Document:

Exhibit 10.76

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is made and entered into as of December 17, 2004 by and between VORNADO
REALTY TRUST, a Maryland real estate investment trust (the “Company”), and Montebello
Realty Corp. 2002, a Delaware corporation (the “Holder”).

 

WHEREAS, the Holder is receiving on the date hereof
Series D-12 Preferred Units of limited partnership interest (“Units”) in
Vornado Realty L.P., a Delaware limited partnership (the “Partnership”);

 

WHEREAS, in connection therewith, the Company has
agreed to grant to the Holder the Registration Rights (as defined in Section 1
hereof);

 

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

 

SECTION 1.  REGISTRATION RIGHTS

 

If Holder receives Series D-12 6.55% Cumulative
Redeemable Preferred Shares of Beneficial Interest, liquidation preference
$25.00 per share, of the Company (“Preferred Shares”) upon redemption of Units
(the “Redemption Shares”) pursuant to the terms of the Second Amended and
Restated Agreement of Limited Partnership of the Partnership, as the same may
be amended from time to time (the “Partnership Agreement”), then, unless such Redemption
Shares are issued to the Holder pursuant to an Issuer Registration Statement as
provided in Section 2 below, Holder shall be entitled to offer for sale
pursuant to a shelf registration statement, the Redemption Shares, subject to
the terms and conditions set forth in Section 3 hereof (the “Registration
Rights”).

 

SECTION 2.  ISSUER REGISTRATION STATEMENT

 

Anything contained herein to the contrary
notwithstanding, in the event that the Redemption Shares are issued by the
Company to Holder or any permitted assignee of Holder pursuant to an effective
registration statement (an “Issuer Registration Statement”) filed with the
Securities and Exchange Commission (the “Commission”), the Company shall be
deemed to have satisfied all of its registration obligations under this
Agreement.

 

SECTION 3.  DEMAND REGISTRATION RIGHTS

 

3.1  (a)    Registration Procedure.  Unless such Redemption Shares are issued
pursuant to an Issuer Registration Statement as provided in Section 2
hereof, then subject to Sections 3.1(c) and 3.2 hereof, if the Holder desires
to exercise its Registration Rights with respect to the Redemption Shares, the
Holder shall deliver to the Company a written notice (a “Registration Notice”)
informing the Company of such exercise and

 

 

specifying the number of shares to be offered by such Holder (such
shares to be offered being referred to herein as the “Registrable Securities”).  Such notice may be given at any time on or
after the date a notice of redemption is delivered by the Holder to the Partnership
pursuant to the Partnership Agreement, but must be given at least fifteen (15)
Business Days prior to the consummation of the sale of Registrable
Securities.  As used in this Agreement, a
“Business Day” is any Monday, Tuesday, Wednesday, Thursday or Friday other than
a day on which banks and other financial institutions are authorized or
required to be closed for business in the State of New York or Maryland.  Upon receipt of the Registration Notice, the
Company, if it has not already caused the Registrable Securities to be included
as part of an existing shelf registration statement (prior to the filing of
which the Company shall have given ten (10) Business Days notice to the Holder)
and related prospectus that the Company then has on file with the Commission
(the “Shelf Registration Statement”) (in which event the Company shall be
deemed to have satisfied its registration obligation under this Section 3),
will cause to be filed with the Commission as soon as reasonably practicable
after receiving the Registration Notice a new registration statement and
related prospectus (a “New Registration Statement”) that complies as to form in
all material respects with applicable Commission rules providing for the sale
by the Holder of the Registrable Securities, and agrees (subject to Section 3.2
hereof) to use its best efforts to cause such New Registration Statement to be
declared effective by the Commission as soon as practicable.  (As used herein, “Registration Statement” and
“Prospectus” refer to the Shelf Registration Statement and related prospectus
(including any preliminary prospectus) or the New Registration Statement and
related prospectus (including any preliminary prospectus), whichever is
utilized by the Company to satisfy Holder’s Registration Rights pursuant to
this Section 3, including in each case any documents incorporated therein
by reference.)  Upon receipt of a
Registration Notice, the Company will provide notice to each permitted assignee
of the Holder that holds Redemption Shares and with respect to which it has not
already satisfied its registration obligation of its receipt of the
Registration Notice and its obligations (such notice, a “Company Notice”).  Each other holder of Redemption Shares shall
have ten (10) days from the mailing of the Company Notice to such holder to
provide to the Company notice of its intention to include all, but not less
than all, of its Registrable Securities in a Registration Statement (such other
holder, a “Piggyback Holder” and together with the Holder, the “Selling Holders”).  In no event may a Registration Notice be
delivered more than once in any calendar year but there shall be no other limit
on the number of Registration Notices delivered or registrations effected
pursuant to this Section 3.1.  The
Holder agrees to provide in a timely manner information regarding the proposed
distribution by the Holder of the Registrable Securities and such other
information reasonably requested by the Company in connection with the
preparation of and for inclusion in the Registration Statement.  The Company agrees (subject to Section 3.2
hereof) to use its commercially reasonable best efforts to keep the
Registration Statement effective (including the preparation and filing of any
amendments and supplements necessary for that purpose) until the earlier of (i)
the date on which the Selling Holders consummate the sale of all of the
Registrable Securities registered under the Registration Statement or (ii) the
date on which all of the Registrable Securities are eligible for sale pursuant
to Rule 144(k) (or any successor

 

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provision) or in a single transaction pursuant to Rule 144(e) (or any
successor provision) under the Securities Act of 1933, as amended (the “Act”).  The Company agrees to provide to each Selling
Holder a reasonable number of copies of the final Prospectus and any amendments
or supplements thereto.  Notwithstanding
the foregoing, the Company may at any time, in its sole discretion and prior to
receiving any Registration Notice from the Holder, include all of Holder’s
Redemption Shares or any portion thereof in any Shelf Registration
Statement.  In connection with any
Registration Statement utilized by the Company to satisfy Holder’s Registration
Rights pursuant to this Section 3, Holder agrees that it will respond
within ten (10) Business Days to any request by the Company to provide or
verify information regarding Holder or Holder’s Registrable Securities as may
be required to be included in such Registration Statement pursuant to the rules
and regulations of the Commission.

