separation Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the respective agreements and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, agree as follows:

 

 

ARTICLE I

DEFINITIONS

 

1.1                               Definitions.  The following terms shall have the following meanings:

 

“Affiliate” shall mean, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person.  For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise.  It is expressly agreed that, prior to, at and after the Effective Time, for purposes of the Transaction Documents (a) no member of the UE Group shall be deemed to be an Affiliate of any member of the VNO Group and (b) no member of the VNO Group shall be deemed to be an Affiliate of any member of the UE Group.

 

“Agreement” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Benefit Plan” means, with respect to an entity, any “employee benefit plan” (as defined in Section 3(3) of ERISA), and each plan, program, arrangement, agreement or commitment that is an employment, consulting, non-competition or deferred compensation agreement, or an executive compensation, incentive bonus or other bonus, employee pension, profit-sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock appreciation rights, restricted stock, operating partnership unit, other equity-based compensation, severance pay, salary continuation, life, health, hospitalization, sick leave, vacation pay, paid time-off, disability or accident insurance plan, program, arrangement, agreement or commitment, corporate-owned or key-man life insurance or other employee benefit plan, program, arrangement, agreement or commitment, sponsored or maintained by such entity (or to which such entity contributes or is required to contribute or with respect to which such entity has any liability).

 

“COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and Sections 601 through 608 of ERISA, and any similar state group health plan continuation Law, together with all regulations and proposed regulations promulgated thereunder, including any amendments or other modifications of such Laws and regulations that may be made from time to time.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“DCP II” has the meaning ascribed thereto in Section 6.1 of this Agreement.

 

“Distribution” shall have the meaning set forth in the recitals to the Separation Agreement.

 

2

 

“Distribution Date” shall mean the date of the consummation of the Distribution, which shall be determined by the VNO Board in its sole and absolute discretion.

 

“Effective Time” shall mean 12:01 a.m., New York City time, on the Distribution Date.

 

“Employee” means any individual who is a full-time or part-time employee of the applicable entity.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

“Force Majeure” has the meaning ascribed thereto in the Separation Agreement.

 

“Former Employee” means any former Employee of VNO or an Affiliate of VNO or of UE or an Affiliate of UE, as of immediately prior to the Effective Time, whether having last been employed by a member of the VNO Group or a member of the UE Group, including retired Employees.

 

“Governmental Authority” means any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any executive official thereof.

 

“Group” shall mean either the UE Group or the VNO Group, as the context requires.

 

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended.

 

“Law” means any national, supranational, federal, state, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any income tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.

 

“Liabilities” shall have the meaning ascribed thereto in the Separation Agreement.

 

“Parties” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Person” shall mean an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

 

3

 

“Separation” has the meaning ascribed thereto in the recitals to this Agreement.

 

“Separation Agreement” has the meaning ascribed thereto in the recitals to this Agreement.

 

“Subsidiary” or “subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (i) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Person, (B) the total combined equity interests, or (C) the capital or profit interests, in the case of a partnership, or (ii) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

 

“Transaction Documents” means all agreements entered into by the Parties or the members of their respective Groups (but as to which no third party is a party) in connection with the Separation, the Distribution, or the other transactions contemplated by this Agreement, including this Agreement, the Separation Agreement, the Transition Services Agreement, the Tax Matters Agreement and the Transfer Documents, as such terms are defined in the Separation Agreement (if not defined in this Agreement).

 

“Transition Services Agreement” means the Transition Services Agreement to be entered into by and between VNO and UE or any members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by the Separation Agreement.

 

“U.S.” means the United States of America.

 

“UE” has the meaning ascribed thereto in the preamble to this Agreement.

 

“UE 401(k) Plan” has the meaning ascribed thereto in Section 3.1(a) of this Agreement.

 

“UE Annual Bonus Plan” has the meaning ascribed thereto in Section 7.1 of this Agreement.

 

“UE Benefit Plan” means any Benefit Plan sponsored, maintained or contributed to by a member of the UE Group after the Effective Time, but excluding any VNO Benefit Plan.

 

“UE Business” shall mean the business, operations and activities of the VNO Group relating to the UE Properties as defined in the Separation Agreement as conducted at any time prior to the Effective Time by either Party or any of their current or former Subsidiaries.

 

“UE Common Share” shall mean a share of common stock, par value $0.01 per share, of UE.

 

“UE Equity Plan” has the meaning ascribed thereto in Section 5.1 of this Agreement.

 

4

 

“UE Group” shall mean (a) prior to the Effective Time, UE and each Person that will be a Subsidiary of UE as of immediately after the Effective Time, including the Transferred Entities (as defined in the Separation Agreement), even if, prior to the Effective Time, such Person is not a Subsidiary of UE; and (b) on and after the Effective Time, UE and each Person that is a Subsidiary of UE.

 

“UE Group Employee” means any person who, immediately following the Effective Time, is an Employee of any member of the UE Group, including any such Employee who is on an approved leave at such time other than long-term disability leave.

 

“UE Nonqualified Deferred Compensation Plan” has the meaning ascribed thereto in Section 6.1 of this Agreement.

 

“UE Participant” shall mean any UE Group Employee who was, prior to the Effective Time, a participant in the applicable VNO Benefit Plan or is, after the Effective Time, a participant in the applicable UE Benefit Plan, or is a beneficiary, dependent or alternate payee of such a participant.

 

“UE Welfare Plans” means Welfare Plans which are maintained or contributed to by a member of the UE Group, but excluding the VNO Welfare Plans.

 

“VNO 401(k) Plan” shall mean the Vornado Realty Trust 401(k) Plan.

 

“VNO Annual Bonus Plans” has the meaning ascribed thereto in Section 7.1 of this Agreement.

 

“VNO Benefit Plan” shall mean any Benefit Plan sponsored, maintained or contributed to by VNO or any of its Affiliates.

 

“VNO Board” has the meaning ascribed thereto in the recitals to this Agreement.

 

“VNO Business” shall mean all businesses, operations and activities (whether or not such businesses, operations or activities are or have been terminated, divested or discontinued) conducted at any time prior to the Effective Time by either Party or any member of its Group, other than the UE Business.

 

“VNO Common Share” shall mean a common share, par value of $0.04 per share, of VNO.

 

“VNO Equity Plan” shall mean the Vornado Realty Trust 2010 Omnibus Share Plan.

 

“VNO Group” shall mean VNO and each Person that is a Subsidiary of VNO (other than any member of the UE Group).

 

“VNO Group Employee” shall mean any person who, immediately following the Effective Time, is an Employee of any member of the VNO Group, including any such Employee who is on an approved leave at such time.

 

5

 

“VNO Nonqualified Deferred Compensation Plans” has the meaning ascribed thereto in Section 6.1 of this Agreement.

 

“VNO Participant” shall mean any VNO Group Employee or Former Employee and who is, at any time prior to, on, or after the Effective Time, a participant in the applicable VNO Benefit Plan or is a beneficiary, dependent or alternate payee of such a participant.

 

“VNO Severance Benefits Program” shall mean the VNO severance program which covers employees of the UE Group immediately prior to the Effective Time.

 

“VNO Welfare Plans” has the meaning ascribed thereto in Section 4.1(a) of this Agreement.

 

“Welfare Plan” shall mean a plan that provides for health, welfare or other insurance benefits within the meaning of Section 3(1) of ERISA.

