Document:

Exhibit 10.1

 

VORNADO REALTY TRUST

2006 OUTPERFORMANCE PLAN

AWARD AGREEMENT

 

2006 OUTPERFORMANCE PLAN AWARD AGREEMENT made as of
date set forth on Schedule A hereto between VORNADO REALTY TRUST, a
Maryland real estate investment trust (the “Company”), its subsidiary
VORNADO REALTY L.P., a Delaware limited partnership and the entity through
which the Company conducts substantially all of its operations (the “Partnership”),
and the party listed on Schedule A (the “Grantee”).

 

RECITALS

 

A.                                   The Grantee is an employee of, or a
consultant or advisor to the Company or one of its affiliates and provides
services to the Partnership.

 

B.                                     The
Company has adopted the 2006 Outperformance Plan (the “Outperformance Plan”)
pursuant to the Vornado Realty Trust 2002 Omnibus Share Plan, as amended (the “2002 Plan”), to provide certain
key employees of and consultants or advisors to the Company or its affiliates,
including the Grantee, in connection with their employment or other service
relationship with the incentive compensation described in this Award Agreement
(this “Agreement”) and
thereby provide additional incentive for them to promote the progress and
success of the business of the Company and its affiliates, including the
Partnership. The Outperformance Plan was
adopted by the Compensation Committee (the “Committee”) of the Board of
Trustees of the Company (the “Board”) pursuant to authority delegated to
it by the Board as set forth in the Committee’s charter, including authority to
make grants of equity interests in the Partnership which may, under certain
circumstances, become exchangeable for shares of the Company’s Common Shares
reserved for issuance under the 2002 Plan, or any successor equity plan (as any
such plan may be amended, modified or supplemented from time to time,
collectively the “Stock Plan”)) and, upon the Compensation Committee’s
recommendation, was also approved by the Board. This Agreement evidences an award to the Grantee under the
Outperformance Plan (this “Award”), which is subject to the terms and
conditions set forth herein.

 

C.                                     The
Grantee was selected by the Committee to receive this Award and the Committee,
effective as of the grant date specified in Schedule A
hereto, awarded to the Grantee the participation percentage in the
Outperformance Pool (as defined herein) set forth in Schedule A.

 

 

NOW, THEREFORE, the Company, the
Partnership and the Grantee agree as follows:

 

1.                                       Administration.
The Outperformance Plan and all awards thereunder, including this Award, shall
be administered by the Committee, which in the administration of the
Outperformance Plan shall have all the powers and authority it has in the
administration of the Stock Plan as set forth in the Stock Plan.

 

2.                                       Definitions.
Capitalized terms used herein without definitions shall have the meanings given
to those terms in the Stock Plan. In addition, as used herein:

 

“Additional Share Baseline Value” means, with respect to an Additional Share, the gross proceeds
received by the Company or the Partnership upon the issuance of such Additional
Share, which amount shall be deemed to equal, as applicable: (A) if such
Additional Share is issued in a public offering or private placement, the gross
price to the public or to the purchaser(s); and (B) if such Additional
Share is issued in exchange for assets or upon the acquisition of another
entity, the cash value imputed to such Additional Share for purposes of such
transaction by the parties thereto, as determined by the Committee, or, if no
such value was imputed, the Common Share Price as of the date of issuance. For
the avoidance of doubt, if a Common Share is issued after the Effective
Date upon exercise of stock options (whether currently outstanding or granted
hereafter ) or in exchange (directly or indirectly) for OPP Units or other Units
issued to employees, non-employee trustees, consultants, advisors or other
persons or entities as incentive compensation or if such Common Share
constitutes a restricted Common Share issued after the Effective Date to
employees or other persons or entities in exchange for services provided to the
Company, such Common Share will not be considered an Additional Share, and
therefore no Additional Share Baseline Value will be attributed thereto.

 

“Additional Shares” means (without
double-counting) the sum of (A) the number of Common Shares plus (B) the product of the Conversion Factor then in effect multiplied
by the number of Units (other than those issued to the Company), in the
case of each (A) and (B), to the extent issued after March 15, 2006
and on or before the Valuation Date in a capital raising transaction, in
exchange for assets or upon the acquisition of another entity, but specifically
excluding, without limitation, (i) Common Shares issued upon exercise of
stock options or upon the exchange (directly or indirectly) of OPP Units or
other Units issued to employees, non-employee trustees, consultants, advisors
or other persons or entities as incentive compensation, (ii) restricted
Common Shares awarded to employees or other persons or entities in exchange for
services provided to the Company, (iii) currently unvested restricted
Common Shares awarded to employees or other persons or entities in exchange for
services provided to the Company as they become vested, and (iv) Class A
Units issued upon conversion of OPP Units or other Units issued to employees,
non-employee trustees, consultants, advisors or other persons or entities as
compensation (insofar as such shares are not included in “Initial Shares)”. When
used in the 

 

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singular, the term “Additional Share” means a Common
Share or Unit issued after March 15, 2006 and included in the definition
of “Additional Shares.”

 

“Aggregate Baseline” means, as of the Valuation Date, an
amount representing (without double-counting) the sum of: (A) the Baseline
Value multiplied by (i) the Initial Shares, multiplied by (ii) the
sum of 100% plus the Target Aggregate Return Percentage; plus (B) with
respect to each Additional Share, the product of (i) the Additional Share
Baseline Value of such Additional Share, multiplied by (ii) the sum of (x)
100% plus (y) the product of the Target Aggregate Return Percentage multiplied
by a fraction the numerator of which is the number of days prior to and
including the Valuation Date during which such Additional Share has been
outstanding and the denominator of which is the number of days from and
including March 15, 2006 to and including the Valuation Date; provided
that if the Valuation Date occurs prior to March 14, 2009 as a result of a
Change in Control, then for purposes of this definition in connection with the
calculation of the Outperformance Pool as of the Valuation Date, then (I) the “Aggregate
Baseline” shall be calculated as of the date that such Change of Control is consummated
instead of March 14, 2009 and (II) the Aggregate Target Return Percentage
to be used in such calculation shall be reduced to 30% multiplied by the CoC
Fraction.

 

“Aggregate Distribution Unit Equivalent” has the meaning set forth in Section 3.

 

“Aggregate OPP Unit Equivalent” has the meaning
set forth in Section 3.

 

“Aggregate Outperformance Pool” means, as of the Valuation
Date, a dollar amount calculated as follows: (A) subtract the Aggregate
Baseline from the Total Return, in each case as of the Valuation Date, and (B) multiply
the resulting amount (or, if the resulting amount is a negative number, zero)
by 10%; provided, however, that in no event
shall the Aggregate Outperformance Pool as of the Valuation Date exceed the
difference between (i) the Maximum Aggregate Outperformance Pool Amount
and (ii) the sum of (I) the Year One Outperformance Pool and (II) the Year
Two Outperformance Pool.

 

“Aggregate Total Unit Equivalent” has the
meaning set forth in Section 3.

 

“Award
OPP Units” has the meaning set forth in Section 3.

 

“Baseline Value” means $89.17, which the
Committee has determined is the average Fair Market Value of a Common Share
over the thirty (30) trading days immediately preceding the Effective Date.

 

“Cause” for termination of the Grantee’s
employment for purposes of Section 4 means: (A) if the Grantee
is a party to a Service Agreement, and “cause” is defined therein, such
definition, or (B) if the Grantee is not party to a Service Agreement or
the Grantee’s Service

 

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Agreement does not define “cause”: (i) the
Grantee’s conviction of, or plea of guilty or nolo contendere to, a felony; (ii) the
Grantee’s willful and continued failure to use reasonable best efforts to
substantially perform his duties (other than such failure resulting from
the Grantee’s incapacity due to physical or mental illness or subsequent to the
issuance of a notice of termination by the Grantee for Good Reason) after
demand for substantial performance is delivered by the Company in writing that
specifically identifies the manner in which the Company believes the Grantee
has not used reasonable best efforts to substantially perform his duties;
or (iii) the Grantee’s willful misconduct that is materially economically
injurious to the Company or to any entity in control of, controlled by or under
common control with the Company (a “Company Affiliate”). For purposes of clause
(B) of this definition, no act, or failure to act, by the Grantee shall be
considered “willful” unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of the Company or any
Company Affiliate. Cause shall not exist under clause (B)(ii) or (B)(iii) above
unless and until the Company (I) gives the Grantee reasonable (but in no event
less than fifteen (15) days) notice of a meeting with the executive officer(s)
to whom the Grantee reports for the purpose of determining whether “cause” for
termination exists and an opportunity for the Grantee, together with his or her
counsel, to be heard, and (II) delivers to the Grantee a written finding that
in the good faith opinion of such executive officer(s), the Grantee was guilty
of the conduct set forth in clause (B)(ii) or (B)(iii) and specifying
the particulars thereof in detail.

 

“Change of Control” means:

 

(a)                                  individuals
who, on the Effective Date, constitute the Board (the “Incumbent Trustees”)
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a trustee subsequent to the Effective Date whose
election or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Trustees then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for trustee, without objection to such nomination) shall
be an Incumbent Trustee; provided, however, that no individual
initially elected or nominated as a trustee of the Company as a result of an
actual or threatened election contest with respect to trustees or as a result
of any other actual or threatened solicitation of proxies by or on behalf of
any person other than the Board shall be an Incumbent Trustee;  or

 

(b)                                 any
“person” (as such term is defined in Section 3(a)(9) of the Exchange
Act and as used in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act) is or becomes, after the Effective Date, a “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company’s then outstanding securities eligible to vote for the election
of the Board (the “Company Voting Securities”); provided, however,
that an event described in this paragraph (b) shall not be deemed to
be a Change

 

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in Control if any of
following becomes such a beneficial owner:  (A) the Company or
any majority-owned subsidiary of the Company (provided that this
exclusion applies solely to the ownership levels of the Company or the
majority-owned subsidiary), (B) any tax-qualified, broad-based employee
benefit plan sponsored or maintained by the Company or any such majority-owned
subsidiary, (C) any underwriter temporarily holding securities pursuant to
an offering of such securities, (D) any person pursuant to a
Non-Qualifying Transaction (as defined in paragraph (c)), (E) (i) any
of the partners (as of the Effective Date) in Interstate Properties (“Interstate”)
including immediate family members and family trusts or family-only
partnerships and any charitable foundations of such partners (the “Interstate
Partners”), (ii) any entities the majority of the voting interests of
which are beneficially owned by the Interstate Partners, or (iii) any “group”
(as described in Rule 13d-5(b)(i) under the Exchange Act) including
the Interstate Partners (the persons in (i), (ii) and (iii) shall be
individually and collectively referred to herein as, “Interstate Holders”);  or

 

(c)                                  the
consummation of a merger, consolidation, share exchange or similar form of
transaction involving the Company or any of its subsidiaries, or the sale of
all or substantially all of the Company’s assets (a “Business Transaction”),
unless immediately following such Business Transaction (A) more than 50%
of the total voting power of the entity resulting from such Business
Transaction or the entity acquiring the Company’s assets in such Business
Transaction (the “Surviving Corporation”) is beneficially owned,
directly or indirectly, by the Interstate Holders or the Company’s shareholders
immediately prior to any such Business Transaction, and (B) no person
(other than the persons set forth in clauses (A), (B), (C), or (F) of
paragraph (b) above or any tax-qualified, broad-based employee benefit
plan of the Surviving Corporation or its affiliates) beneficially owns,
directly or indirectly, 30% or more of the total voting power of the Surviving
Corporation (a “Non-Qualifying Transaction”); or

 

(d)                                 Board
approval of a liquidation or dissolution of the Company, unless the voting
common equity interests of an ongoing entity (other than a liquidating trust)
are beneficially owned, directly or indirectly, by the Company’s shareholders
in substantially the same proportions as such shareholders owned the Company’s
outstanding voting common equity interests immediately prior to such
liquidation and such ongoing entity assumes all existing obligations of the
Company to the Grantee under this Agreement.

 

“Class A Units” has the meaning set forth in the
Partnership Agreement.

 

“CoC Fraction” means the number of calendar
days that have elapsed since the Effective Date to and including the date as of
which a Change of Control is consummated, divided by 1,096.

 

5

 

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

 

“Common Shares” means shares of the Company’s
common shares of beneficial interest, par value $0.04 per share, either
currently existing or authorized hereafter.

 

“Common Share Price” means, as of a particular
date, the average of the Fair Market Value of one Common Share over the thirty
(30) trading days ending on, and including, such date (or, if such date is not
a trading day, the most recent trading day immediately preceding such date).

 

“Conversion Factor” has the meaning given to that term in the
Partnership Agreement (one (1.0) as of the Effective Date).

 

“Disability” means, unless otherwise provided
in the Grantee’s Service Agreement (if any), a disability which renders the
Grantee incapable of performing all of his or her material duties for a period
of at least 180 consecutive or non-consecutive days during any consecutive
twelve-month period.

 

“Distribution Value” means, as of a particular
date of determination, the aggregate amount of distributions paid on one Class A
Unit that was outstanding as of the Effective Date between March 15, 2006
and such date of determination adjusted to take into account any distributions
in the form of additional Units or other Partnership securities as
provided in Section 9
hereof.