 

(b)  Offers and Sales.  All offers and sales by the Holder under the
Registration Statement referred to in this Section 3 shall be completed
within the period during which the Registration Statement is required to remain
effective pursuant to Section 3.1(a) of this Section 3, and upon
expiration of such period Holder will not offer or sell any Registrable
Securities under the Registration Statement. 
If directed by the Company, the Holder will return all undistributed
copies of the Prospectus in its possession upon the expiration of such period.

 

(c)  Limitations on Registration Rights.  Each exercise of a Registration Right shall
be with respect to a minimum of the lesser of (i) five hundred thousand
(500,000) Preferred Shares or (ii) the total number of Redemption Shares held
by the Holder at such time plus the number of Redemption Shares that may be
issued upon redemption of Units by Holder. 
The right of the Holder to deliver a Registration Notice commences upon
the first date the Holder is permitted to redeem Units pursuant to the
Partnership Agreement and the Holder’s Limited Partner Acceptance of
Partnership Agreement.  The right of the
Holder to deliver a Registration Notice shall expire on the date on which all
of the Redemption Shares held by the Holder or issuable upon redemption of
Units held by the Holder are eligible for sale pursuant to Rule 144(k) (or any
successor provision) or in a single transaction pursuant to Rule 144(e) (or any
successor provision) under the Act.  The
Registration Rights granted pursuant to this Section 3.1 may be exercised
in connection with an underwritten public offering; provided, that the Company shall have the right to select
the underwriter or underwriters in connection with such public offering, which
shall be subject to the reasonable approval of the Holder.

 

3.2  Suspension of Offering.  Upon any notice by the Company, either before
or after the Holder has delivered a Registration Notice, that a negotiation or
consummation of a transaction by the Company or any of its subsidiaries is
pending or an event has occurred, which negotiation, consummation or event
would require additional disclosure by the Company in a Registration Statement
of material information which the Company has a bona fide business purpose for
keeping confidential and the nondisclosure of which in the Registration
Statement might cause the Registration

 

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Statement to fail to comply with applicable disclosure requirements (a “Materiality
Notice”), Holder agrees that it will immediately discontinue offers and sales
of the Registrable Securities under the Registration Statement until Holder
receives copies of a supplemented or amended Prospectus that corrects the
misstatement(s) or omission(s) referred to above and receives notice that any
post-effective amendment has become effective; provided,
that the Company may delay, suspend or withdraw the Registration Statement for
such reason for no more than sixty (60) days after delivery of the Materiality
Notice at any one time. If so directed by the Company, Holder will deliver to
the Company all copies of the Prospectus covering the Registrable Securities
current at the time of receipt of any Materiality Notice.

 

3.3  Qualification.  The Company agrees to use its commercially
reasonable best efforts to register or qualify the Registrable Securities by
the time the applicable Registration Statement is declared effective by the
Commission under all applicable state securities or “blue sky” laws of such
jurisdictions as the Selling Holders shall reasonably request in writing, to
keep each such registration or qualification effective during the period such
Registration Statement is required to be kept effective or during the period
offers or sales are being made by such Selling Holders after delivery of a
Registration Notice to the Company, whichever is shorter, and to do any and all
other acts and things which may be reasonably necessary or advisable to enable the
Selling Holders to consummate the disposition in each such jurisdiction of the
Registrable Securities owned by such Selling Holders; provided, however, that the Company shall
not be required to (x) qualify generally to do business in any jurisdiction or
to register as a broker or dealer in such jurisdiction where it would not
otherwise be required to qualify but for this Section 3.3, (y) subject
itself to taxation in any such jurisdiction or (z) submit to the general
service of process in any such jurisdiction.

 

3.4  Whenever
the Company is required to effect the registration of Redemption Shares under
the Act pursuant to Section 3.1 of this Agreement, subject to Section 3.2
hereof, the Company shall:

 

(a)  prepare and
file with the Commission (as soon as reasonably 
practical after receiving the Registration Notice, and in any event
within 60 days after receipt of such Registration Notice) the requisite
Registration Statement to effect such registration, which Registration
Statement shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the Commission to be filed therewith, and the Company shall use its
reasonable best efforts to cause such Registration Statement to become
effective; provided, however, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto, or comparable
statements under securities or blue sky laws of any jurisdiction, the Company
shall (i) provide one duly appointed representative of the Selling Holders with
an adequate and appropriate opportunity to participate in the preparation of
such Registration Statement and each Prospectus included therein (and each
amendment or supplement thereto or comparable statement) to be filed with the
Commission and (ii) not file any such Registration Statement or Prospectus (or
amendment or supplement thereto

 

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or comparable statement) with the Commission to which one duly
appointed counsel to the Selling Holders or any underwriter shall have
reasonably objected on the grounds that such filing does not comply in all
material respects with the requirements of the Act or of the rules or
regulations thereunder;

 

(b)  prepare and
file with the Commission such amendments and supplements to such Registration
Statement and the Prospectus used in connection therewith as may be necessary
(i) to keep such Registration Statement effective and (ii) to comply with the
provisions of the Act with respect to the disposition of the Redemption Shares
covered by such Registration Statement, in each case until such time as all of
such Redemption Shares have been disposed of in accordance with the intended
methods of disposition by the seller(s) thereof set forth in such Registration
Statement; provided, that except
with respect to any Shelf Registration, such period need not extend beyond nine
months after the effective date of the Registration Statement; and provided  further,
that with respect to any Shelf Registration, such period need not extend beyond
the time period provided in Section 3.1(a), and which periods, in any
event, shall terminate when all the Redemption Shares covered by such
Registration Statement have been sold (but not before the expiration of the
time period referred to in Section 4(3) of the Act and Rule 174
thereunder, if applicable);