 

ARTICLE II
 EMPLOYMENT GENERALLY

 

2.1                               Continuation of Employment.  Except as otherwise provided on Schedule 2.1 of this Agreement or as required by applicable local Law, VNO and its Affiliates shall take all actions necessary to ensure that, as of immediately prior to the Effective Time, (i) all Employees intended by the Parties to be UE Group Employees, including any such Employees who are on short-term disability leave or other approved leave of absence, are employed by a member of the UE Group and (ii) all Employees intended by the Parties to be VNO Group Employees are employed by a member of the VNO Group.

 

2.2                               Service Recognition.  UE shall give, or shall cause its Affiliates to give, each UE Group Employee full credit for all purposes under any UE Benefit Plan for such UE Group Employee’s service with VNO or any of its Affiliates prior to the Effective Time to the same extent such service was recognized by the corresponding VNO Benefit Plan immediately prior to the Effective Time; provided, however, that such service shall not be recognized to the extent that such recognition would result in the duplication of benefits or as otherwise provided by applicable local Law.

 

2.3                               No Separation From Service or Termination of Employment.  The Distribution and the assignment, transfer, or continuation of employment of any Employee of VNO or any of its Affiliates in connection therewith (including in accordance with Section 2.1 hereof) shall not be deemed a separation from service or termination of employment entitling such Employee to be eligible to participate in, or to receive payment of, severance or other termination payments or benefits under any applicable Law, VNO Benefit Plan or UE Benefit Plan provided, however, that any Employee of VNO or any of its Affiliates whose employment is not intended to be continued by VNO or any of its Affiliates following the Effective Time and is not assigned to a member of the UE Group, and whose employment is involuntarily terminated by VNO as of the Effective Time, shall be deemed to have incurred a separation from service and shall be eligible to receive severance and benefits as set forth in Section 7.2 of this Agreement.

 

6

 

2.4                               Former Employees.  UE shall have no liability with respect to Former Employees, if any, as of (or after) the Effective Time. VNO shall retain liability, if any, with respect to Former Employees.  Notwithstanding the foregoing, if after the Effective Time UE hires a Former Employee (not in violation of the nonsolicitation obligations in Section 5.6 of the Separation Agreement), then UE shall be responsible for any prospective compensation and benefits provided to such person.

 

ARTICLE III
 RETIREMENT PLANS

 

3.1                               The VNO 401(k) Plan and UE 401(k) Plan.

 

(a)                                 Establishment of Plan and Trust.  UE or one of its Affiliates shall adopt a retirement plan and related trust that are qualified and tax-exempt pursuant to Code Sections 401(a) and 501(a), respectively, and that is intended to meet the requirements of Code Section 401(k) (the “UE 401(k) Plan”), and any trust agreement or other plan documents reasonably necessary in connection therewith, and shall cause a trustee to be appointed for the UE 401(k) Plan.  Such actions shall be completed prior to, or as soon as reasonably practicable following, the Effective Time.  Subject to the written consent of VNO, UE may satisfy its obligations under this Section 3.1 by establishing or adopting a multiple employer 401(k) plan of which VNO or an Affiliate of VNO is the primary sponsoring employer. If such a multiple employer 401(k) plan is established, it shall be deemed, for purposes of this Section 3.1, to be the UE 401(k) Plan referenced herein.

 

(b)                                 Assumption of Liabilities Transfer of Assets.  As soon as practicable after the Effective Time and subject to Applicable Law:  (i) VNO shall cause the accounts (including any outstanding loan balances) of each UE Employee in the VNO 401(k) Plan to be transferred to the UE 401(k) Plan and its related trust; (ii) the UE 401(k) Plan shall assume and be solely responsible for all Liabilities under the UE 401(k) Plan relating to the accounts that are so transferred as of and following the time of such transfer; and (iii) UE shall cause such transferred accounts to be accepted by the UE 401(k) Plan and its related trust and shall cause the UE 401(k) Plan to satisfy all protected benefit requirements under the Code and applicable Law with respect to the transferred accounts.  Such transfer shall be made in (i) cash but, only to the extent it is not practicable to transfer in kind (as determined by the administrator of the VNO 401(k) Plan) and (ii) promissory notes evidencing the transfer of outstanding loans.

 

(c)                                  Contributions Under the VNO 401(k) Plan as of the Effective Time.  All employer contributions, including employee deferrals, matching contributions (including any true-up contributions, if applicable), profit-sharing contributions, and employer non-elective contributions, accrued by UE Participants under the VNO 401(k) Plan through the Effective Time, determined in accordance with the terms and provisions of the VNO 401(k) Plan, ERISA and the Code, and based on all service performed and compensation accrued through the Effective Time, shall be deposited by VNO in the VNO 401(k) Plan and allocated to the VNO 401(k) Plan accounts of the applicable UE Participants prior to the Effective Time.

 

3.2                               Reservation of Rights.  Except as provided in Section 3.1, the Parties hereby acknowledge that nothing in this Article III shall be construed to require (a) VNO or any of its

 

7

 

Affiliates to continue the VNO 401(k) Plan before or after the Effective Time, and (b) UE or any of its Affiliates to continue the UE 401(k) Plan after the Effective Time following its establishment and receipt of the asset and liability transfer described in Section 3.1.  The Parties agree that (i) VNO reserves the right, in its sole discretion, to amend or terminate the VNO 401(k) Plan at any time following the date of this Agreement in accordance with its terms and applicable Law, and (ii) UE reserves the right, in its sole discretion, to amend or terminate the UE 401(k) Plan at any time following the date of this Agreement in accordance with its terms and applicable Law; provided that no such amendment to either the VNO 401(k) Plan or the UE 401(k) Plan shall prevent the actions described in Section 3.1.

 

ARTICLE IV
 HEALTH AND WELFARE PLANS

 

4.1                               UE Health and Welfare Plans.

 

(a)                                 Cessation of Participation in VNO Health and Welfare Plans.  No later than the Effective Time, UE (acting directly or through its Affiliates) shall establish the UE Welfare Plans, which shall generally correspond to the VNO health and welfare plans in which UE Group Employees participate immediately prior to the Effective Time (“VNO Welfare Plans”).  UE shall cause UE Group Employees and their covered dependents who participate in VNO Welfare Plans to be automatically enrolled no later than the Effective Time in UE Welfare Plans corresponding to the VNO Welfare Plans in which the UE Employee or his or her covered dependents, if any, participated before the Effective Time; provided that, with respect to flexible spending accounts, if automatic enrollment is not possible, UE Group Employees shall be eligible to elect coverage before, as of or as soon as reasonably practicable following the Effective Time under each UE Welfare Plan which is a flexible spending account plan and which corresponds to a VNO Welfare Plan which is a flexible spending account plan.

 

(b)                                 Allocation of Health and Welfare Plan Liabilities.  All outstanding Liabilities relating to, arising out of, or resulting from health and welfare claims incurred by or on behalf of UE Employees or their covered dependents under the VNO Welfare Plans on or before the Effective Time, including claims incurred but not reported, shall be retained by VNO or the applicable member of the VNO Group.

 

(c)                                  Waiver of Conditions.  To the extent permitted by applicable Law and the terms of the applicable UE Welfare Plan, UE (acting directly or through its Affiliates) shall cause the UE Welfare Plans to (i) waive all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any UE Group Employee, other than limitations that were in effect with respect to the UE Group Employee under the corresponding VNO Welfare Plan immediately prior to the Effective Time, and (ii) waive any waiting period limitation or evidence of insurability requirement applicable to a UE Group Employee other than limitations or requirements that were in effect with respect to such UE Group Employee under the corresponding VNO Welfare Plan immediately prior to the Effective Time.  Such waivers described in clauses (i) and (ii) of the foregoing sentence, with respect to the UE Welfare Plans, shall apply to initial enrollment effective immediately following the Effective Time.  Following the initial enrollment, pre-existing condition limitations,

 

8

 

exclusions, and services conditions under the UE Welfare Plans may apply only to the extent allowable under HIPAA.