 

“Effective Date” means March 15, 2006.

 

“Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

“Fair Market Value” means, as of any given
date, the fair market value of a Common Share as determined by the Committee
using any reasonable method and in good faith (such determination will be made
in a manner that satisfies Section 409A of the Code and in good-faith as
required by Section 422(c)(1) of the Code); provided that (A) if
Common Shares are admitted to trading on a national securities exchange, the
fair market value of a Common Share on any date shall be the closing sale price
reported for such share on the exchange on such date on which a sale was
reported; (B) if Common Shares are admitted to quotation on the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”) or a
successor quotation system and has been designated as a National Market System
(“NMS”) security, fair market value of a Common Share on any date shall be the
closing sale price reported for such share on the system on such date on which
a sale was reported; and (C) if Common Shares are admitted to quotation on
the NASDAQ but have not been designated as an NMS security, fair market value
of a Common Share on any such date shall be the average of the highest bid and

 

6

 

lowest asked prices for such Common Share on the
system on such date on which both the bid and asked prices were reported.

 

“First Valuation Date” means the earlier of (A) March 14,
2007, or (B) the last day of a 30 consecutive calendar day period during
which, on each day in that period, the Year One Outperformance Pool would have
reached or exceeded the Maximum Year One Outperformance Pool Amount if such day
had been the date of determination of the Year One Outperformance Pool.

 

“Good Reason” for
termination of the Grantee’s employment for purposes of Section 4
means: (A) if the Grantee is a party to a Service Agreement, and “good
reason” is defined therein, such definition, or (B) if the Grantee is not
party to a Service Agreement or the Grantee’s Service Agreement does not define
“good reason,” so long as the Grantee terminates his or her employment within
one hundred and twenty (120) days after the Grantee has actual knowledge of the
occurrence, without the written consent of the Grantee, of one of the following
events that has not been cured within thirty (30) days after written notice
thereof has been given by Grantee to the Company: (i) the assignment to
the Grantee of duties materially and adversely inconsistent with his or her
duties as of the Effective Date or a material and adverse alteration in the
nature of the Grantee’s duties and/or responsibilities, reporting obligations,
titles or authority; (ii) a material reduction by the Company in the
Grantee’s base salary or a failure by the Company to pay any such amounts when
due; (iii) the relocation of the Grantee’s own office location to a
location more than thirty (30) miles from such location as of the Effective
Date without the Grantee’s consent; (iv) any purported termination of
Executive’s employment for Cause which is not effected substantially in
accordance with the definition thereof; or (v) the Company’s failure to
provide benefits comparable to those provided the Grantee as of the Effective
Date, other than any such failure which affects all officers of a similar
level.

 

“Initial Shares”
means                        
Common Shares and Units (other than those held by the Company, with the number
of Units multiplied by the Conversion Factor in effect as of March 15,
2006) which are deemed outstanding as of the Effective Date for purposes of the
calculations set forth in Section 3 hereof. For the avoidance of doubt, such
number (A) includes                       
currently vested restricted Common Shares previously granted to employees or
other persons or entities in exchange for services provided to the Company and (B) excludes
(i) Common Shares issuable upon exercise of stock options or upon the
exchange (directly or indirectly) of OPP Units or other Units issued to
employees, non-employee trustees, consultants, advisors or other persons or
entities as incentive compensation, and (ii) currently unvested restricted
Common Shares.

 

“Maximum Aggregate Outperformance Pool Amount”
means $100,000,000.

 

“Maximum Year One Outperformance Pool Amount”
means $20,000,000.

 

7

 

“Maximum Year Two Outperformance Pool Amount”
means $40,000,000.

 

“OPP Units” means LTIP Units, as such term is
defined in the Partnership Agreement, awarded under the Outperformance Plan
having the rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms and conditions of redemption set forth
in the Partnership Agreement.

 

“Participation Percentage” means the Grantee’s
share of the Outperformance Pool as set forth on Schedule A hereto.

 

“Partnership Agreement” means the Agreement of
Limited Partnership of the Partnership, dated as of October 20, 1997, among
the Company, as general partner, and the limited partners who are parties
thereto, as amended from time to time.

 

“Person” means an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization, other entity or “group” (as
defined in the Exchange Act).

 

“Second Valuation Date” means the earlier of (A) March 14,
2008, or (B) the last day of a 30 consecutive calendar day period during
which, on each day in that period, the Year Two Outperformance Pool would have
reached or exceeded the Maximum Year Two Outperformance Pool Amount if such day
had been the date of determination of the Year Two Outperformance Pool.

 

“Service Agreement”
means, as of a particular date, any
employment, consulting or similar service agreement then in effect between the
Grantee, on the one hand, and the Company or one of its affiliates, on the
other hand, as amended or supplemented through such date.

 

“Target Aggregate Return Percentage” means 30%,
except as otherwise defined for purposes of the definition of Aggregate
Baseline in certain circumstances, as described in such definition.

 

“Target Year One Return Percentage” means 10%.

 

“Target Year Two Return Percentage” means 20%.

 

“Total Return” means (without double-counting),
as of a particular date, an amount equal to the sum of (A) the Total
Shares as of such date multiplied by the Common Share Price as of such date,
plus (B) an amount equal to the sum of the total dividends and other
distributions actually paid between March 15, 2006 and such date including
dividends and distributions paid in the form of additional Common Shares
or Units, as well as other property or securities and the proceeds thereof), in
respect of (i) the Initial Shares and (ii) the Additional Shares if
and to the

 

8

 

extent that such Additional Shares were outstanding on
the record date with respect to the applicable dividend or distribution so
paid.

 

“Total Shares” means (without double-counting),
as of a particular date of determination, the sum of: (A) the Common
Shares included in the Initial Shares, plus (B) the Common Shares included
in the Additional Shares, plus (C) the Units included in Initial Shares
and in Additional Shares (other than those held by the Company), except that
such Units shall be multiplied by the Conversion Factor in effect on such date
of determination and not the Conversion Factor (if different) used in the
definition of “Initial Shares” or “Additional Shares.”

 

“Units” means all Partnership Units (as defined
in the Partnership Agreement), including Class A Units, that are
outstanding or are issuable upon the conversion, exercise, exchange or
redemption of any securities of any kind convertible, exercisable, exchangeable
or redeemable for Partnership Units; provided that all Units that are not convertible into or
exchangeable for Class A Units shall be excluded from the definition of “Units.”

 

“Valuation Date” means the earliest
of (A) March 14, 2009, (B) the date upon which a Change of
Control shall occur, and (C) the last day of a 30 consecutive calendar day
period during which, on each day in that period, the Aggregate Outperformance
Pool would have reached or exceeded the Maximum Aggregate Outperformance Pool
Amount if such day had been the date of determination of the Aggregate
Outperformance Pool.

 

“Year One Baseline” means, as of the First Valuation Date, an
amount representing (without double-counting) the sum of: (A) the Baseline
Value multiplied by (i) the Initial Shares, and (ii) the sum of 100%
plus the Target Year One Return Percentage; plus (B) with respect
to each Additional Share, the product of (i) the Additional Share Baseline
Value of such Additional Share, multiplied by (ii) the sum of (x) 100%
plus (y) the product of the Target Year One Return Percentage multiplied by a
fraction the numerator of which is the number of days prior to and including March 14,
2007 during which such Additional Share has been outstanding and the
denominator of which is 365.

 

“Year One OPP Unit Equivalent” has the meaning
set forth in Section 3.

 

“Year One Outperformance Pool” means, as of the First
Valuation Date, a dollar amount calculated as follows: subtract the Year One
Baseline from the Total Return, in each case as of the First Valuation Date,
and multiply the resulting amount (or, if the resulting amount is a negative
number, zero) by 10%; provided, however, that in no event
shall the Year One Outperformance Pool as of the First Valuation Date exceed
the Maximum Year One Outperformance Pool.

 

9

 

“Year Two Baseline” means, as of the Second Valuation Date,
an amount representing (without double-counting) the sum of: (A) the
Baseline Value multiplied by (i) the Initial Shares, and (ii) the sum
of 100% plus the Target Year Two Return Percentage; plus (B) with
respect to each Additional Share, the product of (i) the Additional Share
Baseline Value of such Additional Share, multiplied by (ii) the sum of (x)
100% plus (y) the product of the Target Year Two Return Percentage multiplied
by a fraction the numerator of which is the number of days prior to and
including March 14, 2008 during which such Additional Share has been
outstanding and the denominator of which is 730.

 

“Year Two OPP Unit Equivalent” has the meaning
set forth in Section 3.

 

“Year Two Outperformance Pool” means, as of the Second
Valuation Date, a dollar amount calculated as follows: subtract the Year Two
Baseline from the Total Return, in each case as the Second Valuation Date, and
multiply the resulting amount (or, if the resulting amount is a negative
number, zero) by 10%; provided, however, that in no event
shall the Year Two Outperformance Pool as of the Second Valuation Date exceed
the difference between (A) the Maximum Year Two Outperformance Pool and (B) the
Year One Outperformance Pool.

 

3.                                       Outperformance
Award.

 

(a)                                  On
the terms and conditions set forth in this Agreement, as well as the terms and
conditions of the Stock Plan, the Grantee is hereby granted this Award
consisting of the participation percentage in the Outperformance Pool set forth
on Schedule A hereto, which is incorporated herein
by reference. Capitalized terms used herein and not otherwise defined have the
meanings provided on Schedule A hereto. The Grantee’s Award, if and when earned, shall be denominated in and
settled through the issuance of OPP Units in a number calculated to result in
the Grantee receiving a value equal to the Grantee’s participation percentage
in the Year One Outperformance Pool, Year Two Outperformance Pool and Aggregate
Outperformance Pool, as applicable (collectively, “Award OPP Units”) as
of the applicable valuation date pursuant to the calculations set forth in this
Section 3. The timing of issuance of Award OPP Units to the Grantee
pursuant to this Award is within the full and exclusive control of the
Committee, so long as such issuance occurs on or prior to the applicable date
as of which calculations are to be made pursuant to this Section 3.
Without limiting the discretion of the Committee, Award OPP Units may be
issued to the Grantee as of the date of this Agreement or from time to time
thereafter, based on a determination by the Committee of the extent to which
the performance objectives established under the Outperformance Plan have been
achieved or otherwise. Award OPP Units, when issued, shall constitute and be
treated as the property of the Grantee, subject to the terms of this Agreement
and the Partnership Agreement. The issuance of Award OPP Units to the Grantee pursuant
to this Award shall be set forth in minutes of the meetings of the Committee
and

 

10

 

communicated
to the Grantee in writing promptly after the approval thereof by the Committee.
Award OPP Units will be: (A) subject to forfeiture or increase to
the extent provided in this Section 3 as set forth below; and (B) subject
to vesting as provided in Section 4 and Section 8
hereof. In connection with each subsequent issuance of Award OPP Units, if any,
the Grantee shall execute and deliver to the Company and the Partnership such
documents, comparable to the documents executed and delivered in connection
with this Agreement, as the Company and/or the Partnership reasonably request
in order to comply with all applicable legal requirements, including, without
limitation, federal and state securities laws.

 

(b)                                 As
soon as practicable following the First Valuation Date, but as of the First
Valuation Date, the Committee will determine the Year One Outperformance Pool
(if any) and then perform the following calculations with respect to this
Award: multiply (w) the Year One Outperformance Pool calculated as of the First
Valuation Date by (x) the Grantee’s Participation Percentage, and then divide
the result by the product of (y) the Common Share Price calculated as of the
First Valuation Date multiplied by (z) the Conversion Factor on the First
Valuation Date; the resulting number is hereafter referred to as the “Year One OPP Unit Equivalent.”  A number of Award OPP Units equal to the Year
One OPP Unit Equivalent shall thereafter no longer be subject to forfeiture
pursuant to this Section 3,
but shall still be subject to vesting pursuant to Section 4 hereof. If the Year One OPP Unit Equivalent
is smaller than the number of Award OPP Units previously issued to the Grantee
pursuant to Section 3(a) hereof, then the balance of the
Award OPP Units shall continue to be subject to forfeiture pursuant to this Section 3. If the Year One OPP Unit Equivalent
is greater than the number of Award OPP Units previously issued to the Grantee
pursuant to Section 3(a) hereof, then, upon the
performance of the calculations set forth in this Section 3(b): (A) the Company shall cause the
Partnership to issue to the Grantee, as of the First Valuation Date, a number
of additional OPP Units equal to the difference; (B) such additional OPP
Units shall be added to the Award OPP Units previously issued, if any, and
thereby become part of this Award; (C) the Company and the
Partnership shall take such corporate and partnership action as is necessary to
accomplish the grant of such additional OPP Units; (D) the Grantee shall
execute and deliver in connection with such grant such documents, comparable to
the documents executed and delivered in connection with this Agreement, as the
Company and/or the Partnership reasonably request in order to comply with all
applicable requirements, including, without limitation, federal and state
securities laws; and (E) thereafter the term Award OPP Units will refer
collectively to the Award OPP Units, if any, issued prior to such additional
grant plus such additional OPP Units.