 

(c)  furnish,
without charge, to each Selling Holder and each underwriter, if any, of the
securities covered by such Registration Statement, such number of copies of
such Registration Statement, each amendment and supplement thereto (in each
case including all exhibits), and the Prospectus included in such Registration
Statement (including each preliminary Prospectus) in conformity with the
requirements of the Act, and other documents, as each Selling Holder and such
underwriter may reasonably request in order to facilitate the public sale or
other disposition of the Redemption Shares owned by such Selling Holder;

 

(d)  prior to
any public offering of Redemption Shares, use its reasonable best efforts to
register or qualify the Redemption Shares covered by such Registration
Statement under such other securities or blue sky laws of such jurisdictions as
the Selling Holders or the sole or lead managing underwriter, if any, may
reasonably request to enable the Selling Holders to consummate the disposition
in such jurisdictions of the Redemption Shares owned by such Holders and to
continue such registration or qualification in effect in each such jurisdiction
for as long as such Registration Statement remains in effect (including through
new filings or amendments or renewals), and do any and all other acts and
things which may be necessary or advisable to enable the Selling Holders to
consummate the disposition in such jurisdictions of the Redemption Shares owned
by it; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section, (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction;

 

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(e)  promptly
notify each Selling Holder and the sole or lead managing underwriter, if any:
(i) when the Registration Statement, any pre-effective amendment, the
Prospectus or any prospectus supplement related thereto or post-effective
amendment to the Registration Statement has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission or any state securities
or blue sky authority for amendments or supplements to the Registration
Statement or the Prospectus related thereto or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation or threat of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Redemption Shares for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
existence of any fact of which the Company becomes aware or the happening of
any event which results in (A) the Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to
be stated therein or necessary to make any statements therein not misleading or
(B) the Prospectus included in such Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to
be stated therein or necessary to make any statements therein, in the light of
the circumstances under which they were made, not misleading and (vi) of the
Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate or that there exist circumstances
not yet disclosed to the public which make further sales under such
Registration Statement inadvisable pending such disclosure and post-effective
amendment; and, if the notification relates to an event described in any of the
clauses (v) or (vi) of this Section 3.4(e), subject to Section 3.2,
the Company shall promptly prepare a supplement or post-effective amendment to
such Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that (1) such
Registration Statement shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (2) as thereafter
delivered to the purchasers of the Redemption Shares being sold thereunder,
such Prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (and shall furnish to each Selling Holder and each
underwriter, if any, a reasonable number of copies of such Prospectus so
supplemented or amended); and if the notification relates to an event described
in clauses (ii) through (iv) of this Section 3.4(e), the Company shall use
its reasonable best efforts to remedy such matters;

 

(f)  make
reasonably available for inspection by one duly appointed representative of the
Selling Holders, any sole or lead managing underwriter participating in any
disposition pursuant to such Registration Statement, such Holders’ counsel and
any attorney, accountant or other agent retained by any such seller or any
underwriter material financial and other relevant information concerning the
business and operations of the Company and the properties of the Company and
any subsidiaries thereof as may

 

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be in existence at such time as shall be necessary, in the reasonable
opinion of such Holders’ and such underwriters’ respective counsel, to enable
them to conduct a reasonable investigation within the meaning of the Act, and
cause the Company’s and any subsidiaries’ officers, directors and employees,
and the independent public accountants of the Company, to supply such
information as may be reasonably requested by any such parties in connection
with such Registration Statement;

 

(g)  obtain an
opinion from the Company’s counsel and a “cold comfort” letter from the Company’s
independent public accountants who have certified the Company’s financial
statements included or incorporated by reference in such Registration Statement
in customary form and covering such matters as are customarily covered by such
opinions and “cold comfort” letters delivered to underwriters in underwritten
public offerings, which opinion and letter shall be reasonably satisfactory to
the sole or lead managing underwriter, if any, and to the Selling Holders, and
furnish to each Holder participating in the offering and to each underwriter,
if any, a copy of such opinion and letter addressed to the Selling Holders (in
the case of the opinion) and underwriter (in the case of the opinion and the “cold
comfort” letter);

 

(h)  in the case
of an underwritten offering, make generally available to its security holders
as soon as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule 158(c)),
an earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158);

 

(i)  use its
reasonable best efforts to cause all such Redemption Shares to be listed (i) on
the national securities exchange on which the Company’s common shares are then
listed or (ii) if common shares of the Company are not at the time listed on
any national securities exchange (or if the listing of Redemption Shares is not
permitted under the rules of such national securities exchange on which the
Company’s common shares are then 
listed), on another national securities exchange;

 

(j)  furnish to
the Selling Holders and the sole or lead managing underwriter, if any, without
charge, at least one manually signed copy of the Registration Statement and any
post-effective amendments thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those deemed to be incorporated by reference);

 

(k)  if
requested by the sole or lead managing underwriter or the Selling Holders of
Redemption Shares, incorporate in a prospectus supplement or post-effective
amendment such information concerning such Holders, the underwriters or the
intended method of distribution as the sole or lead managing underwriter or
such Holders reasonably request to be included therein and as is appropriate in
the reasonable judgment of the Company, including, without limitation,
information with respect to the number of Redemption Shares being sold to the
underwriters, the purchase price being paid therefor

 

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by such underwriters and any other terms of the underwritten offering
of the Redemption Shares to be sold in such offering; and

 

(l)  use its
reasonable best efforts to take all other steps necessary to expedite or
facilitate the registration and disposition of the Redemption Shares
contemplated hereby, including obtaining necessary governmental approvals and
effecting required filings; entering into customary agreements (including
customary underwriting agreements, if the public offering is underwritten);
cooperating with the Selling Holders and any underwriters in connection with
any filings required by the National Association of Securities Dealers, Inc.
(the “NASD”); providing appropriate certificates not bearing restrictive
legends representing the Redemption Shares; and providing a CUSIP number and
maintaining a transfer agent and registrar for the Redemption Shares.