 

(d)                                 Deductibles, Etc.  To the extent permitted by applicable Law and the terms of the applicable UE Welfare Plan, expenses incurred by any UE Group Employee and credited during the year that includes the Distribution Date for purposes of calculating deductibles, co-payments and out-of-pocket maximums under a VNO Welfare Plan shall be taken into account as if such expense had been incurred under the corresponding UE Welfare Plan.

 

4.2                               COBRA and HIPAA Compliance.  VNO shall continue to be responsible for compliance with the health care continuation requirements of COBRA (including the requirements under the American Recovery and Reinvestment Act), the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the VNO Welfare Plans with respect to any UE Group Employees or any of their covered dependents who incur a qualifying event or loss of coverage under COBRA at or before the Effective Time (including as a result of the Separation and Distribution).  UE shall assume responsibility for compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the UE Welfare Plans, with respect to any UE Group Employees or any of their covered dependents who incur a qualifying event or loss of coverage under the UE Welfare Plans after the Effective Time.

 

4.3                               Time-Off Benefits.  UE shall credit each UE Group Employee immediately following the Effective Time with the amount of accrued but unused paid time-off as such UE Group Employee had under the applicable VNO paid time-off policy immediately prior to the Effective Time.

 

4.4                               Incurred Claim Definition.  For purposes of this Article IV, a claim or Liability is deemed to be incurred:  (a) with respect to medical, dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or Liability; (b) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or Liability; (c) with respect to disability benefits, upon the date of an Employee’s disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or Liability; and (d) with respect to a period of continuous hospitalization, upon the date of admission to the hospital.

 

4.5                               Workers Compensation.  The ownership and administration of workers compensation insurance shall be governed by Section 5.1 of the Separation Agreement regarding insurance matters.  For the avoidance of doubt, nothing in this Agreement shall be interpreted to allocate between the Parties the claims and Liabilities under any workers compensation insurance policies.

 

4.6                               Reservation of Rights.  The Parties hereby acknowledge and agree that nothing in this Article IV shall be construed to require (a) VNO or any of its Affiliates to continue any VNO Benefit Plan before or after the Effective Time, or (b) UE or any of its Affiliates to continue any UE Benefit Plan before or after the Effective Time, in each case, except as set forth in Article VII.  Each of VNO and UE reserves the right, in its sole discretion, to amend or

 

9

 

terminate any VNO Benefit Plan and any UE Benefit Plan, respectively, at any time after the date of this Agreement, to the extent permitted or required under the terms of the applicable VNO Benefit Plan, UE Benefit Plan or applicable Law; provided that no such amendment or termination shall prevent the actions described in Article IV.

 

ARTICLE V
 EQUITY PLANS AND AWARDS

 

5.1                               Establishment of UE Equity Plan.  As of or prior to the Effective Time, UE shall adopt an omnibus equity compensation plan (the “UE Equity Plan”) pursuant to which equity awards may be granted to UE Group Employees.  The UE Equity Plan shall provide for the same types of awards as the VNO Equity Plan.  VNO and UE shall take all actions as may be necessary or advisable to adopt and obtain approval of the UE Equity Plan (and the awards in respect of UE Common Shares thereunder) in order to satisfy the requirement of Rule 16b-3 under the Exchange Act, and the applicable rules and regulations of any applicable exchange on which UE Common Shares will be traded.  The UE Equity Plan shall be approved prior to the Effective Time by VRLP as UE’s sole shareholder.

 

5.2                               Liabilities for Settlement of Awards.  VNO shall be responsible for all Liabilities associated with awards made under the VNO Equity Plan, including without limitation such awards made to UE Group Employees at the time they were VNO Group Employees.  UE shall be responsible for all Liabilities associated with awards made under the UE Equity Plan.

 

5.3                               Reservation of Rights.  The Parties hereby acknowledge and agree that nothing in this Article V shall be construed to require (a) VNO or any of its Affiliates to continue the VNO Equity Plan before or after the Effective Time, or (b) UE or any of its Affiliates to continue the UE Equity Plan before or after the Effective Time.  Each of VNO and UE reserves the right, in its sole discretion, to amend or terminate the VNO Equity Plan (and the awards thereunder) and the UE Equity Plan (and the awards thereunder), respectively, at any time after the date of this Agreement, to the extent permitted or required under the terms of the VNO Equity Plan, UE Equity Plan or applicable Law; provided that no such amendment or termination shall prevent the actions described in Article V.

 

ARTICLE VI
 NONQUALIFIED PLANS

 

6.1                               Deferred Compensation Plans.  Effective no later than the Effective Time, UE Group Employees shall cease to be eligible to actively participate in the Vornado Realty Trust Nonqualified Deferred Compensation Plan II (the “DCP II”) and no further deferrals shall be made to the DCP II on behalf of UE Group Employees with respect to compensation or earnings for services on or for the year in which the Effective Time occurs.  Each UE Group Employee who immediately prior to the Effective Time was a participant in, or entitled to future benefits under, the DCP II and/or the Vornado Realty Trust Nonqualified Deferred Compensation Plan (together, the “VNO Nonqualified Deferred Compensation Plans”) shall continue to have such rights, privileges and obligations under the VNO Nonqualified Deferred Compensation Plans as are provided thereunder. A UE Group Employee shall not be deemed to have separated from

 

10

 

service or incurred a termination of employment for purposes of the VNO Nonqualified Deferred Compensation Plans until such UE Group Employee incurs a separation from service (within the meaning of Section 409A of the Code) from UE and the UE Affiliates (and provided such UE Group Employee is not employed by or providing services to VNO or any VNO Affiliate).  UE agrees to promptly notify VNO if and when a UE Group Employee who is a participant of the VNO Nonqualified Deferred Compensation Plans separates from service with UE and the UE Affiliates.

 

6.2                               Reservation of Rights.  The Parties hereby acknowledge and agree that nothing in this Article VI shall be construed to require VNO or any of its Affiliates to continue the VNO Nonqualified Deferred Compensation Plans before or after the Effective Time.  VNO reserves the right, in its sole discretion, to amend or terminate the VNO Nonqualified Deferred Compensation Plans at any time after the date of this Agreement, to the extent permitted or required under the terms of the VNO Nonqualified Deferred Compensation Plans or applicable Law.

 

ARTICLE VII
 ADDITIONAL COMPENSATION MATTERS; SEVERANCE

 

7.1                               Annual Cash Incentive Awards.  As of January 1, 2015, UE Group Employees shall cease participating in each VNO annual bonus plan or policy (“VNO Annual Bonus Plans”).  As of January 1, 2015, (i) UE shall establish annual bonus plans or policies (“UE Annual Bonus Plans”) and (ii) UE Group Employees who were eligible to participate in the VNO Bonus Plans shall be eligible to participate in the UE Bonus Plans.  UE shall be solely responsible for funding, paying and discharging all obligations under the UE Annual Bonus Plans and VNO shall have no liability with respect to annual bonuses to be paid to UE group employees with respect to the calendar year in which the Effective Time occurs.  Vornado shall remain solely responsible for funding and discharging all obligations under the VNO Annual Bonus Plans with respect to annual bonuses to be paid to UE group employees with respect to the 2014 calendar year.

 

7.2                               Assumption of Severance Liabilities.

 

(a)                                 Severance Liabilities.  UE shall be responsible for the severance obligations to UE Group Employees whose employment is terminated on or after the Effective Time and VNO shall have no liability with respect to such severance obligations.