 

(c)                                  As
soon as practicable following the Second Valuation Date, but as of the Second
Valuation Date, the Committee will determine the Year Two Outperformance Pool
(if any) and then perform the following calculations with respect to

 

11

 

this Award: multiply (w)
the Year Two Outperformance Pool calculated as of the Second Valuation Date by
(x) the Grantee’s Participation Percentage, and then divide the result by the
product of (y) the Common Share Price calculated as of the Second Valuation
Date multiplied by (z) the Conversion Factor on the Second Valuation Date; the
resulting number is hereafter referred to as the “Year Two OPP Unit Equivalent.”  A number of Award OPP Units equal to the Year
Two OPP Unit Equivalent shall thereafter no longer be subject to forfeiture
pursuant to this Section 3,
but shall still be subject to vesting pursuant to Section 4 hereof. If the Year Two OPP Unit Equivalent
is smaller than the number of Award OPP Units previously issued to the Grantee
pursuant to Section 3(a) hereof (including the Year One
OPP Unit Equivalent, if any), then the balance of the Award OPP Units shall continue
to be subject to forfeiture pursuant to this Section 3. If
the Year Two OPP Unit Equivalent is greater than the number of Award OPP Units
previously issued to the Grantee pursuant to Section 3(a) hereof
(including the Year One OPP Unit Equivalent, if any), then, upon the
performance of the calculations set forth in this Section 3(c): (A) the Company shall cause the
Partnership to issue to the Grantee, as of the Second Valuation Date, a number
of additional OPP Units equal to the difference; (B) such additional OPP
Units shall be added to the Award OPP Units previously issued, if any, and
thereby become part of this Award; (C) the Company and the
Partnership shall take such corporate and partnership action as is necessary to
accomplish the grant of such additional OPP Units; (D) the Grantee shall
execute and deliver in connection with such grant such documents, comparable to
the documents executed and delivered in connection with this Agreement, as the
Company and/or the Partnership reasonably request in order to comply with all
applicable requirements, including, without limitation, federal and state
securities laws; and (E) thereafter the term Award OPP Units will refer
collectively to the Award OPP Units, if any, issued prior to such additional
grant plus such additional OPP Units.

 

(d)                                 As
soon as practicable following the Valuation Date, but as of the Valuation Date,
the Committee will determine the Aggregate Outperformance Pool (if any) and
then perform the following calculations with respect to this Award:

 

(i)                                                 multiply
(w) the Aggregate Outperformance Pool calculated as of the Valuation Date by
(x) the Grantee’s Participation Percentage, and then divide the result by the
product of (y) the Common Share Price calculated as of the Valuation Date multiplied
by (z) the Conversion Factor as of the Valuation Date; the resulting number is
hereafter referred to as the “Aggregate
OPP Unit Equivalent”;

 

(ii)                                              multiply
(w) the sum of (I) the Aggregate OPP Unit Equivalent plus (II) the Year One OPP
Unit Equivalent plus (III) the Year Two OPP Units Equivalent by (x) the
Distribution Value as of the Valuation Date, and then divide the result by the
product of (y) the Common Share Price calculated as of the Valuation Date
multiplied

 

12

 

by (z) the Conversion
Factor on the Valuation Date; the resulting number is hereafter referred to as
the “Aggregate Distribution
Unit Equivalent”; and

 

(iii)                                           add
the Aggregate OPP Unit Equivalent to the Aggregate Distribution Unit Equivalent;
the resulting number is hereafter referred to as the “Aggregate Total Unit Equivalent”.

 

If the Aggregate Total
Unit Equivalent is smaller than the number of Award OPP Units previously issued
to the Grantee pursuant to Section 3(a) hereof
(including the Year One Total Unit Equivalent and Year Two Total Unit
Equivalent, if any), then the Grantee, as of the Valuation Date, shall forfeit
a number of Award OPP Units equal to the difference, and thereafter the term
Award OPP Units will refer only to the remaining Award OPP Units that were not
so forfeited. If the Aggregate Total Unit Equivalent is greater than the number
of Award OPP Units previously issued to the Grantee pursuant to Section 3(a) hereof (including the Year One
Total Unit Equivalent and Year Two Total Unit Equivalent, if any), then, upon
the performance of the calculations set forth in this Section 3(d): (A) the
Company shall cause the Partnership to issue to the Grantee, as of the
Valuation Date, a number of additional OPP Units equal to the difference; (B) such
additional OPP Units shall be added to the Award OPP Units previously issued,
if any, and thereby become part of this Award; (C) the Company and
the Partnership shall take such corporate and partnership action as is
necessary to accomplish the grant of such additional OPP Units; (D) the
Grantee shall execute and deliver in connection with such grant such documents,
comparable to the documents executed and delivered in connection with this
Agreement, as the Company and/or the Partnership reasonably request in order to
comply with all applicable requirements, including, without limitation, federal
and state securities laws; and (E) thereafter the term Award OPP Units
will refer collectively to the Award OPP Units, if any, issued prior to such
additional grant plus such additional OPP Units. If the Total Unit Equivalent
is the same as the number of Award OPP Units previously issued to the Grantee
pursuant to Section 3(a) hereof (including the Year One
Total Unit Equivalent and Year Two Total Unit Equivalent, if any), then there
will be no change to the number of Award OPP Units under this Award pursuant to
this Section 3.

 

4.                                       Termination
of Grantee’s Service Relationship; Vesting; Change of Control.

 

(a)                                  If
the Grantee is a party to a Service Agreement and ceases to be an employee of
the Company or its affiliates, the provisions of Sections 4(b), 4(c) and
4(d) shall govern the treatment of the Grantee’s Award OPP Units
exclusively, unless the Service Agreement contains provisions that expressly
refer to this Section 4(a) and provides that those provisions
of the Service Agreement shall instead govern the treatment of the Grantee’s
Award OPP Units. The foregoing sentence will be deemed an

 

13

 

amendment to any
applicable Service Agreement to the extent required to apply its terms
consistently with this Section 4, such that, by way of
illustration, any provisions of the Service Agreement with respect to
accelerated vesting or payout of the Grantee’s bonus or incentive compensation
awards in the event of certain types of terminations of Grantee’s service
relationship with the Company (such as, for example, termination at the end of
the term, termination without Cause by the employer or termination for Good
Reason by the employee) shall not be interpreted as requiring that any
calculations set forth in Section 3 hereof be performed, or vesting
occur with respect to this Award other than as specifically provided in this Section 4.

 

(b)                                 In
the event of termination of the Grantee’s employment by the Company without
Cause or by the Grantee with Good Reason (a “Qualified Termination) prior to the Valuation Date then (i) with
respect to the Grantee only the calculations provided in Section 3(d) hereof shall be performed with
respect to this Award effective as of the date of the Qualified Termination as
if a Change of Control had occurred (with respect to the Grantee only) on such
date, (ii) all of the Award OPP Units that (A) have previously become
non-forfeitable pursuant to Sections
3(b) or 3(c) hereof
and/or (B) become no longer subject to forfeiture as a result of the
foregoing calculations pursuant to Section 3(d) hereof shall automatically and
immediately vest, and (iii) this Agreement shall then automatically
terminate and no further calculations pursuant to Section 3 hereof shall be performed. In the event of a
Qualified Termination on or after the Valuation Date, then all of the Grantee’s
Award OPP Units that have ceased to be subject to forfeiture pursuant to Section 3
hereof, but remain unvested as of the time of such Qualified Termination shall
automatically and immediately vest. This Agreement shall automatically
terminate effective as of the date of such Qualified Termination after giving
effect to this Section 4(b).
Notwithstanding the foregoing, in the
event any payment to be made hereunder after giving effect to this Section 4(b) is
determined to constitute “nonqualified deferred compensation” subject to Section 409A
of the Code, then, to the extent the Grantee is a “specified employee” under Section 409A
of the Code subject to the six-month delay thereunder, any such payments to be
made during the six-month period commencing on the Grantee’s “separation from
service” (as defined in Section 409A of the Code) shall be delayed until
the expiration of such six-month period.

 

(c)                                  In
the event of a termination of employment by reason of death or Disability, the
provisions of Section 8 hereof shall apply.

 

(d)                                 In
the event of a termination of employment other than a Qualified Termination or
by reason of death or Disability, this Agreement shall automatically terminate
effective as of the date of such termination and all Award OPP Units except for
those that both (i) have ceased to be subject to forfeiture pursuant to Section 3
hereof and

 

14

 

(ii) are then vested
pursuant to Section 4(e) hereof shall automatically and
immediately be forfeited by the Grantee.

 

(e)                                  Subject
to Sections 4(a), 4(b), 4(c), 4(d) and 8 hereof
and the last sentence of this Section 4(e), the Grantee’s Award OPP Units
(including the Year One OPP Unit Equivalent and Year Two OPP Unit Equivalent,
if any) not forfeited pursuant to Section 3
hereof shall become vested as follows: (i) thirty-three and one-third
percent (33.34%) of such Award OPP Units shall become vested on March 14,
2009; and (ii) an additional thirty-three and one-third percent (33.33%)
of such Award OPP Units shall become vested on each of March 14, 2010 and March 14,
2011; provided, however, that all unvested Award OPP Units that
have not previously been forfeited pursuant to Section 3 hereof shall vest immediately upon the
occurrence of a Change of Control. For the avoidance of doubt, the vesting of
the Award OPP Units pursuant to this Section 4(e) shall be independent from, and
in no way effect, the calculations set forth in Section 3 hereof. To
the extent that Schedule A provides for amounts or schedules of
vesting that conflict with the provisions of this Section 4(e), the provisions of Schedule A
will govern.  Notwithstanding anything to
the contrary in this Agreement, the portion of the Aggregate Distribution Unit
Equivalent calculated pursuant to Section3(d)(ii) that is attributable
to the Dividend Value associated with the Year One OPP Unit Equivalent and/or
the Year Two OPP Unit Equivalent shall not be subject to vesting pursuant to
this Section 4(e), but shall be immediately and automatically vested as
soon as the calculation provided in Section 3(d)(ii) is performed.

 

5.                                       Payments
by Award Recipients. No amount shall be payable to the Company or the
Partnership by the Grantee at any time in respect of this Award.

 

6.                                       Distributions.
The holder of the Award OPP Units shall be entitled to receive distributions
with respect to such Award OPP Units to the extent provided for in the
Partnership Agreement, as modified hereby, if applicable. The Distribution
Participation Date (as defined in the Partnership Agreement) shall be the
Valuation Date, except that if the provisions of Section 4(b) or
Section 8(a) hereof become applicable to the
Grantee, the Distribution Participation Date for the Grantee shall be
accelerated to the date the calculations provided in such provisions are
performed with respect to the Award OPP Units that are no longer subject to
forfeiture.

 

7.                                       Restrictions
on Transfer. None of the Award OPP Units shall be sold, assigned,
transferred, pledged or otherwise disposed of or encumbered (whether
voluntarily or involuntarily or by judgment, levy, attachment, garnishment or
other legal or equitable proceeding) (each such action a “Transfer”), or
redeemed in accordance with the Partnership Agreement (a) prior to vesting
and (b) unless such Transfer is in compliance with all applicable
securities laws (including, without limitation, the Securities Act of 1933, as
amended (the “Securities Act”)), and such Transfer is in accordance with
the applicable terms and conditions of the Partnership Agreement. In connection
with any Transfer of Award OPP Units, the Partnership may require the
Grantee to provide an opinion of counsel, satisfactory to the Partnership, that
such Transfer is in compliance with all federal and state securities laws
(including, without limitation, the Securities Act). Any attempted Transfer of
Award OPP Units not in accordance with the terms and conditions of this Section 7
shall be null and void, and the Partnership shall not reflect on its records
any change in record ownership of any OPP Units as a

 

15

 

result of any such Transfer, shall otherwise refuse to recognize any
such Transfer and shall not in any way give effect to any such Transfer of any
OPP Units. This Agreement is personal to the Grantee, is non-assignable and is
not transferable in any manner, by operation of law or otherwise, other than by
will or the laws of descent and distribution.

 

8.                                       Death or Disability.

 

(a)                                  Notwithstanding
any other provision herein, but subject to Section 8(c) below,
if, prior to the Valuation Date, the Grantee shall cease to be an employee of
the Company and its affiliates as a result of his or her death or Disability,
then (i) with respect to the Grantee only the calculations provided in Section 3(d) hereof shall be performed with
respect to this Award immediately upon such cessation as if a Change of Control
had occurred (with respect to the Grantee only) on the date of his or her death
or termination by reason of Disability, (ii) all of the Award OPP Units
that (A) have previously become non-forfeitable pursuant to Sections 3(b) or 3(c) hereof
and/or (B) become no longer subject to forfeiture as a result of such
calculations pursuant to Section 3(d) hereof shall automatically and
immediately vest, and (iii) this Agreement shall then automatically
terminate and no further calculations pursuant to Section 3 hereof shall be performed.