 

3.5  Indemnification by the Company.  The Company agrees to indemnify and hold
harmless each Selling Holder and each person, if any, who controls the Holder
within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as follows:

 

(i)  against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to which the
Registrable Securities were registered under the Act, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;

 

(ii)  against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with the
written consent of the Company; and

 

(iii)  against any and all expense whatsoever, as
incurred (including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any litigation, or

 

8

 

investigation or
proceeding by any governmental agency or body, commenced or threatened, in each
case whether or not a party, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii) above;

 

provided, however,
that the indemnity provided pursuant to this Section 3.5 does not apply
with respect to any loss, liability, claim, damage or expense to the extent
arising out of (A) any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with written information
furnished to the Company by such Selling Holder expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) or (B) such Selling Holder’s failure to
deliver an amended or supplemental Prospectus provided to such Selling Holder
by the Company if such loss, liability, claim, damage or expense would not have
arisen had such delivery occurred.

 

3.6  Indemnification by the Holder.  The Holder (and each permitted assignee of
the Holder, on a several basis) agrees to indemnify and hold harmless the
Company, and each of its trustees/directors and officers (including each trustee/director
and officer of the Company who signed a Registration Statement), and each
person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, as follows:

 

(i)  against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to which the
Registrable Securities were registered under the Act, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;

 

(ii)  against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with the
written consent of the Holder; and

 

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(iii)  against any and all expense whatsoever, as
incurred (including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced or
threatened, in each case whether or not a party, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;

 

provided, however,
that the indemnity provided pursuant to this Section 3.6 shall only apply
with respect to any loss, liability, claim, damage or expense to the extent
arising out of (A) any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with written information
furnished to the Company by the Holder or its permitted assignee expressly for
use in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto) or (B) the Holder’s or its permitted
assignee’s failure to deliver an amended or supplemental Prospectus provided to
the Holder by the Company if such loss, liability, claim, damage or expense
would not have arisen had such delivery occurred.  Notwithstanding the provisions of this Section 3.6,
the Holder and any permitted assignee shall not be required to indemnify the
Company, its officers, trustees/directors or control persons with respect to
any amount in excess of the amount of the total proceeds to the Holder or such
permitted assignee, as the case may be, from sales of the Registrable
Securities of the Holder under the Registration Statement.

 

3.7  Conduct of Indemnification Proceedings.  An indemnified party hereunder shall give
reasonably prompt notice to the indemnifying 
party of any action or proceeding commenced against it in respect of
which indemnity may be sought hereunder, but failure to so notify the
indemnifying party (i) shall not relieve it from any liability which it may
have under the indemnity agreement provided in Section 3.5 or 3.6 above,
unless and to the extent it did not otherwise learn of such action and the lack
of notice by the indemnified party results in the forfeiture by the
indemnifying party of substantial rights and defenses, and (ii) shall not, in
any event, relieve the indemnifying party from any obligations to the
indemnified party other than the indemnification obligation provided under Section 3.5
or 3.6 above.  If the indemnifying party
so elects within a reasonable time after receipt of such notice, the indemnifying
party may assume the defense of such action or proceeding at such indemnifying
party’s own expense with counsel chosen by the indemnifying party and approved
by the indemnified party, which approval shall not be unreasonably withheld; provided, however, that the indemnifying
party will not settle any such action or proceeding without the written consent
of the indemnified party unless, as a condition to such settlement, the
indemnifying party secures the unconditional release of the indemnified party;
and provided further, that if the
indemnified party reasonably determines that a conflict of interest exists
where it is advisable for the indemnified party to be represented by separate
counsel or that, upon advice of counsel, there may be legal defenses available
to it which are different from or in addition to those available to the
indemnifying party, then the indemnifying party shall

 

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not be entitled to assume such defense and the indemnified party shall
be entitled to separate counsel at the indemnifying party’s expense.  If the indemnifying party is not entitled to
assume the defense of such action or proceeding as a result of the second
proviso to the preceding sentence, the indemnifying party’s counsel shall be
entitled to conduct the indemnifying party’s defense and counsel for the
indemnified party shall be entitled to conduct the defense of the indemnified
party, it being understood that both such counsel will cooperate with each
other to conduct the defense of such action or proceeding as efficiently as
possible.  If the indemnifying party is
not so entitled to assume the defense of such action or does not assume such
defense, after having received the notice referred to in the first sentence of
this paragraph, the indemnifying party will pay the reasonable fees and
expenses of counsel for the indemnified party. 
In such event, however, the indemnifying party will not be liable for
any settlement effected without the written consent of the indemnifying
party.  If an indemnifying party is
entitled to assume, and assumes, the defense of such action or proceeding in
accordance with this paragraph, the indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified party incurred thereafter
in connection with such action or proceeding.