 

(b)                                 Severance Agreements.  In the event any UE Group Employee who is a salaried employee is eligible for severance benefits on account of a termination of employment on or after the Effective Time, unless agreed otherwise by an executive officer of VNO, UE shall require such employee, as a condition of receiving severance benefits, to agree in writing to a release of existing claims and confidentiality and noncompete provisions in favor of UE and VNO, in such form as UE and VNO mutually agree.

 

7.3                               Reservation of Rights.  The Parties hereby acknowledge that, except for the obligations described in this Article VII, nothing in this Article VII shall be construed to require either VNO or UE (and their respective Affiliates) to continue any cash incentive awards

 

11

 

program, deferred compensation plan, or severance plan after the Effective Time.  The Parties agree that each of VNO and UE reserves the right, in its sole discretion, to amend or terminate any cash incentive awards program, deferred compensation plan, or severance plan maintained by the VNO Group or the UE Group, respectively, at any time after the Effective Time to the extent permitted under the terms of the applicable cash incentive awards program, deferred compensation plan, or severance plan and applicable Law; provided that no such amendment shall prevent the actions described in this Article VII.

 

ARTICLE VIII
 GENERAL AND ADMINISTRATIVE

 

8.1                               Non-Termination of Employment; No Third-Party Beneficiaries.  Except as expressly provided for in this Agreement or the Separation Agreement, no provision of this Agreement or any of the other Transaction Documents shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any VNO Group Employee, UE Group Employee or any Former Employee, or future Employee of VNO or any of its Affiliates or of UE or any of its Affiliates under any VNO Benefit Plan or UE Benefit Plan or otherwise, nor shall any such provision be construed as an amendment to any employee benefit plan or other employee compensatory or benefit arrangement.  Furthermore, nothing in this Agreement is intended to confer upon any Employee or Former Employee any right to continued employment, any recall or similar rights to an Employee on layoff or any type of approved leave, or to change the employment status of any Employee from “at will.”

 

8.2                               Beneficiary Designation/Release of Information/Right to Reimbursement.  To the extent permitted by applicable Law and except as otherwise provided for in this Agreement, all beneficiary designations, authorizations for the release of Information (as defined in the Separation Agreement) and rights to reimbursement made by or relating to UE Participants under VNO Benefit Plans shall be transferred to and be in full force and effect under the corresponding UE Benefit Plans until such beneficiary designations, authorizations or rights are replaced or revoked by, or no longer apply, to the relevant UE Participant. Notwithstanding the foregoing, UE shall seek to obtain, before or as soon as reasonably practicable following the Effective Time, beneficiary designations, authorizations for the release of Information and rights to reimbursement from all UE Participants under UE Benefit Plans.

 

8.3                               Not a Change in Control.  The Parties acknowledge and agree that the transactions contemplated by the Separation Agreement and this Agreement do not constitute a “change in control” for purposes of any VNO Benefit Plan or UE Benefit Plan.

 

8.4                               Code Section 409A.  Notwithstanding anything to the contrary herein, if any of the provisions of this Agreement would result in imposition of taxes and/or penalties under Section 409A of the Code, VNO and UE shall cooperate in good faith to modify the applicable provision so that such taxes and/or penalties do not apply in order to comply with the provisions of Section 409A of the Code, other applicable provisions of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions.

 

12

 

ARTICLE IX
 MISCELLANEOUS

 

9.1                               Relationship of Parties.  Nothing in this Agreement shall be deemed or construed by the Parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained therein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship set forth herein.

 

9.2                               Affiliates.  Each of VNO and UE shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by each of their respective Affiliates.

 

9.3                               Corporate Power.  VNO represents on behalf of itself and on behalf of other members of the VNO Group, and UE represents on behalf of itself and on behalf of other members of the UE Group, as follows:

 

(a)                                 each such Person has the requisite trust power and authority and has taken all corporate action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby and thereby; and

 

(b)                                 this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

 

9.4                               Governing Law.  This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of New York irrespective of the choice of laws principles of the State of New York including all matters of validity, construction, effect, enforceability, performance and remedies.

 

9.5                               Survival of Covenants.  Except as expressly set forth in any other Transaction Document, the covenants and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein or therein, shall survive each of the transactions described in the Plan of Reorganization (as defined in the Separation Agreement) and the Distribution and shall remain in full force and effect.

 

9.6                               Force Majeure.  No Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any other Transaction Document for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure.  In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay.  A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to

 

13

 

remove any such causes and resume performance under the Transaction Documents, as applicable, as soon as reasonably practicable.

 

9.7                               Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.7):

 

If to Vornado, to:

 

Vornado Realty Trust
 888 Seventh Avenue
 New York, New York 10019
 Attention:  Corporation Counsel
 Facsimile:  (212) 894-7996

 

with a copy (until the Effective Time) to:

 

Sullivan & Cromwell LLP
 125 Broad Street
 New York, New York 10004
 Attention:  William G. Farrar

Matthew M. Friestedt

Facsimile:  (212) 558-3588

 

If to UE, to:

 

Urban Edge Properties
 888 Seventh Avenue
 New York, New York 10019
 Attention:  General Counsel
 Facsimile:  (212) 894-7996

 

with a copy (until the Effective Time) to:

 

Sullivan & Cromwell LLP
 125 Broad Street
 New York, New York 10004
 Attention:  William G. Farrar

Matthew M. Friestedt

Facsimile:  (212) 558-3588

 

9.8                               Termination.  Notwithstanding any provision to the contrary, this Agreement may be terminated and the Distribution abandoned at any time prior to the Effective Time by and

 

14

 

in the sole discretion of VNO without the prior approval of any Person, including UE.  In the event of such termination, this Agreement shall become void and no Party, or any of its officers and directors, shall have any liability to any Person by reason of this Agreement.  After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties.

 

9.9                               Severability.  If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

9.10                        Entire Agreement.  Except as otherwise expressly provided in this Agreement, this Agreement (including the Schedules hereto) and the applicable provisions of the Separation Agreement together constitute the entire agreement of the Parties with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matter of this Agreement.

 

9.11                        Indemnification; Dispute Resolutions.  Article IV of the Separation Agreement governs the Parties’ indemnification rights and obligations and Article VII of the Separation Agreement governs the resolution of any dispute between the Parties.

 

9.12                        Assignment; No Third-Party Beneficiaries.  This Agreement shall not be assigned by any Party without the prior written consent of the other Parties, except that VNO may assign (i) any or all of its rights and obligations under this Agreement to any of its Affiliates and (ii) any or all of its rights and obligations under this Agreement in connection with a sale or disposition of any assets or entities or lines of business of VNO; provided, however, that, in each case, no such assignment shall release VNO from any liability or obligation under this Agreement nor change any of the steps in the Plan of Reorganization (as defined in the Separation Agreement).  Except as provided in Article IV of the Separation Agreement with respect to Indemnified Parties (as defined in the Separation Agreement), this Agreement is for the sole benefit of the Parties and members of their respective Group and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

9.13                        Public Announcements.  From and after the Effective Time, VNO and UE shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system.

 

15

 

9.14                        Specific Performance.  Subject to the provisions of Article VII of the Separation Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.

 

9.15                        Amendment.  No provision of this Agreement may be amended or modified except by a written instrument signed by all the Parties.  No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the Party so waiving.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.