 

(b)                                 Notwithstanding
any other provision herein, but subject to Section 8(c) hereof,
if, on or after the Valuation Date, the Grantee shall cease to be an employee,
consultant or advisor, as applicable, of the Company as a result of his death
or Disability, then all of the Grantee’s Award OPP Units shall automatically
and immediately vest.

 

(c)                                  Notwithstanding
Sections 8(a) and 8(b) hereof,
in the event of any conflict between the provisions of the Grantee’s Service
Agreement, if any, and the provisions of this Agreement with respect to death
or Disability, the provisions of such Service Agreement shall govern the
treatment of the Grantee’s Award OPP Units in the event of death or Disability.
As further provided in Section 10(k)
hereof, nothing herein shall imply that any employment agreement exists between
the Grantee and the Company or its affiliates.

 

9.                                       Changes
in Capital Structure. If (i) the Company shall at any time be involved
in a merger, consolidation, dissolution, liquidation, reorganization, exchange
of shares, sale of all or substantially all of the assets or stock of the
Company or other transaction similar thereto, (ii) any stock dividend,
stock split, reverse stock split, stock combination, reclassification,
recapitalization, significant repurchases of stock, or other similar change in
the capital structure of the Company, or any extraordinary dividend or other
distribution to holders of Common Shares or Class A Units other than
regular cash dividends shall occur, or (iii) any other event shall occur
that in each case in the good faith judgment of the Committee necessitates
action by way of appropriate equitable adjustment in the terms of this Award,
the Outperformance Plan or the OPP Units, then the Committee shall take such
action as it deems necessary to maintain the

 

16

 

Grantee’s rights hereunder so that they are substantially proportionate
to the rights existing under this Award, the Outperformance Plan and the terms
of the OPP Units prior to such event, including, without limitation: (A) adjustments
in the Award OPP Units, Additional Shares, Initial Shares, Year One Baseline
Value, Year Two Baseline Value, Aggregate Baseline Value, Distribution Value,
Common Share Price, Maximum Aggregate Outperformance Pool Amount, Total Shares,
Total Return or other pertinent terms of this Award; and (B) substitution
of other awards under the Stock Plan or otherwise.

 

10.                                 Miscellaneous.

 

(a)                                  Amendments.
This Agreement may be amended or modified only with the consent of the
Company and the Partnership acting through the Committee; provided that
any such amendment or modification materially and adversely affecting the
rights of the Grantee hereunder must be consented to by the Grantee to be
effective as against him. Notwithstanding the foregoing, this Agreement may be
amended in writing signed only by the Company to correct any errors or
ambiguities in this Agreement and/or to make such changes that do not
materially adversely affect the Grantee’s rights hereunder. This grant shall in
no way affect the Grantee’s participation or benefits under any other plan or
benefit program maintained or provided by the Company.

 

(b)                                 Incorporation
of Stock Plan; Committee Determinations. The provisions of the Stock Plan
are hereby incorporated by reference as if set forth herein. In the event of a conflict between this Agreement and
the Stock Plan, the Stock Plan shall govern. The Committee will make the determinations
and certifications required by this Award as promptly as reasonably practicable
following the occurrence of the event or events necessitating such
determinations or certifications. In the event of a Change of Control, the
Committee will make such determinations within a period of time that enables
the Company to make any payments due hereunder not later than the date of
consummation of the Change of Control.

 

(c)                                  Status
as a Partner. As of the grant date set forth on Schedule A, the
Grantee shall be admitted as a partner of the Partnership with beneficial
ownership of the number of Award OPP Units issued to the Grantee as of such
date pursuant to Section 3
hereof by: (A) signing and delivering to the Partnership a copy of this
Agreement; and (B) signing, as a Limited Partner, and delivering to the
Partnership a counterpart signature page to the Partnership Agreement
(attached hereto as Exhibit A). The Partnership Agreement shall be
amended from time to time as applicable to reflect the issuance to the Grantee
of Award OPP Units pursuant to Section 3
hereof, if any, whereupon the Grantee shall have all the rights of a Limited
Partner of the Partnership with respect to the number of OPP Units then held by
the Grantee, as set forth in the Partnership Agreement, subject, however, to
the restrictions and conditions specified herein and in the Partnership
Agreement.

 

17

 

(d)                                 Status
of OPP Units under the Stock Plan. Insofar as the Outperformance Plan has
been established as an incentive program of the Company and the Partnership,
the Award OPP Units are both issued as equity securities of the Partnership and
granted as awards under the Stock Plan. The Company will have the right at its
option, as set forth in the Partnership Agreement, to issue Common Shares in
exchange for Units into which Award OPP Units may have been converted
pursuant to the Partnership Agreement, subject to certain limitations set forth
in the Partnership Agreement, and such Common Shares, if issued, will be issued
under the Stock Plan. The Grantee must be eligible to receive the Award OPP
Units in compliance with applicable federal and state securities laws and to
that effect is required to complete, execute and deliver certain covenants, representations
and warranties (attached as Exhibit B). The Grantee acknowledges
that the Grantee will have no right to approve or disapprove such determination
by the Committee.

 

(e)                                  Legend.
The records of the Partnership evidencing the Award OPP Units shall bear an
appropriate legend, as determined by the Partnership in its sole discretion, to
the effect that such OPP Units are subject to restrictions as set forth herein
and in the Partnership Agreement.

 

(f)                                    Compliance
With Law. The Partnership and the Grantee will make reasonable efforts to
comply with all applicable securities laws. In addition, notwithstanding any
provision of this Agreement to the contrary, no OPP Units will become vested or
be paid at a time that such vesting or payment would result in a violation of
any such law.

 

(g)                                 Investment
Representations; Registration. The Grantee hereby makes the covenants,
representations and warranties and set forth on Exhibit B attached
hereto. All of such covenants, warranties and representations shall survive the
execution and delivery of this Agreement by the Grantee. The Partnership will
have no obligation to register under the Securities Act any OPP Units or any
other securities issued pursuant to this Agreement or upon conversion or
exchange of OPP Units. The Grantee agrees that any resale of the Common Shares
received upon the exchange of Units into which OPP Units may be converted
shall not occur during the “blackout periods” forbidding sales of Company
securities, as set forth in the then applicable Company employee manual or
insider trading policy. In addition, any resale shall be made in compliance
with the registration requirements of the Securities Act or an applicable
exemption therefrom, including, without limitation, the exemption provided by Rule 144
promulgated thereunder (or any successor rule).

 

(h)                                 Section 83(b) Election.
In connection with each separate issuance of OPP Units under this Award
pursuant to Section 3
hereof the Grantee hereby agrees to make an election to include in gross income
in the year of transfer the applicable Award OPP Units pursuant to Section 83(b) of
the Code substantially in the form attached hereto as Exhibit C
and to supply the necessary information in accordance with the regulations
promulgated thereunder.

 

18

 

(i)                                     Severability.
If, for any reason, any provision of this Agreement is held invalid, such
invalidity shall not affect any other provision of this Agreement not so held
invalid, and each such other provision shall to the full extent consistent with
law continue in full force and effect. If any provision of this Agreement shall
be held invalid in part, such invalidity shall in no way affect the rest of
such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.

 

(j)                                     Governing
Law. This Agreement is made under, and will be construed in accordance
with, the laws of State of New York, without giving effect to the principles of
conflict of laws of such State.

 

(k)                                  No
Obligation to Continue Position as an Employee, Consultant or Advisor. Neither
the Company nor any affiliate is obligated by or as a result of this Agreement
to continue to have the Grantee as an employee, consultant or advisor and this
Agreement shall not interfere in any way with the right of the Company or any
affiliate to terminate the Grantee’s service relationship at any time.

 

(l)                                     Notices.
Any notice to be given to the Company shall be addressed to the Secretary of
the Company at 888 Seventh Avenue, New York, New York 10019 and any notice to
be given the Grantee shall be addressed to the Grantee at the Grantee’s address
as it appears on the employment records of the Company, or at such other
address as the Company or the Grantee may hereafter designate in writing
to the other.

 

(m)                               Withholding
and Taxes. No later than the date as of which an amount first becomes
includible in the gross income of the Grantee for income tax purposes or
subject to the Federal Insurance Contributions Act withholding with respect to
this Award, the Grantee will pay to the Company or, if appropriate, any of its
affiliates, or make arrangements satisfactory to the Committee regarding the
payment of, any United States federal, state or local or foreign taxes of any
kind required by law to be withheld with respect to such amount. The
obligations of the Company under this Agreement will be conditional on such
payment or arrangements, and the Company and its affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Grantee.

 

(n)                                 Headings. The
headings of paragraphs hereof are included solely for convenience of reference
and shall not control the meaning or interpretation of any of the provisions of
this Agreement.

 

(o)                                 Counterparts.
This Agreement may be executed in multiple counterparts with the same
effect as if each of the signing parties had signed the same document. All
counterparts shall be construed together and constitute the same instrument.

 

19

 

(p)                                 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and any successors to the Company and the Partnership, on
the one hand, and any successors to the Grantee, on the other hand, by will or
the laws of descent and distribution, but this Agreement shall not otherwise be
assignable or otherwise subject to hypothecation by the Grantee.

 

(q)                                 409A. This Agreement shall be construed, administered and interpreted in
accordance with a good faith interpretation of Section 409A of the Code. Any
provision of this Agreement that is inconsistent with Section 409A of the
Code, or that may result in penalties under Section 409A of the Code,
shall be amended, with the reasonable cooperation of the Grantee and the
Company, to the extent necessary to bring it into compliance with Section 409A
of the Code.

 

[signature
page follows]

 

20

 

IN WITNESS WHEREOF, the
undersigned have caused this Award Agreement to be executed as of the     
day of                ,
2006.

 

 

	
   

  	
  VORNADO REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VORNADO REALTY L.P.

  
	
   

  	
   

  
	
   

  	
  By: Vornado Realty
  Trust, its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
								

 

21

 

EXHIBIT A

 

FORM OF
LIMITED PARTNER SIGNATURE PAGE

 

The Grantee, desiring to become one of the within
named Limited Partners of Vornado Realty L.P., hereby accepts all of the terms
and conditions of (including, without limitation, the provisions related to
powers of attorney), and becomes a party to, the Agreement of Limited
Partnership, dated as of October 20, 1997, of Vornado Realty L.P., as
amended (the “Partnership Agreement”). The Grantee agrees that this
signature page may be attached to any counterpart of the
Partnership Agreement and further agrees as follows (where the term “Limited
Partner” refers to the Grantee:

 

1.                                       The
Limited Partner hereby confirms that it has reviewed the terms of the
Partnership Agreement and affirms and agrees that it is bound by each of the
terms and conditions of the Partnership Agreement, including, without
limitation, the provisions thereof relating to limitations and restrictions on
the transfer of Partnership Units.

 

2.                                       The
Limited Partner hereby confirms that it is acquiring the Partnership Units for
its own account as principal, for investment and not with a view to resale or
distribution, and that the Partnership Units may not be transferred or
otherwise disposed of by the Limited Partner otherwise than in a transaction
pursuant to a registration statement filed by the Partnership (which it has no
obligation to file) or that is exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and all
applicable state and foreign securities laws, and the General Partner may refuse
to transfer any Partnership Units as to which evidence of such registration or
exemption from registration satisfactory to the General Partner is not provided
to it, which evidence may include the requirement of a legal opinion
regarding the exemption from such registration. If the General Partner delivers
to the Limited Partner Common Shares of Beneficial Interest of the General
Partner (“Common Shares”) upon redemption of any Partnership Units, the
Common Shares will be acquired for the Limited Partner’s own account as
principal, for investment and not with a view to resale or distribution, and
the Common Shares may not be transferred or otherwise disposed of by the
Limited Partner otherwise than in a transaction pursuant to a registration
statement filed by the General Partner with respect to such Common Shares
(which it has no obligation under the Partnership Agreement to file) or that is
exempt from the registration requirements of the Securities Act and all
applicable state and foreign securities laws, and the General Partner may refuse
to transfer any Common Shares as to which evidence of such registration or
exemption from such registration satisfactory to the General Partner is not
provided to it, which evidence may include the requirement of a legal
opinion regarding the exemption from such registration.

 

3.                                       The
Limited Partner hereby affirms that it has appointed the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead, in accordance with Section 15.11 of the Partnership
Agreement, which section is hereby incorporated by reference. The
foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest, and it shall survive and not be affected by the
death, 

 

 

incompetency,
dissolution, disability, incapacity, bankruptcy or termination of the Limited
Partner and shall extend to the Limited Partner’s heirs, executors,
administrators, legal representatives, successors and assigns.

 

4.                                       The
Limited Partner hereby confirms that, notwithstanding any provisions of the
Partnership Agreement to the contrary, the Award OPP Units shall not be
redeemable by the Limited Partner pursuant to Section 8.6 of the
Partnership Agreement.