 

3.8  Contribution.  In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Sections 3.5 and 3.6 above is for any reason held to be unenforceable by the
indemnified party although applicable in accordance with its terms, the Company,
on the one hand, and the Holder and its permitted assignees, on the other hand,
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by the
Company and the Holder and its permitted assignees, (i) in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and
the Holder and its permitted assignees on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative fault of, but also the relative benefits to, the
Company on the one hand and the Holder and its permitted assignees on the
other, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.  The relative
benefits to the indemnifying party and indemnified party shall be determined by
reference to, among other things, the total proceeds received by the
indemnifying party and indemnified party in connection with the offering to
which such losses, claims, damages, liabilities or expenses relate.  The relative fault of the indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether the action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, the
indemnifying party or the indemnified party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action.

 

The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 3.8 were determined by
pro rata allocation or by any

 

11

 

other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this Section 3.8,
the Holder or its permitted assignees, as the case may be, shall not be
required to contribute any amount in excess of the amount of the total proceeds
to the Holder or its permitted assignees, as the case may be, from sales of the
Registrable Securities of the Holder or its permitted assignees, as the case
may be, under the Registration Statement.

 

Notwithstanding the foregoing, no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.  For
purposes of this Section 3.8, each person, if any, who controls the Holder
within the meaning of Section 15 of the Act shall have the same rights to
contribution as the Holder, and each trustee/director of the Company, each
officer of the Company who signed a Registration Statement and each person, if
any, who controls the Company within the meaning of Section 15 of the Act
shall have the same rights to contribution as the Company.

 

SECTION 4.  EXPENSES

 

The Company shall pay all expenses incident to the
performance by the Company of the Company’s registration obligations under
Sections 2 and 3, including (i) all stock exchange, Commission and state
securities registration, listing and filing fees, (ii) all expenses incurred in
connection with the preparation, printing and distributing of any Issuer
Registration Statement or Registration Statement and Prospectus, (iii) fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company (including, without limitation, the expenses of any
annual or special audit and comfort letter reasonably required by the
underwriters in an underwritten offering, but excluding underwriting discounts
and commissions) and (iv) fees and expenses of any other person retained by the
Company in connection with the registration, including any experts, transfer
agents or registrar retained by the Company. 
The Holder shall be responsible for the payment of any brokerage and
sales commissions, fees and disbursements of the Holder’s counsel, accountants
and other advisors and any transfer taxes relating to the sale or disposition
of the Registrable Securities by the Holder pursuant to Section 3 or
otherwise.

 

SECTION 5.  RULE 
144 COMPLIANCE

 

The Company covenants that it will use its commercially
reasonable best efforts to timely file the reports required to be filed by the
Company under the Act and the Exchange Act so as to enable the Holder to sell
Registrable Securities pursuant to Rule 144 under the Act.  In connection with any sale, transfer or
other disposition by the Holder of any Registrable Securities pursuant to Rule
144 under the Act, the Company shall cooperate with the Holder to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Act legend,

 

12

 

and enable certificates for such Registrable
Securities to be for such number of shares and registered in such names as
Holder may reasonably request at least ten (10) Business Days prior to any sale
of Registrable Securities hereunder.

 

SECTION 6.  MISCELLANEOUS

 

6.1  Integration; Amendment.  This Agreement constitutes the entire
agreement among the parties hereto with respect to the matters set forth herein
and supersedes and renders of no force and effect all prior oral or written
agreements, commitments and understandings among the parties with respect to
the matters set forth herein. Except as otherwise expressly provided in this
Agreement, no amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the Company
and the Holder.

 

6.2  Waivers. 
No waiver by a party hereto shall be effective unless made in a written
instrument duly executed by the party against whom such waiver is sought to be
enforced, and only to the extent set forth in such instrument.  Neither the waiver by any of the parties
hereto of a breach or a default under any of the provisions of this Agreement,
nor the failure of any of the parties, on one or more occasions, to enforce any
of the provisions of this Agreement or to exercise any right or privilege
hereunder shall thereafter be construed as a waiver of any subsequent breach or
default of a similar nature, or as a waiver of any such provisions, rights or
privileges hereunder.

 

6.3  Assignment; Successors and Assigns.  This Agreement and the rights granted
hereunder may not be assigned by the Holder without the written consent of the
Company; provided, however, that
the Holder may assign its rights and obligations hereunder, following at least
ten (10) days’ prior written notice to the Company, (i) to the direct equity
owners (e.g., partners or
members) or beneficiaries in connection with a distribution of the Holder’s
Units to its equity owners or beneficiaries and (ii) to a permitted transferee
in connection with a transfer of all or a portion of the Holder’s Units in
accordance with the terms of the Partnership Agreement, if, in the case of (i)
and (ii) above, such persons agree in writing to be bound by all of the
provisions hereof.  This Agreement shall
inure to the benefit of and be binding upon the successors and permitted
assigns of all of the parties hereto.

 

6.4  Burden and Benefit.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and, subject to Section 6.3
above, assigns.

 

6.5  Notices. 
All notices called for under this Agreement shall be in writing and
shall be deemed given upon receipt if delivered personally or by facsimile
transmission and followed promptly by mail, or mailed by registered or
certified mail (return receipt requested), postage prepaid, to the parties at
the addresses set forth below their names in Schedule A hereto, or to any
other address or addressee as any party entitled to receive notice under this
Agreement shall designate, from time to time, to the others in the manner
provided in this Section 6.5 for the service of notices; provided,

 

13

 

however, that
notices of a change of address shall be effective only upon receipt
thereof.  Any notice delivered to the
party hereto to whom it is addressed shall be deemed to have been given and
received on the day it was received; provided,
however, that if such day is not a Business Day then the notice shall
be deemed to have been given and received on the Business Day next following
such day and if any party rejects delivery of any notice attempted to be given
hereunder, delivery shall be deemed given on the date of such rejection.  Any notice sent by facsimile transmission
shall be deemed to have been given and received on the Business Day next
following the transmission.