 

9.16                        Rules of Construction.  Interpretation of this Agreement shall be governed by the following rules of construction (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement unless otherwise specified, (iii) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto, (iv) references to “$” shall mean U.S. dollars, (v) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified, (vi) the word “or” shall not be exclusive, (vii) references to “written” or “in writing” include in electronic form, (viii) unless the context requires otherwise, references to “Party” shall mean VNO or UE, as appropriate, and references to “Parties” shall mean VNO and UE, (ix) provisions shall apply, when appropriate, to successive events and transactions, (x) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (xi) VNO and UE have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement, and (xii) a reference to any Person includes such Person’s successors and permitted assigns.

 

9.17                        Counterparts.  This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.

 

16

 

[Remainder of this page intentionally left blank.]

 

17

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

	
 
    	
VORNADO   REALTY TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Alan J. Rice
    
	
 
    	
 
    	
Name:  Alan   J. Rice
    
	
 
    	
 
    	
Title:  Corporation   Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
VORNADO   REALTY L.P.
    
	
 
    	
 
    
	
 
    	
By   VORNADO REALTY TRUST, its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Alan J. Rice
    
	
 
    	
 
    	
Name:  Alan   J. Rice
    
	
 
    	
 
    	
Title:  Corporation   Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
URBAN   EDGE PROPERTIES
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Donald P. Casey
    
	
 
    	
 
    	
Name:  Donald   P. Casey
    
	
 
    	
 
    	
Title:  General   Counsel and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
URBAN   EDGE PROPERTIES LP
    
	
 
    	
 
    
	
 
    	
By   URBAN EDGE PROPERTIES, its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Donald P. Casey
    
	
 
    	
 
    	
Name:  Donald   P. Casey
    
	
 
    	
 
    	
Title:  General   Counsel and SecretaryExhibit 10.5

 

 

Urban Edge Properties

 

Form of 2015 Omnibus Share Plan

 

(As approved by shareholders on January 7, 2015)

	
 
    

 

 

Table of Contents

 

	
1.
    	
Purpose
    	
2
    
	
 
    	
 
    	
 
    
	
2.
    	
Shares Available for Awards
    	
2
    
	
 
    	
 
    	
 
    
	
3.
    	
Administration
    	
3
    
	
 
    	
 
    	
 
    
	
4.
    	
Eligibility
    	
4
    
	
 
    	
 
    	
 
    
	
5.
    	
Awards
    	
4
    
	
 
    	
 
    	
 
    
	
6.
    	
Stock Options
    	
5
    
	
 
    	
 
    	
 
    
	
7.
    	
Stock Appreciation Rights
    	
5
    
	
 
    	
 
    	
 
    
	
8.
    	
Performance Shares
    	
6
    
	
 
    	
 
    	
 
    
	
9.
    	
Restricted Stock
    	
6
    
	
 
    	
 
    	
 
    
	
10.
    	
Other Stock-Based Awards
    	
6
    
	
 
    	
 
    	
 
    
	
11.
    	
Operating Partnership Units
    	
8
    
	
 
    	
 
    	
 
    
	
12.
    	
Award Agreements
    	
9
    
	
 
    	
 
    	
 
    
	
13.
    	
Withholding
    	
9
    
	
 
    	
 
    	
 
    
	
14.
    	
Nontransferability
    	
10
    
	
 
    	
 
    	
 
    
	
15.
    	
No Right to Employment
    	
10
    
	
 
    	
 
    	
 
    
	
16.
    	
Adjustment of and Changes in Shares
    	
10
    
	
 
    	
 
    	
 
    
	
17.
    	
Amendment
    	
11
    
	
 
    	
 
    	
 
    
	
18.
    	
Section 409A
    	
11
    
	
 
    	
 
    	
 
    
	
19.
    	
Effective Date
    	
11
    

 

1

 

1.                                      Purpose

 

The purpose of the 2015 Omnibus Share Plan of Urban Edge Properties, as amended from time to time (the “Plan”), is to promote the financial interests of Urban Edge Properties (the “Trust”), including its growth and performance, by encouraging employees of the Trust and its subsidiaries, including officers (together, the “Employees”), its non-employee trustees of the Trust and non-employee directors of its subsidiaries (together, the “Non-Employee Trustees”), and certain non-employee advisors and consultants that provide bona fide services to the Trust or its subsidiaries (together, the “Consultants”) to acquire an ownership position in the Trust, enhancing the ability of the Trust and its subsidiaries to attract and retain Employees, Non-Employee Trustees and Consultants of outstanding ability, and providing Employees, Non-Employee Trustees and Consultants with a way to acquire or increase their proprietary interest in the Trust’s success and to further align the interests of the Employees, Non-Employee Trustees and Consultants with shareholders of the Trust.

 

2.                                      Shares Available for Awards

 

Subject to the provisions of this Section 2 or any adjustment as provided in Section 16, awards may be granted under the Plan with respect to 7,500,000 Share Equivalents (as defined below), which, in accordance with the share counting provisions of this Section 2, would result in the issuance of up to a maximum of 7,500,000 common shares, par value $.01, of beneficial interest in the Trust (the “Shares”) if all awards granted under the Plan were Full Value Awards (as defined below) and 15,000,000 Shares if all awards granted under the Plan were not Full Value Awards.  No Participant (as defined in Section 3) who is an Employee shall be granted during any period of 12 consecutive months stock options, stock appreciation rights or any award intended to be “performance-based compensation” (as that term is used in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)) with respect to more than 15,000,000 Shares (subject to adjustment as provided in Section 16).  The Shares issued under the Plan may be authorized and unissued Shares or treasury Shares, as the Trust may from time to time determine.  Any Shares that are subject to awards that are not Full Value Awards shall be counted against the number of Share Equivalents available for the grant of awards under the Plan, as set forth in the first sentence of this Section 2, as one-half Share Equivalent for every Share granted pursuant to an award; any Shares that are subject to awards that are Full Value Awards shall be counted as one Share Equivalent for every Share granted pursuant to an award.  “Full Value Award” means an award under the Plan other than a stock option, stock appreciation right or other award that does not deliver to a Participant on the grant date of such award the full value of the underlying Shares.  “Share Equivalent” shall be the measuring unit for purposes of the Plan to determine the number of Shares that may be subject to awards hereunder, which number of Shares shall not in any event exceed 15,000,000, subject to the provisions of this Section 2 or any adjustment as provided in Section 16.

 

The Committee (as defined in Section 3) may, without affecting the number of Share Equivalents available pursuant to this Section 2, authorize the issuance or assumption of benefits under the Plan in connection with any merger, consolidation, acquisition of property or stock, reorganization or similar transaction upon such terms and conditions as it may deem appropriate, subject to compliance with Section 409A (as defined in Section 16) and any other applicable provisions of the Code.

 

2

 

Shares subject to an award granted under the Plan that expires unexercised, that is forfeited, terminated or cancelled, in whole or in part, or is paid in cash in lieu of Shares, shall thereafter again be available for grant under the Plan; provided, however, that the number of Share Equivalents that shall again be available for the grant under the Plan shall be increased by one Share Equivalent for each Share that is subject to a Full Value Award at the time such Full Value Award expires or is forfeited, terminated or cancelled and by one-half Share Equivalent for each Share that is subject to an award that is not a Full Value Award at the time such award expires or is forfeited, terminated or cancelled.  Awards that use Shares as a reference but that are paid or settled in whole or in part in cash shall not affect the number of Share Equivalents available under the Plan pursuant to this Section 2 to the extent paid or settled in cash.  The number of Share Equivalents available for the purpose of awards under the Plan shall be reduced by (i) one-half of the gross number of Shares for which stock options or stock appreciation rights are exercised, regardless of whether any of the Shares underlying such awards are not actually issued to the Participant as the result of a net settlement and (ii) one-half of any Shares withheld to satisfy any tax withholding obligation with respect to any award that is not a Full Value Award and one Share for each Share withheld to satisfy any tax withholding obligation with respect to any Full Value Award, as described further in Section 13.