 

5.                                       (a)                                  The
Limited Partner hereby irrevocably consents in advance to any amendment to the
Partnership Agreement, as may be recommended by the General Partner, intended
to avoid the Partnership being treated as a publicly-traded partnership within
the meaning of Section 7704 of the Internal Revenue Code, including,
without limitation, (x) any amendment to the provisions of Section 8.6
of the Partnership Agreement intended to increase the waiting period between
the delivery of a Notice of Redemption and the Specified Redemption Date and/or
the Valuation Date to up to sixty (60) days or (y) any other amendment to
the Partnership Agreement intended to make the redemption and transfer
provisions, with respect to certain redemptions and transfers, more similar to
the provisions described in Treasury Regulations Section 1.7704-1(f).

 

(b)                                 The
Limited Partner hereby appoints the General Partner, any Liquidator and
authorized officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its name, place
and stead, to execute and deliver any amendment referred to in the foregoing
paragraph 5(a) on the Limited Partner’s behalf. The foregoing power of
attorney is hereby declared to be irrevocable and a power coupled with an
interest, and it shall survive and not be affected by the death, incompetency,
dissolution, disability, incapacity, bankruptcy or termination of the Limited
Partner and shall extend to the Limited Partner’s heirs, executors,
administrators, legal representatives, successors and assigns.

 

6.                                       The
Limited Partner agrees that it will not transfer any interest in the
Partnership Units (x) through (i) a national, non-U.S., regional, local or
other securities exchange, (ii) PORTAL or (iii) an over-the-counter
market (including an interdealer quotation system that regularly disseminates
firm buy or sell quotations by identified brokers or dealers by electronic
means or otherwise) or (y) to or through (a) a person, such as a broker or
dealer, that makes a market in, or regularly quotes prices for, interests in
the Partnership or (b) a person that regularly makes available to the
public (including customers or subscribers) bid or offer quotes with respect to
any interests in the Partnership and stands ready to effect transactions at the
quoted prices for itself or on behalf of others.

 

7.                                       The
Limited Partner acknowledges that the General Partner shall be a third party
beneficiary of the representations, covenants and agreements set forth in
Sections 4 and 6 hereof. The Limited Partner agrees that it will transfer,
whether by assignment or otherwise, Partnership Units only to the General
Partner or to transferees that provide the Partnership and the General Partner
with the representations and covenants set forth in Sections 4 and 6 hereof.

 

 

8.                                       This
Acceptance shall be construed and enforced in accordance with and governed by
the laws of the State of Delaware, without regard to the principles of
conflicts of law.

 

	
   

  	
  Signature Line for Limited Partner:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Date: 

  	
   

  	
  , 2006

  
	
   

  	
   

  
	
   

  	
  Address of Limited Partner:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
								

 

 

EXHIBIT B

 

GRANTEE’S
COVENANTS, REPRESENTATIONS AND WARRANTIES

 

The Grantee hereby represents, warrants and covenants
as follows:

 

(a)                                  The
Grantee has received and had an opportunity to review the following documents
(the “Background Documents”):

 

(i)                                     The
Company’s latest Annual Report to Stockholders;

 

(ii)                                  The
Company’s Proxy Statement for its most recent Annual Meeting of Stockholders;

 

(iii)                               The
Company’s Report on Form 10-K for the fiscal year most recently ended;

 

(iv)                              The
Company’s Form 10-Q, if any, for the most recently ended quarter filed by
the Company with the Securities and Exchange Commission since the filing of the
Form 10-K described in clause (iii) above;

 

(v)                                 Each
of the Company’s Current Report(s) on Form 8-K, if any, filed since the
end of the fiscal year most recently ended for which a Form 10-K has been
filed by the Company;

 

(vi)                              The
Partnership Agreement;

 

(vii)                           The
Stock Plan; and

 

(viii)                        The
Company’s Declaration of Trust, as amended.

 

The Grantee also
acknowledges that any delivery of the Background Documents and other
information relating to the Company and the Partnership prior to the
determination by the Partnership of the suitability of the Grantee as a holder
of OPP Units shall not constitute an offer of OPP Units until such determination
of suitability shall be made.

 

(b)                                 The
Grantee hereby represents and warrants that

 

(i)                                     The
Grantee either (A) is an “accredited investor” as defined in Rule 501(a) under
the Securities Act of 1933, as amended (the “Securities Act”), or (B) by
reason of the business and financial experience of the Grantee, together with
the business and financial experience of those persons, if any, retained by the
Grantee to represent or advise him with respect to the grant to him of OPP
Units, the potential conversion of OPP Units into Class A Units of the
Partnership (“Common Units”) and the potential redemption of such Common
Units for the Company’s Common Shares (“REIT Shares”), has such
knowledge, sophistication and experience in financial and business matters and
in making investment decisions of this type that the Grantee (I) is capable of
evaluating the merits and risks of an investment in the Partnership and
potential investment in the Company and of making an informed investment
decision, (II)

 

 

is capable of protecting his own interest or has
engaged representatives or advisors to assist him in protecting his interests,
and (III) is capable of bearing the economic risk of such investment.

 

(ii)                                  The
Grantee understands that (A) the Grantee is responsible for consulting his
own tax advisors with respect to the application of the U.S. federal income tax
laws, and the tax laws of any state, local or other taxing jurisdiction to
which the Grantee is or by reason of the award of OPP Units may become
subject, to his particular situation; (B) the Grantee has not received or
relied upon business or tax advice from the Company, the Partnership or any of
their respective employees, agents, consultants or advisors, in their capacity
as such; (C) the Grantee provides services to the Partnership on a regular
basis and in such capacity has access to such information, and has such
experience of and involvement in the business and operations of the
Partnership, as the Grantee believes to be necessary and appropriate to make an
informed decision to accept this Award of OPP Units; and (D) an investment
in the Partnership and/or the Company involves substantial risks. The Grantee
has been given the opportunity to make a thorough investigation of matters
relevant to the OPP Units and has been furnished with, and has reviewed and
understands, materials relating to the Partnership and the Company and their
respective activities (including, but not limited to, the Background Documents).
The Grantee has been afforded the opportunity to obtain any additional
information (including any exhibits to the Background Documents) deemed
necessary by the Grantee to verify the accuracy of information conveyed to the
Grantee. The Grantee confirms that all documents, records, and books pertaining
to his receipt of OPP Units which were requested by the Grantee have been made
available or delivered to the Grantee. The Grantee has had an opportunity to
ask questions of and receive answers from the Partnership and the Company, or
from a person or persons acting on their behalf, concerning the terms and
conditions of the OPP Units. The Grantee has relied
upon, and is making its decision solely upon, the Background Documents and
other written information provided to the Grantee by the Partnership or the
Company.

 

(iii)                               The
OPP Units to be issued, the Common Units issuable upon conversion of the OPP
Units and any REIT Shares issued in connection with the redemption of any such
Common Units will be acquired for the account of the Grantee for investment
only and not with a current view to, or with any intention of, a distribution
or resale thereof, in whole or in part, or the grant of any participation
therein, without prejudice, however, to the Grantee’s right (subject to the
terms of the OPP Units, the Stock Plan and this Agreement) at all times to sell
or otherwise dispose of all or any part of his OPP Units, Common Units or
REIT Shares in compliance with the Securities Act, and applicable state
securities laws, and subject, nevertheless, to the disposition of his assets
being at all times within his control.

 

(iv)                              The
Grantee acknowledges that (A) neither the OPP Units to be issued, nor the
Common Units issuable upon conversion of the OPP Units, have been registered
under the Securities Act or state securities laws by reason of a specific
exemption or exemptions from registration under the Securities Act and
applicable state securities laws and, if such OPP Units or Common Units are
represented by certificates,

 

 

such certificates will bear a legend to such effect, (B) the
reliance by the Partnership and the Company on such exemptions is predicated in
part on the accuracy and completeness of the representations and
warranties of the Grantee contained herein, (C) such OPP Units or Common
Units, therefore, cannot be resold unless registered under the Securities Act
and applicable state securities laws, or unless an exemption from registration
is available, (D) there is no public market for such OPP Units and Common
Units and (E) neither the Partnership nor the Company has any obligation
or intention to register such OPP Units or the Common Units issuable upon
conversion of the OPP Units under the Securities Act or any state securities
laws or to take any action that would make available any exemption from the
registration requirements of such laws, except, that, upon the redemption of
the Common Units for REIT Shares, the Company may issue such REIT Shares
under the Stock Plan and pursuant to a Registration Statement on Form S-8
under the Securities Act, to the extent that (I) the Grantee is eligible to
receive such REIT Shares under the Stock Plan at the time of such issuance,
(II) the Company has filed a Form S-8 Registration Statement with the
Securities and Exchange Commission registering the issuance of such REIT Shares
and (III) such Form S-8 is effective at the time of the issuance of such
REIT Shares. The Grantee hereby acknowledges that because of the restrictions
on transfer or assignment of such OPP Units acquired hereby and the Common
Units issuable upon conversion of the OPP Units which are set forth in the
Partnership Agreement or this Agreement, the Grantee may have to bear the
economic risk of his ownership of the OPP Units acquired hereby and the Common
Units issuable upon conversion of the OPP Units for an indefinite period of
time.

 

(v)                                 The
Grantee has determined that the OPP Units are a suitable investment for the
Grantee.

 

(vi)                              No
representations or warranties have been made to the Grantee by the Partnership
or the Company, or any officer, director, shareholder, agent, or affiliate of
any of them, and the Grantee has received no information relating to an
investment in the Partnership or the OPP Units except the information specified
in paragraph (b) above.

 

(c)                                  So
long as the Grantee holds any OPP Units, the Grantee shall disclose to the
Partnership in writing such information as may be reasonably requested
with respect to ownership of OPP Units as the Partnership may deem
reasonably necessary to ascertain and to establish compliance with provisions
of the Code, applicable to the Partnership or to comply with requirements of
any other appropriate taxing authority.

 

(d)                                 The
Grantee hereby agrees to make an election under Section 83(b) of the
Code with respect to the OPP Units awarded hereunder, and has delivered with
this Agreement a completed, executed copy of the election form attached
hereto as Exhibit C. The Grantee agrees to file the election (or to
permit the Partnership to file such election on the Grantee’s behalf) within
thirty (30) days after the award of the OPP Units hereunder with the IRS
Service Center at which such Grantee files his personal income tax returns, and
to file a copy of such election with the Grantee’s U.S. federal income tax
return for the taxable year in which the OPP Units are awarded to the Grantee.

 

 

(e)                                  The
address set forth on the signature page of this Agreement is the address
of the Grantee’s principal residence, and the Grantee has no present intention
of becoming a resident of any country, state or jurisdiction other than the
country and state in which such residence is sited.

 

 

EXHIBIT C

 

ELECTION
TO INCLUDE IN GROSS INCOME IN YEAR OF

 

TRANSFER
OF PROPERTY PURSUANT TO SECTION 83(B)

 

OF THE
INTERNAL REVENUE CODE

 

The undersigned hereby makes an election pursuant to Section 83(b) of
the Internal Revenue Code with respect to the property described below and
supplies the following information in accordance with the regulations
promulgated thereunder:

 

1.                                       The
name, address and taxpayer identification number of the undersigned are:

 

Name:                                                                  
(the “Taxpayer”)

 

Address:

 

 

 

Social Security
No./Taxpayer Identification No.:                                         

 

2.                                       Description
of property with respect to which the election is being made:

 

The
election is being made with respect to                        
OPP Units in Vornado Realty L.P. (the “Partnership”).

 

3.                                       The
date on which the OPP Units were transferred is                
   , 2006. The taxable year to which this election relates is
calendar year 2006.

 

4.                                       Nature
of restrictions to which the OPP Units are subject:

 

(a)                                  With
limited exceptions, until the OPP Units vest, the Taxpayer may not
transfer in any manner any portion of the OPP Units without the consent of the
Partnership.

 

(b)                                 The
Taxpayer’s OPP Units vest in accordance with the vesting provisions described
in the Schedule attached hereto. Unvested OPP Units are forfeited in
accordance with the vesting provisions described in the Schedule attached
hereto.

 

5.                                       The
fair market value at time of transfer (determined without regard to any
restrictions other than restrictions which by their terms will never lapse) of
the OPP Units with respect to which this election is being made was $0 per OPP
Unit.

 

6.                                       The
amount paid by the Taxpayer for the OPP Units was $0 per OPP Unit.

 

7.                                       A
copy of this statement has been furnished to the Partnership and Vornado Realty
Trust.

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
						

 

 

SCHEDULE TO EXHIBIT C

 

Vesting Provisions of OPP Units

 

The
OPP Units are subject to time-based and performance-based vesting with the
final vesting percentage equaling the product of the time-based vesting
percentage and the performance-based vesting percentage. Performance-based
vesting will be from 0-100% based on Vornado Realty Trust’s (the “Company’s”)
per-share total return to shareholders for the period from March 15, 2006
to March 14, 2009 (or earlier in certain circumstances). Under the
time-based vesting hurdles, thirty-three and one-third percent (33.34%) of the
OPP Units will vest on the last day of the performance period (March 14,
2009) and thirty-three and one-third percent (33.33%) of the remaining OPP
Units will vest on each of the first and second anniversaries thereof, provided
that the Taxpayer remains an employee of the Company through such dates,
subject to acceleration in the event of certain extraordinary transactions or
termination of the Taxpayer’s service relationship with the Company under
specified circumstances. Unvested OPP Units are subject to forfeiture in the
event of failure to vest based on the passage of time or the determination of
the performance-based percentage.