 

6.6  Specific Performance.  The parties hereto acknowledge that the
obligations undertaken by them hereunder are unique and that there would be no
adequate remedy at law if either party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to
(i) compel specific performance of the obligations, covenants and agreements of
the other party under this Agreement in accordance with the terms and
conditions of this Agreement and (ii) obtain preliminary injunctive relief to
secure specific performance and to prevent a breach or contemplated breach of
this Agreement in any court of the United States or any State thereof having
jurisdiction.

 

6.7  Governing Law.  This Agreement, the rights and obligations of
the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the State of New York,
but not including the choice of law rules thereof.

 

6.8  Headings. 
Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be a
part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

 

6.9  Pronouns. 
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the person
or entity may require.

 

6.10  Execution in Counterparts.  To facilitate execution, this Agreement may
be executed in as many counterparts as may be required.  It shall not be necessary that the signature
of or on behalf of each party appears on each counterpart, but it shall be
sufficient that the signature of or on behalf of each party appears on one or
more of the counterparts.  All
counterparts shall collectively constitute a single agreement.  It shall not be necessary in any proof of
this Agreement to produce or account for more than a number of counterparts
containing the respective signatures of or on behalf of both of the parties.

 

6.11  Severability.  If fulfillment of any provision of this
Agreement, at the time such fulfillment shall be due, shall transcend the limit
of validity prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any

 

14

 

clause or provision contained in this Agreement operates or would
operate to invalidate this Agreement, in whole or in part, then such clause or
provision only shall be held ineffective, as though not herein contained, and
the remainder of this Agreement shall remain operative and in full force and
effect.

 

15

 

IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be duly executed on its behalf as of the date first
hereinabove set forth.

 

	
   

  	
  VORNADO REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Joseph Macnow

  
	
   

  	
   

  	
  Name:

  	
  Joseph Macnow

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President—

  
	
   

  	
   

  	
   

  	
  Finance and Administration,

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MONTEBELLO REALTY CORP. 2002

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jay Willoughby

  
	
   

  	
   

  	
  Name:

  	
  Jay Willoughby

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

Schedule A

 

Vornado Realty
Trust

210 Route 4 East

Paramus, New
Jersey 07652

Attention:
Executive Vice President, Finance and Administration

Facsimile: 201-587-0600

 

Montebello Realty
Corp. 2002

800 Scudder’s Mill
Road

Special
Investments, Area 2-G

Plainsboro, New
Jersey 08536

Attention: Jay
Willoughby

Facsimile:
609-282-8600EXHIBIT 10.77

 

VORNADO REALTY TRUST 2002 OMNIBUS
SHARE PLAN

[INCENTIVE/NON-QUALIFIED] STOCK OPTION AGREEMENT

 

STOCK OPTION AGREEMENT made as of date set forth on Schedule A
hereto between Vornado Realty Trust, a Maryland real estate investment trust
(the “Company”), and the employee of the Company or one of its
affiliates listed on Schedule A (the “Employee”).

 

RECITALS

 

A.                                   In
accordance with the Vornado Realty Trust 2002 Omnibus Share Plan (the “Plan”),
the Company desires in connection with the employment of the Employee, to
provide the Employee with an opportunity to acquire shares of the Company’s
common shares of beneficial interest, par value $.04 per share (the “Common
Shares”), and thereby provide additional incentive for the Employee to
promote the progress and success of the business of the company and its
subsidiaries.

 

B.                                     Schedule A
hereto sets forth certain significant details of the option grant herein and is
incorporated herein by reference. 
Capitalized terms used herein and not otherwise defined have the
meanings provided on Schedule A.

 

NOW, THEREFORE, the Company and the Employee hereby
agree as follows:

 

AGREEMENT

 

1.  GRANT OF OPTIONS:  On the terms and conditions set forth below,
as well as the terms and conditions of the Plan and subject to adjustment as
provided in Section 8 hereof, the Company hereby grants to the Employee
the right to purchase (the “Option”) an aggregate of such number of
Common Shares as is set forth on Schedule A at a purchase price per
Common Share equal to the Exercise Price set forth on Schedule A.  The Option [is/is not] intended to be an “incentive
stock option” within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).

 

2.  TERM OF OPTION:  The term of the Option shall be the time
period indicated on Schedule A from the date of grant referred to
on Schedule A, subject to earlier termination or cancellation as
provided in this Agreement.

 

Except as otherwise permitted under Section 7 hereof, the Option
shall not be exercisable unless the Employee shall, at the time of exercise, be
an employee of the Company.

 

3.  NON-TRANSFERABILITY OF OPTION:  The Option shall not be transferable
otherwise than by will or by the laws of descent and distribution, and the
Option may be exercised during the Employee’s lifetime only by the
Employee.  More particularly, but without
limiting the generality of the foregoing, the Option may not be assigned,
transferred (except as provided in the preceding sentence), pledged, or hypothecated
in any way (whether by operation of law or otherwise), and shall not be

 

 

subject to
execution, attachment or similar process. 
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions of the Plan or this
Agreement, and any levy of any attachment or similar process upon the Option,
shall be null and void and without effect, and the Compensation Committee of
the Company (the “Committee”) may, in its discretion, upon the happening
of any such event, terminate the Option forthwith.

 

4.  EXERCISE OF OPTION:  Unless terminated pursuant to Section 7
hereof, the Option may be exercised as to not more than the Annual Option
Vesting Amount of the aggregate number of Common Shares originally subject
thereto commencing on the first Annual Vesting Date following the date of
grant.  Thereafter, on each Annual
Vesting Date and until the expiration of the term of this Agreement (unless
earlier terminated or canceled as provided in this Agreement), the Option may
be exercised for an additional Annual Option Vesting Amount.  To the extent that Schedule A
provides for amounts or schedules of vesting that conflict with the provisions
of this paragraph, the provisions of Schedule A will govern.