 

The maximum aggregate number of Shares that may be issued under the Plan pursuant to the exercise of incentive stock options within the meaning of Section 422 of the Code shall not exceed 15,000,000 Shares (as adjusted pursuant to the provisions of Section 16).

 

3.                                      Administration

 

The Plan shall be administered by the Compensation Committee (the “Committee”) of the Board of Trustees of the Trust.  A majority of the Committee shall constitute a quorum, and the acts of a majority shall be the acts of the Committee.  Notwithstanding anything to the contrary contained herein, the Board of Trustees may, in its sole discretion, at any time and from time to time, grant awards or administer the Plan.  In any such case, the Board of Trustees will have all of the authority and responsibility granted to the Committee herein.

 

Subject to the provisions of the Plan, the Committee shall select the Employees, Non-Employee Trustees and Consultants who will be participants in the Plan (together, the “Participants”).  The Committee shall (i) determine the type of awards to be made to Participants, determine the Shares or share units subject to awards, and (ii) have the authority to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements entered into hereunder, and to make all other determinations necessary or advisable for the administration of the Plan, based on, among other things, information made available to the Committee by the management of the Trust.  The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any award in the manner and to the extent it shall deem desirable to carry it into effect.  The determinations of the Committee in its administration of the Plan, as described herein, shall be final and conclusive.

 

3

 

4.                                      Eligibility

 

All Employees who have demonstrated significant management potential or who have the capacity for contributing in a substantial measure to the successful performance of the Trust, as determined by the Committee, and Non-Employee Trustees and Consultants, as determined by the Committee, are eligible to be Participants in the Plan.

 

5.                                      Awards

 

Awards under the Plan may consist of the following:  stock options (either incentive stock options within the meaning of Section 422 of the Code or non-qualified stock options), stock appreciation rights, performance shares, grants of restricted stock and other-stock based awards, including OP Units (as defined in Section 11).  Awards of performance shares, restricted stock or share units and other-stock based awards may provide the Participant with dividends or dividend equivalents and voting rights prior to vesting (whether based on a period of time or based on attainment of specified performance conditions).  Unless the Committee otherwise specifies in the award agreement, if dividends or dividend equivalent rights are granted, dividends and dividend equivalents shall be paid to the Participant at the same time as the Trust pays dividends to common shareholders (even if the Shares subject to the underlying award are held by the Trust) but not less than annually and not later than the fifteenth day of the third month following the end of the calendar year in which the dividends or dividend equivalents are credited (or, if later, the fifteenth day of the third month following the end of the calendar year in which the dividends or dividend equivalents are no longer subject to a “substantial risk of forfeiture” within the meaning of Section 409A (as defined in Section 16)); provided, however, that dividend and dividend equivalent payments in the case of an award that is subject to performance vesting conditions shall be treated as unvested so long as such award remains unvested, and any such dividend and dividend equivalent payments that would otherwise have been paid during the vesting period shall instead be accumulated (and, if paid in cash, reinvested in additional Shares based on the Surrender Value (as defined in Section 6) of the Shares on the date of reinvestment) and paid within 30 days following the date on which such award is determined by the Committee to have satisfied such performance vesting conditions.  Any dividends or dividend equivalents that are accumulated and paid after the date specified in the preceding sentence may be treated separately from the right to other amounts under the award.

 

Notwithstanding any other provision of the Plan to the contrary, Full Value Awards (a) that vest on the basis of the Participant’s continued employment or service shall be subject to a minimum vesting schedule of at least three years (with no more than one-third of the Shares subject thereto vesting earlier than a date 60 days prior to the first anniversary of the date on which such award is granted and on each of the next two anniversaries of such initial vesting date) and (b) that vest on the basis of the attainment of performance goals shall provide for a performance period that ends no earlier than 60 days prior to the first anniversary of the commencement of the period over which performance is evaluated; provided, however, that the foregoing limitations shall not preclude the acceleration of vesting of any such award upon the death, disability or retirement of the Participant or upon an actual change in control (and not, for example, the commencement of a tender offer for the Trust’s shares or shareholder approval of a transaction that, if consummated, would result in an actual change in control).  Notwithstanding the foregoing, (i) Full Value Awards with respect to 5% of the maximum

 

4

 

aggregate number of Share Equivalents available for the purpose of awards under the Plan pursuant to Section 2 may be granted under the Plan to any one or more Participants without respect to such minimum vesting provisions and (ii) Full Value Awards granted in connection with the Spinoff (as defined in Section 19) pursuant to a legally binding right that existed prior to the Spinoff shall not be subject to the provisions of this paragraph and shall not be counted against the 5% exception in clause (i).

 

6.                                      Stock Options

 

The Committee shall establish the option price at the time each stock option is granted, which price shall not be less than 100% of the Fair Market Value (as defined below) of the Shares on that date.  Stock options shall be exercisable for such period as specified by the Committee but in no event may options be exercisable more than ten years after their date of grant.  No stock option shall be exercisable earlier than a date 60 days prior to the first anniversary of the date on which such award is granted, except in the event of the Participant’s retirement, death or disability or an actual change in control.  The option price of each Share as to which a stock option is exercised shall be paid in full at the time of such exercise.  Such payment shall be made (i) in cash, (ii) by tender of Shares owned by the Participant valued at Surrender Value as of the date of exercise, (iii) to the extent approved by the Committee in its sole discretion, by surrender of all or part of the Shares issuable upon exercise of the option by the largest whole number of Shares with a Surrender Value that does not exceed the aggregate exercise price; provided, however, that the Trust shall accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole Shares to be issued, (iv) in such other consideration as the Committee deems appropriate, or (v) by a combination of cash, Shares and such other consideration.

 

For purposes of the Plan, (i) “Fair Market Value” means, with respect to a Share, the average of the high and the low prices reported for the Shares on the applicable date as reported on the New York Stock Exchange or, if not so reported, as determined in accordance with a valuation methodology approved by the Committee in a manner consistent with Section 409A, unless determined as otherwise specified herein; provided that the “Fair Market Value” for purposes of any award granted in connection with the Spinoff pursuant to a legally binding right that existed prior to the Spinoff may be determined based on the volume-weighted average trading price of the Shares for up to 20 trading days following (but not including) the date of the Spinoff, and (ii) “Surrender Value” means, with respect to a Share, the closing price reported for the Shares on the applicable date as reported on the New York Stock Exchange or, if not so reported, as determined in accordance with a valuation methodology approved by the Committee in a manner consistent with Section 409A, unless determined as otherwise specified herein.  For purposes of the grant of any award, the applicable date will be the trading day on which the award is granted or, if the date the award is granted is not a trading day, the trading day immediately prior to the date the award is granted.  For purposes of the exercise of any award, the applicable date is the date a notice of exercise is received by the Trust or, if such date is not a trading day, the trading day immediately following the date a notice of exercise is received by the Trust.

 

7.                                      Stock Appreciation Rights

 

Stock appreciation rights may be granted in tandem with a stock option, in addition to a stock option, or may be freestanding and unrelated to a stock option.  Stock appreciation rights granted in tandem with or in addition to a stock option may be granted either at the same time as the stock option or at a later time.  The Committee shall establish the grant price of each stock appreciation right granted at the time each such

 

5

 

stock appreciation right is granted, which price shall not be less than 100% of the Fair Market Value of the Shares subject to such award on that date.  No stock appreciation right shall be exercisable earlier than a date 60 days prior to the first anniversary of the date on which such award is granted, except in the event of the Participant’s retirement, death or disability or an actual change in control, or later than 10 years from the grant date of such award.  A stock appreciation right shall entitle the Participant to receive from the Trust an amount equal to the increase of the Fair Market Value of the Shares on the exercise of the stock appreciation right over the grant price.  The Committee, in its sole discretion, shall determine whether the stock appreciation right shall be settled in cash, Shares or a combination of cash and Shares.