 

 

SCHEDULE A
TO 2006 OUTPERFORMANCE PLAN AWARD AGREEMENT

 

 

	
  Date of Award
  Agreement:

  	
   

  
	
  Name of Grantee:

  	
   

  
	
  Participation Percentage: 

  	
      %

  
	
  Number of OPP Units Subject to Grant:

  	
   

  
	
  Grant Date:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

Initials of Company representative:                   

Initials of Grantee:Exhibit 10.2

 

THIRTY-THIRD 

 

AMENDMENT 

 

TO 

 

SECOND AMENDED AND
RESTATED 

 

AGREEMENT OF LIMITED
PARTNERSHIP 

 

OF 

 

VORNADO REALTY L.P.

 

 

Dated as
of April 25, 2006

 

THIS THIRTY-THIRD AMENDMENT TO THE SECOND AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF VORNADO REALTY L.P. (this “ Amendment
“), dated as of April 25, 2006, is hereby adopted by Vornado Realty Trust,
a Maryland real estate investment trust (defined in the Agreement, hereinafter
defined, as the “ General Partner “), as the general partner of Vornado
Realty L.P., a Delaware limited partnership (the “Partnership”). For ease of
reference, capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P. dated as of October 20, 1997,
as amended by the Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of December 16, 1997, and
further amended by the Second Amendment to Second Amended and Restated
Agreement of Limited Partnership of Vornado Realty L.P., dated as of April 1,
1998, the Third Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of November 12, 1998, the Fourth
Amendment to Second Amended and Restated Agreement of Limited Partnership of
Vornado Realty L.P., dated as of November 30, 1998, the Fifth Amendment to
Second Amended and Restated Agreement of Limited Partnership of Vornado Realty
L.P., dated as of March 3, 1999, the Sixth Amendment to Second Amended and
Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of March 17,
1999, the Seventh Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of May 20, 1999, the Eighth
Amendment to Second Amended and Restated Agreement of Limited Partnership of
Vornado Realty L.P., dated as of May 27, 1999, the Ninth Amendment to
Second Amended and Restated Agreement of Limited Partnership of Vornado Realty
L.P., dated as of September 3, 1999, the Tenth Amendment to Second Amended
and Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as
of September 3, 1999, the Eleventh Amendment to Second Amended and
Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of November 24,
1999, the Twelfth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of May 1, 2000, the

 

 

Thirteenth Amendment to Second Amended and Restated
Agreement of Limited Partnership of Vornado Realty L.P., dated as of May 25,
2000, the Fourteenth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of December 8, 2000,
the Fifteenth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of December 15, 2000, the
Sixteenth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of July 25, 2001, the
Seventeenth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of September 21, 2001, the
Eighteenth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of January 1, 2002, the
Nineteenth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Vornado Realty L.P., dated as of July 1, 2002, the
Twentieth Amendment to Second Amended and Restated Agreement of Limited Partnership
of Vornado Realty L.P., dated as of April 9, 2003, the Twenty-First
Amendment to Second Amended and Restated Agreement of Limited Partnership of
Vornado Realty L.P., dated as of July 31, 2003, the Twenty-Second
Amendment to Second Amended and Restated Agreement of Limited Partnership of
Vornado Realty L.P., dated as of November 17, 2003, the Twenty-Third
Amendment to Second Amended and Restated Agreement of Limited Partnership of
Vornado Realty L.P., dated as of May 27, 2004, the Twenty-Fourth Amendment
to Second Amended and Restated Agreement of Limited Partnership of Vornado
Realty L.P., dated as of August 17, 2004, the Twenty-Fifth Amendment to
Second Amended and Restated Agreement of Limited Partnership of Vornado Realty
L.P., dated as of November 17, 2004, the Twenty-Sixth Amendment to Second
Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,
dated as of December 17, 2004, the Twenty-Seventh Amendment to Second
Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,
dated as of December 20, 2004, the Twenty-Eighth Amendment to Second
Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,
dated as of December 30, 2004, the Twenty-Ninth Amendment to Second
Amended and Restated Agreement of Limited Partnership of Vornado Realty L.P.,
dated as of June 17, 2005, the Thirtieth Amendment to Second Amended and
Restated Agreement of Limited Partnership of Vornado Realty L.P., dated as of August 31,
2005, the Thirty-First Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of September 9, 2005,
and the Thirty-Second Amendment to Second Amended and Restated Agreement of
Limited Partnership of Vornado Realty L.P., dated as of December 19, 2005
(as so amended, the “ Agreement “).

 

WHEREAS, the General Partner desires to establish and
set forth the terms of a new series of Partnership Interests designated as
LTIP Units (the “LTIP Units”) and to amend the Agreement to accomplish
the same;

 

WHEREAS, Section 14.1.B of the Agreement grants
the General Partner power and authority to amend the Agreement without the
consent of any of the Partnership’s limited partners if the amendment does not
adversely affect or eliminate any right granted to a limited partner pursuant
to any of the provisions of the Agreement specified in Section 14.1.C or Section 14.1.D
of the Agreement as requiring a particular minimum vote; and

 

2

 

WHEREAS, the General Partner has determined that the
amendment effected hereby does not adversely affect or eliminate any of the
limited partner rights specified in Section 14.1.C or Section 14.1.D
of the Agreement;

 

NOW, THEREFORE, the General Partner hereby amends the
Agreement as follows:

 

1.                                       Exhibit AH,
attached hereto as Attachment 1, is hereby incorporated by reference
into the Agreement and made a part thereof.

 

2.                                       Article 1
of the Partnership Agreement is amended by inserting the following definitions
in alphabetical order:

 

“Class A Unit Economic Balance” has the
meaning set forth in Section 6.1.F.

 

“Economic Capital Account Balance” has the
meaning set forth in Section 6.1.F.

 

“LTIP Units” means the Partnership Units
designated as such having the rights, powers, privileges, restrictions,
qualifications and limitations set forth in Exhibit AH hereto.

 

3.                                       Section 4.2
of the Agreement is hereby supplemented by adding the following paragraph to
the end thereof:

 

AH.                          Issuance
of LTIP Units. From and after the date hereof the Partnership shall be
authorized to issue Partnership Units of a new series, which Partnership Units
are hereby designated as “LTIP Units.” 
From time to time the General Partner may issue LTIP Units to
Persons providing services to or for the benefit of the Partnership. LTIP Units
are intended to qualify as profits interests in the Partnership and for the
avoidance of doubt, the provisions of Section 4.4 shall not apply to the
issuance of LTIP Units. LTIP Units shall have the terms set forth in Exhibit AH
attached hereto and made part hereof.

 

4.                                       Section 4.2.D
of the Agreement is hereby supplemented by adding the following Subsection (iv):

 

(iv)                              For
purposes of the foregoing calculations, issued and outstanding LTIP Units with
an associated Distribution Participation Date (as defined in Exhibit AH
hereto) that falls on or before the date of a particular distribution shall be
treated as outstanding Class A Units.

 

5.                                       In
making distributions pursuant to Section 5.1(B) of the Agreement, the
General Partner of the Partnership shall take into account the provisions of
Paragraph 2 of Exhibit AH to the Agreement.

 

6.                                       Section 6.1
of the Agreement is hereby supplemented by adding the following Section F:

 

3

 

F.                                      Special
Allocations With Respect to LTIP Units. After giving effect to the special
allocations set forth in Section 1 of Exhibit C hereto and Section 6.1.E
above, and notwithstanding the provisions of Sections 6.1.A and 6.1.B above,
but subject to the prior allocation of income and gain under Subsections 6.1.A(i) through
(vi) above, any Liquidating Gains shall first be allocated to the holders
of LTIP Units until the Economic Capital Account Balances of such holders, to
the extent attributable to their ownership of LTIP Units, are equal to (i) the
Class A Unit Economic Balance, multiplied by (ii) the number of their
LTIP Units; provided that no such Liquidating Gains will be allocated
with respect to any particular LTIP Unit unless and to the extent that such
Liquidating Gains, when aggregated with other Liquidating Gains realized since
the issuance of such LTIP Unit, exceed Liquidating Losses realized since the
issuance of such LTIP Unit. After giving effect to the special allocations set
forth in Section 1 of Exhibit C hereto, and notwithstanding the
provisions of Sections 6.1.A and 6.1.B above, in the event that, due to
distributions with respect to Class A Units in which the LTIP Units do not
participate or otherwise, the Economic Capital Account Balance of any present or
former holder of LTIP Units, to the extent attributable to the holder’s
ownership of LTIP Units, exceeds the target balance specified above, then
Liquidating Losses shall be allocated to such holder to the extent necessary to
reduce or eliminate the disparity. In the event that Liquidating Gains or
Liquidating Losses are allocated under this Section 6.1.F, Net Income
allocable under the remaining Subsections of Section 6.1.A (i.e. Subsections 6.1.A(vii) and after) and any Net
Losses shall be recomputed without regard to the Liquidating Gains or
Liquidating Losses so allocated. For this purpose, “Liquidating Gains”
means any net capital gain realized in connection with the actual or
hypothetical sale of all or substantially all of the assets of the Partnership
(including any Liquidating Transaction), including but not limited to net
capital gain realized in connection with an adjustment to the Carrying Value of
Partnership assets under Section 1.D of Exhibit B of this
Agreement. Similarly, “Liquidating Losses” means any net capital loss
realized in connection with any such event. The “Economic Capital Account
Balances” of the holders of LTIP Units will be equal to their Capital
Account balances, plus the amount of their shares of any Partner Minimum Gain
or Partnership Minimum Gain, in either case to the extent attributable to their
ownership of LTIP Units. Similarly, the “Class A Unit Economic Balance”
shall mean (i) the Capital Account balance of the General Partner, plus
the amount of the General Partner’s share of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to the
General Partner’s ownership of Class A Units and computed on a
hypothetical basis after taking into account all allocations through the date
on which any allocation is made under this Section 6.1.F, divided by (ii) the
number of the General Partner’s Class A Units. Any such allocations shall
be made among the holders of LTIP Units in proportion to the amounts required
to be allocated to each under this Section 6.1.F. The parties agree that
the intent of this Section 6.1.F is to make the Capital Account balance
associated with each LTIP Unit economically equivalent to the Capital Account
balance associated with the General Partner’s Class A Units (on a per-unit

 

4

 

basis), but only if the Partnership has recognized
cumulative net gains with respect to its assets since the issuance of the
relevant LTIP Unit.

 

7.                                       The
Agreement is hereby supplemented by adding the following paragraph at the end
of Section 8.6 thereof:

 

AA.                         LTIP
Unit Exception and Redemption of Class A Units Issued Upon Conversion of
LTIP Units. Holders of LTIP Units shall not be entitled to the Redemption
Right provided for in Section 8.6.A of this Agreement, unless and until
such LTIP Units have been converted into Class A Units (or any other class or
series of Partnership Units entitled to such Redemption Right) in
accordance with their terms. Notwithstanding the foregoing, and except as otherwise
permitted by the award, plan or other agreement pursuant to which an LTIP Units
was issued, the Redemption Right shall not be exercisable with respect to any Class A
Unit issued upon conversion of an LTIP Unit until on or after the date that is
two years after the date on which the LTIP Unit was issued, provided however,
that the foregoing restriction shall not apply if the Redemption Right is
exercised by a LTIP Unit holder in connection with a transaction that falls
within the definition of a “change of control” under the agreement or
agreements pursuant to which the LTIP Units were issued to him or her and
provided further that the one (1) and two (2) year requirement set
forth in the first sentence of Subsection 8.6.A(i) shall not apply
with respect to Class A Units issued upon conversion of LTIP Units.

 

8.                                       Section 10.2
of the Partnership Agreement is amended by designating the existing text of Section 10.2
as paragraph A, and by appending the following new paragraph B:

 

B.                                     To
the extent provided for in Regulations, revenue rulings, revenue procedures
and/or other IRS guidance issued after the date hereof, the Partnership is
hereby authorized to, and at the direction of the General Partner shall, elect
a safe harbor under which the fair market value of any Partnership Interests
issued after the effective date of such Regulations (or other guidance) will be
treated as equal to the liquidation value of such Partnership Interests (i.e.,
a value equal to the total amount that would be distributed with respect to
such interests if the Partnership sold all of its assets for their fair market
value immediately after the issuance of such Partnership Interests, satisfied
its liabilities (excluding any non-recourse liabilities to the extent the
balance of such liabilities exceeds the fair market value of the assets that
secure them) and distributed the net proceeds to the Partners under the terms
of this Agreement). In the event that the Partnership makes a safe harbor
election as described in the preceding sentence, each Partner hereby agrees to
comply with all safe harbor requirements with respect to transfers of such
Partnership Interests while the safe harbor election remains effective.

 

9.                                       Exhibit A
of the Agreement is hereby deleted and is replaced in its entirety by new Exhibit A
attached hereto as Attachment 2.