 

The right to purchase Common Shares pursuant to the Option shall be
cumulative.  If the full number of Common
Shares available for purchase under the Option, to the extent the Option is
vested, has not been purchased, the balance may be purchased at any time or
from time to time thereafter, but prior to the termination of such Option.  The Option shall not, however, be exercisable
after the expiration thereof; and except as provided in Section 7 hereof,
the Option shall not be exercisable unless the Employee is an employee of the
Company at the time of exercise.

 

The holder of the Option shall not have any rights to dividends or any
other rights of a shareholder with respect to the Common Shares subject to the
Option until such Common Shares shall have been issued to him (as evidenced by the
appropriate entry on the books of a duly authorized transfer agent of the
Company), upon the purchase of such Common Shares through exercise of the
Option.

 

Notwithstanding the foregoing or anything to the contrary set forth
herein, upon the occurrence of a Change in Control of the Company, the Option
shall become vested and immediately exercisable in full.  For purposes of this Agreement, a “Change
in Control” of the Company means the occurrence of one of the following
events:

 

(i) individuals
who, on the date hereof, constitute the Board of Trustees of the Company (the “Incumbent
Trustees”) cease for any reason to constitute at least a majority of the
Board of Trustees (the “Board”), provided that any person
becoming a trustee subsequent to the date hereof 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;

 

2

 

(ii) any “person”
(as such term is defined in Section 3(a)(9) of the Securities Exchange Act
of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) is or becomes, after the date hereof, 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 (ii) shall not be
deemed to be a Change 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 (iii)), (E) (a) any of the partners (as of the date hereof) 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”), (b) any entities the majority
of the voting interests of which are beneficially owned by the Interstate
Partners, or (c) any “group” (as described in Rule 13d-5(b)(1) under the
Exchange Act) including the Interstate Partners, provided that the
Interstate Partners beneficially own a majority of the Company Voting
Securities beneficially owned by such group (the persons in (a), (b) and (c)
shall be individually and collectively referred to herein as, “Interstate
Holders”);

 

(iii) the
consummation of a merger, consolidation, share exchange or similar form of
transaction involving the Company or any of its subsidiaries, or the sale 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 (E) of paragraph (ii) above or any tax-qualified,
broad-based employee benefit plan of the Surviving Corporation or its
affiliates) beneficially owns, directly or indirectly, 30% or more of the total
voting power of the Surviving Corporation (a “Non-Qualifying Transaction”);
or

 

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

 

3

 

5.  METHOD OF EXERCISE:  The Option shall be exercisable by written
notice specifying the number of Common Shares purchased and accompanied by
payment in full in cash or by certified or bank cashier’s check payable to the
order of the Company, by tender of Common Shares owned by the employee valued
at fair market value as of the date of exercise or by a combination of cash and
Common Shares.  Upon delivery, by hand or
by registered mail directed to the Company at its executive offices (currently
at 888 Seventh Avenue, New York, NY 10019 Attn: Stock Option Administrator) the
Company shall issue the number of Common Shares purchased, which issuance
shall, in the event of a hand delivery of the exercise price, occur immediately
upon such delivery, provided the holder of the Option shall have given two
business days’ advance notice of such delivery. 
In no case may a fraction of a Common Share be purchased or issued
pursuant to the exercise of an Option. 
The Option shall be deemed to have been exercised with respect to any
particular Common Shares, if, and only if, the provisions of this Agreement
shall have been complied with, in which event the Option shall be deemed to
have been exercised on the date on which the notice described above shall have
been delivered to the Company.  The
certificate or certificates of Common Shares as to which the Options shall be
exercised shall be registered in the name of the person or persons exercising
the Option.

 

6.  RESTRICTIONS ON COMMON SHARES:  Common Shares issued upon the exercise of the
Option shall be issued only to the holder of the Option.  Any restrictions upon transfer of Common Shares
issued upon the exercise of the Option, which in the opinion of the Company’s
counsel are required by the Securities Act of 1933, as amended, shall be noted
on the certificate thereof by appropriate legend.

 

7.  TERMINATION OF EMPLOYMENT:  Any Options held by the Employee upon
termination of employment shall remain exercisable as follows:

 

(I)  If the Employee’s termination of employment
is due to death, all unvested Options shall become immediately exercisable in
full and shall be exercisable by the Employee’s designated beneficiary, or, if
none, the person(s) to whom such Optionee’s rights under the Option are
transferred by will or the laws of descent and distribution for the Applicable
Option Exercise Period following the date of death (but in no event beyond the
term of the Option), and shall thereafter terminate;

 

(II)  If the Employee’s termination of employment
is due to disability (as defined in Section 22(e)(3) of the Code, or Section 422(c)(6)
of the Code if this Option is intended to be an incentive stock option), all
unvested Options shall become immediately exercisable in full and shall be
exercisable for the Applicable Option Exercise Period following such
termination of employment (but in no event beyond the term of the Option), and
shall thereafter terminate;

 

(III)  If the Employee’s termination of employment
is due to retirement on or after the attainment of age 65, all unvested Options
shall become immediately exercisable in full and shall be exercisable for the
Applicable Option Exercise Period following such retirement (but in no event
beyond the term of the Option), and shall thereafter terminate;

 

4

 

(IV)  If the Employee’s termination of employment
is for Cause, all Options, to the extent not vested, shall terminate on the
date of termination and, all other Options, to the extent exercisable as of the
date of termination, shall be exercisable for the Applicable Option Exercise
Period, if any, following such termination of employment (but in no event
beyond the term of the Option), and shall thereafter terminate; and

 

(V)  If the Employee’s termination of employment
is for any reason (other than as set forth in clause in (I), (II), (III) or
(IV) of this Section 7), all unvested Options shall terminate on the date
of termination and, all other Options, to the extent exercisable as of the date
of termination, shall be exercisable for the Applicable Option Exercise Period
following such termination of employment (but in no event beyond the term of
the Option), and shall thereafter terminate. 
An Employee’s status as an employee shall not be considered terminated
in the case of a leave of absence agreed to in writing by the Company
(including, but not limited to, military and sick leave); provided, that, such
leave is for a period of not more than one year or re-employment upon
expiration of such leave is guaranteed by contract or statute.