 

8.                                      Performance Shares

 

Performance shares may be granted in the form of actual Shares or share units having a value equal to an identical number of Shares.  In the event that a certificate is issued in respect of Shares subject to a grant of performance shares, such certificate shall be registered in the name of the Participant but shall be held by the Trust until the time the Shares subject to the grant of performance shares are earned.  The performance conditions and the length of the performance period shall be determined by the Committee.  The Committee, in its sole discretion, shall determine whether performance shares granted in the form of share units shall be paid in cash, Shares, or a combination of cash and Shares.

 

Notwithstanding anything to the contrary herein, performance shares granted under this Section 8 may, at the discretion of the Committee, be granted in a manner which is intended to be deductible by the Trust under Section 162(m) of the Code.  In such event, the Committee shall follow procedures substantially equivalent to those set forth in Section 10 for Performance-Based Awards (as defined in Section 10).

 

9.                                      Restricted Stock

 

Restricted stock may be granted in the form of actual Shares or share units having a value equal to an identical number of Shares.  In the event that a certificate is issued in respect of Shares subject to a grant of restricted stock, such certificate shall be registered in the name of the Participant but shall be held by the Trust until the end of the restricted period.  The employment conditions and the length of the period for vesting of restricted stock shall be established by the Committee at time of grant.  The Committee, in its sole discretion, shall determine whether restricted stock granted in the form of share units shall be paid in cash, Shares, or a combination of cash and Shares.

 

Notwithstanding anything to the contrary herein, restricted stock granted under this Section 9 may, at the discretion of the Committee, be granted in a manner which is intended to be deductible by the Trust under Section 162(m) of the Code.  In such event, the Committee shall follow procedures substantially equivalent to those set forth in Section 10 for Performance-Based Awards.

 

10.                               Other Stock-Based Awards

 

Other types of equity-based or equity-related awards (including the grant or offer for sale of unrestricted Shares and performance stock and performance units settled in

 

6

 

shares or cash) may be granted under such terms and conditions as may be determined by the Committee in its sole discretion.

 

Notwithstanding anything to the contrary herein, any other stock-based awards may, at the discretion of the Committee, be granted in a manner that is intended to be deductible by the Trust under Section 162(m) of the Code (a “Performance-Based Award”).  In such event, the Committee shall follow the following procedures:

 

A Participant’s Performance-Based Award shall be determined based on the attainment of written objective performance goals approved by the Committee for a performance period generally of one year established by the Committee (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of the performance period to which the performance goal relates or, if less, the number of days which is equal to 25% of the relevant performance period.  At the same time as the performance goals are established, the Committee will prescribe a formula to determine the amount of the Performance-Based Award that may be payable based upon the level of attainment of the performance goal during the performance period.

 

The performance goals shall be based on one or more of the following business criteria (either separately or in combination) with regard to the Trust (or a subsidiary, division, other operational unit or administrative department of the Trust):  (i) pre-tax income, (ii) after-tax income, (iii) net income (meaning net income as reflected in the Trust’s financial reports for the applicable period, on an aggregate, diluted and/or per share basis), (iv) operating income, (v) cash flow, (vi) earnings per share, (vii) return on equity, (viii) return on invested capital or assets, (ix) cash and/or funds available for distribution, (x) appreciation in the Fair Market Value of Shares, (xi) return on investment, (xii) total return to shareholders, (xiii) net earnings growth, (xiv) stock appreciation (meaning an increase in the price or value of the Shares after the date of grant of an award and during the applicable period), (xv) related return ratios, (xvi) increase in revenues, (xvii) net earnings, (xviii) changes (or the absence of changes) in the per share or aggregate market price of the Shares, (xix) number of securities sold, (xx) earnings before any one or more of the following items:  interest, taxes, depreciation or amortization for the applicable period, as reflected in the Trust’s financial reports for the applicable period, (xxi) total revenue growth (meaning the increase in total revenues after the date of grant of an award and during the applicable period, as reflected in the Trust’s financial reports for the applicable period), (xxii) total shareholder return, (xxiii) funds from operations, as determined and reported by the Trust in its financial reports and (xxiv) increase in net asset value per Share.

 

Performance criteria may be absolute amounts or percentages of amounts or may be relative to the performance of a peer group of real estate investment trusts or other corporations or indices.

 

Except as otherwise expressly provided, all financial terms are used as defined under Generally Accepted Accounting Principles (“GAAP”) and all determinations shall be made in accordance with GAAP, as applied by the Trust in the preparation of its periodic reports to shareholders.

 

In addition, the performance goals may be based upon the attainment of specified levels of Trust (or subsidiary, division, other operational unit or administrative department

 

7

 

of the Trust) performance under one or more of the measures described above relative to the performance of other real estate investment trusts or the historic performance of the Trust.  To the extent permitted by Section 162(m) of the Code, unless the Committee provides otherwise at the time of establishing the performance goals, for each fiscal year of the Trust, the Committee may (i) designate additional business criteria on which the performance goals may be based or (ii) provide for objectively determinable adjustments, modifications or amendments, as determined in accordance with GAAP, to any of the performance criteria described above for one or more of the items of gain, loss, profit or expense:  (A) determined to be extraordinary or unusual in nature or infrequent in occurrence, (B) related to the disposal of a segment of a business, (C) related to a change in accounting principle under GAAP, (D) related to discontinued operations that do not qualify as a segment of business under GAAP, and (E) attributable to the business operations of any entity acquired by the Trust during the fiscal year.

 

Following the completion of each performance period, the Committee shall have the sole discretion to determine, based on information made available to the Committee by the management of the Trust, whether the applicable performance goals have been met with respect to a given Participant and, if they have, shall so certify and ascertain the amount of the applicable Performance-Based Award.  No Performance-Based Awards will be paid for such performance period until such certification is made by the Committee.  The amount of the Performance-Based Award actually paid to a given Participant may be less (but not more) than the amount determined by the applicable performance goal formula, at the discretion of the Committee.  The amount of the Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion, after the end of such performance period and after the Committee’s certification described above.

 

11.                               Operating Partnership Units

 

Awards may be granted under the Plan in the form of undivided fractional limited partnership interests in Urban Edge Properties LP (together with any successor entity, the “Operating Partnership”), a Delaware limited partnership, the entity through which the Trust conducts its business and an entity that has elected to be treated as a partnership for federal income tax purposes, of one or more classes (“OP Units”) established pursuant to the Operating Partnership’s agreement of limited partnership, as amended from time to time.  Awards of OP Units shall be valued by reference to, or otherwise determined by reference to or based on, Shares.  OP Units awarded under the Plan may be (1) convertible, exchangeable or redeemable for other limited partnership interests in the Operating Partnership (including OP Units of a different class or series) or Shares, or (2) valued by reference to the book value, fair value or performance of the Operating Partnership.  Awards of OP Units are intended to qualify as “profits interests” within the meaning of IRS Revenue Procedure 93-27, as clarified by IRS Revenue Procedure 2001-43, with respect to a Participant in the Plan who is rendering services to or for the benefit of the Operating Partnership, including its subsidiaries.