 

5

 

10.                                 Section 1.D(2) of
Exhibit B of the Agreement is amended by replacing the text thereof
with the following:

 

(2)                                  Such
adjustments shall be made as of the following times:  (a) immediately prior to the acquisition
of an additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (b) immediately
prior to the acquisition of a more than de minimis additional interest in the
Partnership by any new or existing Partner as consideration for the provision
of services to or for the benefit of the Partnership in a partner capacity or
in anticipation of becoming a partner; (c) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis amount
of property as consideration for an interest in the Partnership; and (d) immediately
prior to the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
provided  however that adjustments pursuant to clauses (a), (b) and
(c) above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership.

 

11.                                 Section 1
of Exhibit C of the Agreement is hereby supplemented by appending
the following new paragraph H:

 

H.                                    Forfeiture
Allocations. Upon a forfeiture of any unvested Partnership Interest by any
Partner, gross items of income, gain, loss or deduction shall be allocated to
such Partner if and to the extent required by final Regulations promulgated
after the Effective Date to ensure that allocations made with respect to all
unvested Partnership Interests are recognized under Code Section 704(b).

 

12.                                 Except
as expressly amended hereby, the Agreement shall remain in full force and
effect.

 

6

 

IN WITNESS WHEREOF, the General Partner has executed
this Amendment as of the date first written above. 

 

	
   

  	
  VORNADO REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Joseph Macnow

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph Macnow

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President –

  Finance and Administration

  and Chief Financial Officer

  
					

 

7

 

ATTACHMENT 1

 

EXHIBIT AH

DESIGNATION OF THE PREFERENCES, CONVERSION 

AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, 

LIMITATIONS AS TO DISTRIBUTIONS, QUALIFICATIONS AND TERMS 

AND CONDITIONS OF REDEMPTION 

OF THE 

LTIP UNITS

 

The
following are the terms of the LTIP Units:

 

1.               Vesting.

 

A. Vesting, Generally. LTIP Units may, in the
sole discretion of the General Partner, be issued subject to vesting,
forfeiture and additional restrictions on transfer pursuant to the terms of an
award, vesting or other similar agreement (a “Vesting Agreement”). The
terms of any Vesting Agreement may be modified by the General Partner from
time to time in its sole discretion, subject to any restrictions on amendment
imposed by the relevant Vesting Agreement or by the terms of any plan pursuant
to which the LTIP Units are issued, if applicable. LTIP Units that have vested
and are no longer subject to forfeiture under the terms of a Vesting Agreement
are referred to as “Vested LTIP Units”; all other LTIP Units are
referred to as “Unvested LTIP Units.” 
Subject to the terms of any Vesting Agreement, a holder of LTIP Units
shall be entitled to transfer his or her LTIP Units to the same extent, and
subject to the same restrictions as holders of Class A Units are entitled
to transfer their Class A Units pursuant to Article XI of the
Agreement.

 

B. Forfeiture or Transfer of Unvested LTIP Units.
Unless otherwise specified in the relevant Vesting Agreement, upon the
occurrence of any event specified in a Vesting Agreement as resulting in either
the forfeiture of any LTIP Units, or the right of the Partnership or the
General Partner to repurchase LTIP Units at a specified purchase price, then
upon the occurrence of the circumstances resulting in such forfeiture or if the
Partnership or the General Partner exercises such right to repurchase, then the
relevant LTIP Units shall immediately, and without any further action, be
treated as cancelled or transferred to the General Partner, as applicable, and
no longer outstanding for any purpose. Unless otherwise specified in the
Vesting Agreement, no consideration or other payment shall be due with respect
to any LTIP Units that have been forfeited, other than any distributions
declared with a record date prior to the effective date of the forfeiture. In
connection with any forfeiture or repurchase of LTIP Units, the balance of the
portion

 

AH-1

 

of the Capital Account of the holder that is attributable to all of his
or her LTIP Units shall be reduced by the amount, if any, by which it exceeds
the target balance contemplated by Section 6.1.F of the Agreement, calculated with respect to the holder’s remaining LTIP
Units, if any.

 

C. Legend. Any certificate evidencing an LTIP
Unit shall bear an appropriate legend indicating that additional terms,
conditions and restrictions on transfer, including without limitation any
Vesting Agreement, apply to the LTIP Unit.

 

2.               Distributions.

 

A. LTIP Distribution Amount. Commencing from
the Distribution Participation Date (as defined below) established for any LTIP
Units, for any quarterly or other period holders of such LTIP Units shall be
entitled to receive, if, when and as authorized by the General Partner out of
funds legally available for the payment of distributions, regular cash
distributions in an amount per unit equal to the amount that would have been
payable to such holders of the LTIP had been Class A Units for the
quarterly or other period to which such distributings relate (assuming such LTIP
Units was held for the entire quarter or other period) (the “LTIP
Distribution Amount”). In addition, from and after the Distribution
Participation Date, LTIP Units shall be entitled to receive, if, when and as
authorized by the General Partner out of funds or other property legally
available for the payment of distributions, non-liquidating special,
extraordinary or other distributions which may be made from time to time, in an
amount per unit equal to the amount of any non-liquidating special,
extraordinary or other distributions that would have been payable to such
holders if the LTIP Units had been Class A Units (if applicable, assuming
such LTIP Units were held for the entire period to which such distributions
relate) which may be made from time to time. LTIP Units shall also be
entitled to receive, if, when and as authorized by the General Partner out of
funds or other property legally available for the payment of distributions,
distributions representing proceeds of a sale or other disposition of all or
substantially all of the assets of the Partnership in an amount per unit equal
to the amount of any such distributions payable on the Class A Units,
whether made prior to, on or after the Distribution Participation Date,
provided that the amount of such distributions shall not exceed the positive
balances of the Capital Accounts of the holders of such LTIP Units to the
extent attributable to the ownership of such LTIP Units. Distributions on the
LTIP Units, if authorized, shall be payable on such dates and in such manner as
may be authorized by the General Partner (any such date, a “Distribution
Payment Date”); provided that the Distribution Payment Date and the record
date for determining which holders of LTIP Units are entitled to receive a
distribution shall be the same as the corresponding dates relating to the
corresponding distribution on the Class A Units.

 

B. Distribution Participation Date. The “Distribution
Participation Date” for each LTIP Units will be either (i) with
respect to LTIP Units granted pursuant to the General Partner’s 2006
Outperformance Plan (the “2006 Outperformance Plan”), the applicable
Valuation Date (as defined in the Vesting Agreement of each Person granted LTIP
Units under the 2006 Outperformance Plan) or (ii) with respect to other
LTIP Units, such date as may be specified in the Vesting Agreement or
other documentation pursuant to which such LTIP Units are issued.

 

AH-2

 

3.               Allocations.

 

Commencing with the portion of the taxable year of the
Partnership that begins on the Distribution Participation Date established for
any LTIP Units, such LTIP Units shall be allocated Net Income and Net Loss in
amounts per LTIP Unit equal to the amounts allocated per Class A Unit. The
allocations provided by the preceding sentence shall be subject to the proviso
to the first sentence of Section 6.1.B of the Agreement and in addition to
any special allocations required by Section 6.1.F of the Agreement. The
General Partner is authorized in its discretion to delay or accelerate the
participation of the LTIP Units in allocations of Net Income and Net Loss under
this Section 3, or to adjust the allocations made under this Section 3
after the Distribution Participation Date, so that the ratio of (i) the
total amount of Net Income or Net Loss allocated with respect to each LTIP Unit
in the taxable year in which that LTIP Unit’s Distribution Participation Date
falls (excluding special allocations under Section 6.1.F), to (ii) the
total amount distributed to that LTIP Unit with respect to such period, is more
nearly equal to the ratio of (i) the Net Income and Net Loss allocated
with respect to the General Partner’s Class A Units in such taxable year
to (ii) the amounts distributed to the General Partner with respect to such
Class A Units and such taxable year.

 

4.               Adjustments.

 

The Partnership shall maintain at all times a
one-to-one correspondence between LTIP Units and Class A Units for
conversion, distribution and other purposes, including without limitation
complying with the following procedures; provided that the foregoing is not
intended to alter the Capital Account Limitation (as defined in Section 7.C
of this Exhibit AH), the special allocations pursuant to Section 6.1.F
of the Partnership Agreement, differences between non-liquidating distributions
to be made with respect to the LTIP Units and Class A Units prior to the
Distribution Participation Date for such LTIP Units, differences between
liquidating distributions to be made with respect to the LTIP Units and Class A
Units pursuant to Section 13.2 of the Partnership Agreement or Section 2.A
of this Exhibit AH in the event that the Capital Accounts attributable to
the LTIP Units are less than those attributable to the Class A Units due
to insufficient special allocations pursuant to Section 6.1.F of the
Partnership Agreement or related provisions. If an Adjustment Event (as defined
below) occurs, then the General Partner shall make a corresponding adjustment
to the LTIP Units to maintain such one-for-one correspondence between Class A
Units and LTIP Units. The following shall be “Adjustment Events”:  (A) the Partnership makes a distribution
on all outstanding Class A Units in Partnership Units, (B) the
Partnership subdivides the outstanding Class A Units into a greater number
of units or combines the outstanding Class A Units into a smaller number
of units, or (C) the Partnership issues any Partnership Units in exchange
for its outstanding Class A Units by way of a reclassification or
recapitalization of its Class A Units. If more than one Adjustment Event
occurs, the adjustment to the LTIP Units need be made only once using a single
formula that takes into account each and every Adjustment Event as if all
Adjustment Events occurred simultaneously. For the avoidance of doubt, the
following

 

AH-3

 

shall not be Adjustment
Events: (x) the issuance of Partnership Units in a financing, reorganization,
acquisition or other similar business transaction, (y) the issuance of Partnership
Units pursuant to any employee benefit or compensation plan or distribution
reinvestment plan, or (z) the issuance of any Partnership Units to the General
Partner in respect of a capital contribution to the Partnership of proceeds
from the sale of securities by the General Partner. If the Partnership takes an
action affecting the Class A Units other than actions specifically
described above as Adjustment Events and in the opinion of the General Partner
such action would require an adjustment to the LTIP Units to maintain the
one-to-one correspondence described above, the General Partner shall have the
right to make such adjustment to the LTIP Units, to the extent permitted by law
and by the terms of any plan pursuant to which the LTIP Units have been issued, in such manner and at such time as the
General Partner, in its sole discretion, may determine to be appropriate
under the circumstances. If an adjustment is made to the LTIP Units as herein
provided the Partnership shall promptly file in the books and records of the
Partnership an officer’s certificate setting forth such adjustment and a brief
statement of the facts requiring such adjustment, which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error.
Promptly after filing of such certificate, the Partnership shall mail a notice
to each holder of LTIP Units setting forth the adjustment to his or her LTIP
Units and the effective date of such adjustment.

 

5.               Ranking.

 

The LTIP Units shall rank on parity with the Class A
Units in all respects, subject to the proviso in the first sentence of Section 4
of this Exhibit AH.

 

6.               No Liquidation
Preference.

 

The LTIP Units shall have no liquidation preference.

 

7.               Right to Convert
LTIP Units into Class A Units.

 

A. Conversion Right. A holder of LTIP Units
shall have the right (the “Conversion Right”), at his or her option, at
any time to convert all or a portion of his or her Vested LTIP Units into Class A
Units. Holders of LTIP Units shall not have the right to convert Unvested LTIP
Units into Class A Units until they become Vested LTIP Units; provided,
however, that when a holder of LTIP Units is notified of the expected
occurrence of an event that will cause his or her Unvested LTIP Units to become
Vested LTIP Units, such Person may give the Partnership a Conversion
Notice conditioned upon and effective as of the time of vesting, and such
Conversion Notice, unless subsequently revoked by the holder of the LTIP Units,
shall be accepted by the Partnership subject to such condition. The General
Partner shall have the right at any time to cause a conversion of Vested LTIP
Units into Class A Units. In all cases, the conversion of any

 

AH-4

 

LTIP Units into Class A Units shall be subject to the conditions
and procedures set forth in this Section 7.

 

B. Number of Units Convertible. A holder of
Vested LTIP Units may convert such Vested LTIP Units into an equal number
of fully paid and non-assessable Class A Units, giving effect to all
adjustments (if any) made pursuant to Section 4. Notwithstanding the
foregoing, in no event may a holder of Vested LTIP Units convert a number
of Vested LTIP Units that exceeds (x) the Economic Capital Account Balance of
such holder, to the extent attributable to its ownership of LTIP Units, divided
by (y) the Class A Unit Economic Balance, in each case as determined as of
the effective date of conversion (the “Capital Account Limitation”).