 

For purposes of calculating the number of Shares underlying an award of OP Units relative to the total number of Share Equivalents available for issuance under the Plan, the Committee shall establish in good faith the maximum number of Shares to which a Participant receiving such award of OP Units may be entitled upon fulfillment of all applicable conditions set forth in the relevant award documentation, including vesting conditions, partnership capital account allocations, value accretion factors, conversion

 

8

 

ratios, exchange ratios and other similar criteria.  If and when any such conditions are no longer capable of being met, in whole or in part, the number of Shares underlying such awards of OP Units shall be reduced accordingly by the Committee, and the number of Share Equivalents shall be increased by one Share Equivalent for each Share so reduced.  Awards of OP Units may be granted either alone or in addition to other awards granted under the Plan.  The Committee shall determine the eligible Participants to whom, and the time or times at which, awards of OP Units shall be made; the number of OP Units to be awarded; the price, if any, to be paid by the Participant for the acquisition of such OP Units; and the restrictions and conditions applicable to such award of OP Units.  Conditions may be based on continuing employment (or other service relationship), computation of financial metrics and/or achievement of pre-established performance goals and objectives, with related length of the service period for vesting, minimum or maximum performance thresholds, measurement procedures and length of the performance period to be established by the Committee at the time of grant, in its sole discretion.  The Committee may allow awards of OP Units to be held through a limited partnership, or similar “look-through” entity, and the Committee may require such limited partnership or similar entity to impose restrictions on its partners or other beneficial owners that are not inconsistent with the provisions of this Section 11.  The provisions of the grant of OP Units need not be the same with respect to each Participant.

 

Notwithstanding Section 5 of the Plan, the award agreement or other award documentation in respect of an award of OP Units may provide that the recipient of an award under this Section 11 shall be entitled to receive, currently or on a deferred or contingent basis, dividends or dividend equivalents with respect to the number of Shares underlying the award or other distributions from the Operating Partnership prior to vesting (whether based on a period of time or based on attainment of specified performance conditions), as determined at the time of grant by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or OP Units.

 

OP Units awarded under this Section 11 may be issued for no cash consideration.

 

12.                               Award Agreements

 

Each award under the Plan shall be evidenced by an agreement setting forth the terms and conditions, as determined by the Committee, which shall apply to such award, in addition to the terms and conditions specified in the Plan.

 

13.                              Withholding

 

The Trust shall have the right to deduct from any payment to be made pursuant to the Plan, or to require prior to the issuance or delivery of any Shares or the payment of cash under the Plan, any taxes required by law to be withheld therefrom.  The Committee, in its sole discretion, may permit a Participant who is an employee of the Trust or its subsidiaries to elect to satisfy such withholding obligation by having the Trust retain the number of Shares whose Fair Market Value equals the minimum statutory amount of taxes required by applicable law to be withheld.  Any fraction of a Share required to satisfy such obligation shall be disregarded, and the amount due shall instead be paid in cash to or by the Participant, as the case may be.

 

9

 

14.                               Nontransferability

 

No award under the Plan shall be assignable or transferable except by will or the laws of descent and distribution, and no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant.  Notwithstanding the foregoing, the Committee may determine, at the time of grant or thereafter, that an award (other than stock options intended to be incentive stock options within the meaning of Section 422 of the Code) is transferable by the Participant to such Participant’s immediate family members (or trusts, partnerships, or limited liability companies established for such immediate family members).  For this purpose, immediate family member means, except as otherwise defined by the Committee, the Participant’s children, stepchildren, grandchildren, parents, stepparents, grandparents, spouse, siblings (including half brothers and sisters), in-laws and persons related by reason of legal adoption.  Such transferees may transfer an award only by will or the laws of descent or distribution.  An award transferred pursuant to this Section 14 shall remain subject to the provisions of the Plan, and shall be subject to such other rules as the Committee shall determine.  Upon transfer of a stock option, any related stock appreciation right shall be canceled.  Except in the case of a holder’s incapacity, an award shall be exercisable only by the holder thereof.

 

15.                               No Right to Employment

 

No person shall have any claim or right to be granted an award, and the grant of an award shall not be construed as giving a Participant any right to continue his or her service to the Trust or its subsidiaries as an Employee, Non-Employee Trustee or Consultant.  Further, the Trust and its subsidiaries expressly reserve the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein or in any agreement entered into hereunder.

 

16.                               Adjustment of and Changes in Shares

 

In the event of any change in the outstanding Shares by reason of any share dividend or split, reverse split, recapitalization, merger, consolidation, spinoff, combination or exchange of Shares or other corporate change, or any distributions to common shareholders other than regular cash dividends, the Committee shall make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number of Share Equivalents for which awards may be granted under the Plan, (ii) the number or kind of Shares or other securities issued or reserved for issuance pursuant to outstanding awards, (iii) the individual Participant limitation set forth in Section 2, and (iv) the number of Shares set forth in Section 2 that can be issued through incentive stock options within the meaning of Section 422 of the Code; provided, however, that no such substitution or adjustment shall be required if the Committee determines that such action could cause an award to fail to satisfy the conditions of an applicable exception from the requirements of Section 409A of the Code (“Section 409A”) or otherwise could subject a Participant to the additional tax imposed under Section 409A in respect of an outstanding award; and further provided that no Participant shall have the right to require the Committee to make any adjustment or substitution under this Section 16 or have any claim or right whatsoever against the Trust or any of its subsidiaries or affiliates or any of their respective trustees, directors, officer or employees in respect of any action taken or not taken under this Section 16.

 

10

 

17.                               Amendment

 

The Committee may amend or terminate the Plan or any portion thereof from time to time, provided that no amendment shall be made without shareholder approval if such amendment (i) would increase the maximum aggregate number of Shares that may be issued under the Plan (other than pursuant to Section 16), (ii) would materially modify the requirements for participation in the Plan, (iii) would result in a material increase in the benefits accrued to Participants under the Plan, (iv) would reduce the exercise price of outstanding stock options or stock appreciation rights or cancel outstanding stock options or stock appreciation rights in exchange for cash, other awards or stock options or stock appreciation rights with an exercise price that is less than the exercise price of the original stock options or stock appreciation rights (other than pursuant to Section 16) or (v) requires shareholder approval to comply with any applicable laws, regulations or rules, including the rules of a securities exchange or self-regulatory agency.

 

18.                               Section 409A

 

It is the Trust’s intent that awards under the Plan be exempt from, or comply with, the requirements of Section 409A, and that the Plan be administered and interpreted accordingly.  If and to the extent that any award made under the Plan is determined by the Trust to constitute “non-qualified deferred compensation” subject to Section 409A and is payable to a Participant by reason of the Participant’s termination of employment, then (a) such payment or benefit shall be made or provided to the Participant only upon a “separation from service” as defined for purposes of Section 409A under applicable regulations and (b) if the Participant is a “specified employee” (within the meaning of Section 409A and as determined by the Trust), such payment or benefit shall not be made or provided before the date that is six months after the date of the Participant’s separation from service (or the Participant’s earlier death).

 

19.                               Effective Date

 

The Plan was adopted on October 23, 2014 by the Compensation Committee of the Board of Trustees of Vornado Realty Trust, subject to the approval of Vornado Realty L.P. (as the sole shareholder of the Trust), and shall be effective as of the date the Trust is separated (the “Spinoff”) from Vornado Realty Trust (the “Effective Date”).  Subject to earlier termination pursuant to Section 17, the Plan shall have a term of ten years from the Effective Date; provided, however, that all awards made under the Plan before its termination, and the Committee’s authority to administer the terms of such awards, will remain in effect until such awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable award agreements.

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00239-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00239-of-00352.parquet"}]]