 

C. Notice. In order to exercise his or her
Conversion Right, a holder of LTIP Units shall deliver a notice (a “Conversion
Notice”) in the form attached as Attachment A to this Exhibit AH
to the Partnership not less than 10 nor more than 60 days prior to a date (the “Conversion
Date”) specified in such Conversion Notice. Each holder of LTIP Units
covenants and agrees with the Partnership that all Vested LTIP Units to be
converted pursuant to this Section 7 shall be free and clear of all liens.
Notwithstanding anything herein to the contrary or the holding period
requirement of Section 8.6A(i) of the Agreement (but subject to the
remainder of Section 8.6), a holder of LTIP Units may deliver a
Redemption Notice pursuant to Section 8.6 of the Agreement relating to
those Class A Units that will be issued to such holder upon conversion of
such LTIP Units into Class A Units in advance of the Conversion Date;
provided, however, that the redemption of such Class A Units by the
Partnership shall in no event take place until the Conversion Date. For
clarity, it is noted that the objective of this paragraph is to put a holder of
LTIP Units in a position where, if he or she so wishes, the Class A Units
into which his or her Vested LTIP Units will be converted can be redeemed by
the Partnership simultaneously with such conversion notwithstanding such Class A
Units were not held for one (1) year, with the further consequence that,
if the General Partner elects to assume the Partnership’s redemption obligation
with respect to such Class A Units under Section 8.6 of the Agreement
by delivering to such holder Shares rather than cash, then such holder can have
such Shares issued to him or her simultaneously with the conversion of his or
her Vested LTIP Units into Class A Units. The General Partner shall
cooperate with a holder of LTIP Units to coordinate the timing of the different
events described in the foregoing sentence.

 

D. Forced Conversion. The Partnership, at any
time at the election of the General Partner, may cause any number of
Vested LTIP Units held by a holder of LTIP Units to be converted (a “Forced
Conversion”) into an equal number of Class A Units, giving effect to
all adjustments (if any) made pursuant to Section 4; provided, that
the Partnership may not cause a Forced Conversion of any LTIP Units that
would not at the time be eligible for conversion at the option of the holder of
such LTIP Units pursuant to Section 7.B above. In order to exercise its
right to cause a Forced Conversion, the Partnership shall deliver a notice (a “Forced
Conversion Notice”) in the form attached as

 

AH-5

 

Attachment B to this Exhibit AH to the applicable holder not
less than 10 nor more than 60 days prior to the Conversion Date specified in
such Forced Conversion Notice. A Forced Conversion Notice shall be provided in
the manner provided in Section 15.1 of the Agreement.

 

E. Conversion Procedures. A conversion of
Vested LTIP Units for which the holder thereof has given a Conversion Notice or
the Partnership has given a Forced Conversion Notice shall occur automatically
after the close of business on the applicable Conversion Date without any
action on the part of such holder of LTIP Units, as of which time such
holder of LTIP Units shall be credited on the books and records of the
Partnership with the issuance as of the opening of business on the next day of
the number of Class A Units issuable upon such conversion. After the
conversion of LTIP Units as aforesaid, the Partnership shall deliver to such
holder of LTIP Units, upon his or her written request, a certificate of the
General Partner certifying the number of Class A Units and remaining LTIP
Units, if any, held by such Person immediately after such conversion.

 

F. Treatment of Capital Account. For purposes
of making future allocations under Section 6.1.F of the Agreement and
applying the Capital Account Limitation, the portion of the Economic Capital
Account balance of the applicable holder of LTIP Units that is treated as
attributable to his or her LTIP Units shall be reduced, as of the date of
conversion, by the product of the number of LTIP Units converted and the Class A
Unit Economic Balance.

 

G. Mandatory Conversion in Connection with a
Transaction. If the Partnership or the General Partner shall be a party to
any transaction (including without limitation a merger, consolidation, unit
exchange, self tender offer for all or substantially all Class A Units or
other business combination or reorganization, or sale of all or substantially
all of the Partnership’s assets, but excluding any transaction which
constitutes an Adjustment Event), in each case as a result of which Class A
Units shall be exchanged for or converted into the right, or the holders of Class A
Units shall otherwise be entitled, to receive cash, securities or other
property or any combination thereof (each of the foregoing being referred to
herein as a “Transaction”), then the General Partner shall, immediately
prior to the Transaction, exercise its right to cause a Forced Conversion with
respect to the maximum number of LTIP Units then eligible for conversion,
taking into account any allocations that occur in connection with the
Transaction or that would occur in connection with the Transaction if the
assets of the Partnership were sold at the Transaction price or, if applicable,
at a value determined by the General Partner in good faith using the value
attributed to the Partnership Units in the context of the Transaction (in which
case the Conversion Date shall be the effective date of the Transaction and the
conversion shall occur immediately prior to the effectiveness of the
Transaction).

 

In anticipation of such Forced Conversion and the
consummation of the Transaction, the Partnership shall use commercially
reasonable efforts to cause each holder of LTIP Units to be afforded the right
to receive in connection with such

 

AH-6

 

Transaction in
consideration for the Class A Units into which his or her LTIP Units will
be converted the same kind and amount of cash, securities and other property
(or any combination thereof) receivable upon the consummation of such
Transaction by a holder of the same number of Class A Units, assuming such
holder of Class A Units is not a Person with which the Partnership
consolidated or into which the Partnership merged or which merged into the
Partnership or to which such sale or transfer was made, as the case may be
(a “Constituent Person”), or an affiliate of a Constituent Person. In
the event that holders of Class A Units have the opportunity to elect the form or
type of consideration to be received upon consummation of the Transaction,
prior to such Transaction the General Partner shall give prompt written notice
to each holder of LTIP Units of such election, and shall use commercially
reasonable efforts to afford such holders the right to elect, by written notice
to the General Partner, the form or type of consideration to be received
upon conversion of each LTIP Unit held by such holder into Class A Units
in connection with such Transaction. If a holder of LTIP Units fails to make
such an election, such holder (and any of its transferees) shall receive upon
conversion of each LTIP Unit held him or her (or by any of his or her transferees) the same kind and amount
of consideration that a holder of a Class A Unit would receive if such
holder of Class A Units failed to make such an election.

 

Subject to the rights of the Partnership and the
General Partner under any Vesting Agreement and the terms of any plan under
which LTIP Units are issued, the Partnership shall use commercially reasonable
efforts to cause the terms of any Transaction to be consistent with the
provisions of this Section 7 and to enter into an agreement with the
successor or purchasing entity, as the case may be, for the benefit of any
holders of LTIP Units whose LTIP Units will not be converted into Class A
Units in connection with the Transaction that will (i) contain provisions
enabling the holders of LTIP Units that remain outstanding after such
Transaction to convert their LTIP Units into securities as comparable as
reasonably possible under the circumstances to the Class A Units and (ii) preserve
as far as reasonably possible under the circumstances the distribution, special
allocation, conversion, and other rights set forth in the Agreement for the
benefit of the holders of LTIP Units.

 

8.               Redemption at
the Option of the Partnership.

 

LTIP Units will not be redeemable at the option of the
Partnership; provided, however, that the foregoing shall not
prohibit the Partnership from repurchasing LTIP Units from the holder thereof
if and to the extent such holder agrees to sell such Units.

 

9.               Voting Rights.

 

A. Voting with Class A Units. Holders of
LTIP Units shall have the right to vote on all matters submitted to a vote of
the holders of Class A Units; holders of LTIP Units and Class A Units
shall vote together as a single class, together with any other class or 

 

AH-7

 

series of units of limited partnership interest in the Partnership
upon which like voting rights have been conferred. In any matter in which the
LTIP Units are entitled to vote, including an action by written consent, each
LTIP Unit shall be entitled to vote a Percentage Interest equal on a per unit
basis to the Percentage Interest of the Class A Units.

 

B. Special Approval Rights. Except as provided
in Section 9.A above, holders of LTIP Units shall only (a) have those
voting rights required from time to time by non-waivable provisions of
applicable law, if any, and (b) have the additional voting rights that are
expressly set forth in this Section 9.B. The General Partner and/or the
Partnership shall not, without the affirmative vote of holders of more than 50%
of the then outstanding LTIP Units affected thereby, given in person or by
proxy, either in writing or at a meeting (voting separately as a class), take
any action that would materially and adversely alter, change, modify or amend,
whether by merger, consolidation or otherwise, the rights, powers or privileges
of such LTIP Units, subject to the following exceptions:

 

(i) no separate consent of the holders of LTIP
Units will be required if and to the extent that any such alteration, change,
modification or amendment would equally, ratably and proportionately alter,
change, modify or amend the rights, powers or privileges of the Class A
Units (in which event the holders of LTIP Units shall only have such voting
rights, if any, as provided in Section 14.1 of the Agreement in accordance
with Section 9.A above);

 

(ii) with respect to
any merger, consolidation or other business combination or reorganization, so
long as the LTIP Units either (x) are converted into Class A Units
immediately prior to the effectiveness of the transaction, (y) remain
outstanding with the terms thereof materially unchanged, or (z) if the
Partnership is not the surviving entity in such transaction, are exchanged for
a security of the surviving entity with terms that are materially the same with
respect to rights to allocations, distributions, redemption, conversion and
voting as the LTIP Units and without any income, gain or loss expected to be
recognized by the holder upon the exchange for federal income tax purposes (and
with the terms of the Class A Units or such other securities into which
the LTIP Units (or the substitute security therefor) are convertible materially
the same with respect to rights to allocations, distributions, redemption,
conversion and voting), such merger, consolidation or other business
combination or reorganization shall not be deemed to materially and adversely
alter, change, modify or amend the rights, powers or privileges of the LTIP
Units, provided further, that if some, but not all, of the LTIP Units are
converted into Class A Units immediately prior to the effectiveness of the
transaction (and neither clause (y) or (z) above is applicable), then the
consent required pursuant to this Section will be the consent of the
holders of more than 50% of the LTIP Units to be outstanding following such
conversion and Class A Units outstanding voting together as a single class pursuant
to Section 9.A above;

 

AH-8

 

(iii) any creation or issuance of any Class A
Units or of any class of series of Common Partnership Units or
Preference Units of the Partnership (whether ranking junior to, on a parity
with or senior to the LTIP Units with respect to payment of distributions,
redemption rights and the distribution of assets upon liquidation, dissolution
or winding up), which either (x) does not require the consent of the holders of
Class A Units or (y) does require such consent and is authorized by a vote
of the holders of Class A Units and LTIP Units voting together as a single
class pursuant to Section 9.A above, together with any other class or
series of units of limited partnership interest in the Partnership upon
which like voting rights have been conferred, shall not be deemed to materially
and adversely alter, change, modify or amend the rights, powers or privileges
of the LTIP Units;

 

(iv) any waiver by the Partnership of
restrictions or limitations applicable to any outstanding LTIP Units with
respect to any holder or holders thereof shall not be deemed to materially and
adversely alter, change, modify or amend the rights, powers or privileges of
the LTIP Units with respect to other holders. The foregoing voting provisions
will not apply if, as of or prior to the time when the action with respect to
which such vote would otherwise be required will be taken or be effective, all
outstanding LTIP Units shall have been converted and/or redeemed, or provision
is made for such redemption and/or conversion to occur as of or prior to such
time; and

 

(v) the General Partner shall have the power,
without the consent of holders of LTIP Units, to amend the Agreement as may be
required to reflect any change to the Agreement not otherwise specifically
permitted by this Section 9.B that the General Partner deems necessary or
appropriate in its sole discretion, provided that such change does not
adversely affect or eliminate any right granted to holders of LTIP Units
requiring their approval.

 

[End of text]

 

AH-9

 

Attachment A to Exhibit AH

 

Notice
of Election by Partner to Convert

LTIP Units into Class A Units

 

The undersigned holder of LTIP Units hereby
irrevocably elects to convert the number of Vested LTIP Units in Vornado Realty
L.P. (the “Partnership”) set forth below into Class A Units in
accordance with the terms of the Second Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended. The undersigned hereby
represents, warrants, and certifies that the undersigned: (a) has title to
such LTIP Units, free and clear of the rights or interests of any other person
or entity other than the Partnership; (b) has the full right, power, and
authority to cause the conversion of such LTIP Units as provided herein; and (c) has
obtained the consent or approval of all persons or entities, if any, having the
right to consent or approve such conversion.

 

	
  Name of Holder:

  	
   

  	
   

  
	
   

  	
  (Please Print: Exact Name as Registered with
  Partnership)

  
	
   

  
	
  Number of LTIP Units to be Converted:

  	
   

  	
   

  
	
   

  
	
  Conversion Date:

  	
   

  	
   

  
							

 

	
   

  	
   

  
	
  (Signature of Holder:
  Sign Exact Name as Registered with Partnership)

  
	
   

  
	
   

  	
   

  
	
  (Street Address)

  
	
   

  
	
   

  	
   

  
	
  (City)

  	
  (State)

  	
  (Zip Code)

  
	
   

  
	
  Signature
  Guaranteed by:

  	
   

  	
   

  
					

 

 

Attachment B to Exhibit AH

 

Notice
of Election by Partnership to Force Conversion

of LTIP Units into Class A Units

 

Vornado Realty L.P. (the “Partnership”) hereby
irrevocably elects to cause the number of LTIP Units held by the holder of LTIP
Units set forth below to be converted into Class A Units in accordance
with the terms of the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended.

 

	
  Name of Holder:

  	
   

  	
   

  
	
   

  	
  (Please Print: Exact Name as Registered with
  Partnership)

  
	
   

  
	
  Number of LTIP Units to be Converted:

  	
   

  	
   

  
	
   

  
	
  Conversion Date:

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