 

For
the purposes of this Section, “Cause” will mean with respect to the Employee,
the Employee’s:  (a) conviction of, or
plea of guilty or nolo contendre
to, a felony pertaining or otherwise relating to his or her employment with the
Company; or (b) willful misconduct that is materially economically injurious to
the Company or any of its affiliates, in each case as determined in the Company’s
sole discretion.

 

8.  RECLASSIFICATION, CONSOLIDATION OR MERGER:  In the event of any change in the outstanding
Common Shares by reason of any share dividend or split, recapitalization,
merger, consolidation, spin-off combination or exchange of Common Shares or
other corporate change, or any distributions to common shareholders other than
regular cash dividends, the Committee shall make such substitution or
adjustment, if any, as it deems to be equitable, as to the Exercise Price and
the number or kind of Common Shares issued or reserved for issuance pursuant to
the Plan and to outstanding awards or make such other cash or other
distribution as is equitable.  If the
Company is reorganized or consolidated or merged with another corporation, the
Employee shall be entitled to receive options covering shares of such
reorganized, consolidated or merged company in the same proportion, at an
equivalent price, and subject to the same conditions.  For purposes of the preceding sentence the
excess of the aggregate fair market value of the shares subject to the Option
immediately after the reorganization, consolidation or merger over the
aggregate option price of such shares shall not be more than the excess of the
aggregate fair market value of all shares subject to the Option immediately
before the reorganization, consolidation or merger over the aggregate option
price of the shares, and the new Option or assumption of the old Option shall
not give the Employee additional benefits which he did not have under the old
Option.

 

5

 

9.  APPROVAL OF COUNSEL:  The issuance and delivery of Common Shares
pursuant to the Option shall be subject to the reasonable approval by the
Company’s counsel with respect to compliance with the requirements of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, and the requirements of any
national securities exchange upon which the Common Shares may then be listed as
in compliance with any other law or regulation, including, but not limited to, Section 856
of the Code.

 

10.  NO RIGHT TO EMPLOYMENT:  Nothing herein contained shall affect the
right of the Company or any subsidiary to terminate the Employee’s services,
responsibilities and duties at any time for any reason whatsoever.

 

11.  GOVERNING LAW:  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Maryland,
without references to principles of conflict of laws.

 

12.  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.

 

13.  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.

 

14.  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.

 

15.  BENEFITS OF AGREEMENT:  This Agreement shall inure to the benefit of
and be binding upon each successor of the Company.  All obligations imposed upon the Employee and
all rights granted to the Company under this Agreement shall be binding upon
the Employee’s heirs, legal representatives and successors.  The Agreement shall be the sole and exclusive
source of any and all rights which the Employee, his heirs, legal
representatives or successors may have in respect to the Plan or any Option or
Common Shares granted or issued thereunder whether to himself or any other
person and may not be amended except in writing signed by the Company and the
Employee.

 

16.  CONFLICT WITH EMPLOYMENT AGREEMENT.  If (and only if) the Employee and the Company
or its affiliates have entered into an employment agreement, in the event of
any conflict between any of the provisions of this Agreement and any such
employment agreement (in particular, but without limitation, with respect to
the definition of “Cause”) the provisions of such employment agreement will
govern.  As

 

6

 

further provided
in Section 10, nothing herein shall imply that any employment agreement
exists between the Employee and the Company or its affiliates.

 

17.  TAX WITHHOLDING.  The Company has the right to withhold from
other compensation payable to the Employee any and all applicable income and
employment taxes due and owing with respect to the Options to the extent such
amount is required to be paid by the Company (the “Withholding Amount”),
and/or to delay delivery of Common Shares until appropriate arrangements have
been made for payment of such withholding. 
In the alternative, the Company has the right to retain and cancel, or
sell or otherwise dispose of such number of Common Shares underlying Options as
have a market value (determined at date the Withholding Amount becomes payable)
approximately equal to the Withholding Amount with any excess proceeds being
paid to Employee.

 

[signature page follows]

 

7

 

IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date and year first above written.

 

 

	
   

  	
  VORNADO REALTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph Macnow,
  Executive Vice

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  President –
  Finance & Administration

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [EMPLOYEE]

  

 

8

 

SCHEDULE A
TO OPTION AGREEMENT

 

(Terms being
defined are in quotation marks.)

 

	
  Date of Option Agreement:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Employee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of Common Shares
  Subject to Grant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Exercise Price”:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Term of Option from
  Date of Grant:

  	
   

  	
  (Check the applicable box to
  indicate term of Option)

  
	
   

  	
   

  	
  o  Ten years

  
	
   

  	
   

  	
  o  Five years

  
	
   

  	
   

  	
  o                  

  
	
  Vesting Period:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Annual Vesting
  Amount”

  Insert the number of Options that vest
  each year or other applicable vesting schedule. 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Annual Vesting Date”
  (or if such date is not a business day, on the next succeeding business day):

  Insert the calendar date of each year on
  which Options will vest or other appropriate vesting schedule.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Applicable Option Exercise Period”:

  Insert the period following
  termination for which an Option may still be exercised for each event
  referenced and as cross-referenced to the applicable Section of the
  Agreement.

  	
   

  	
  Death (Section 7(I)):

  

  Disability (Section 7(II)):

  

  Retirement (Section 7(III)):

  

  Cause (Section 7(IV)):

  

  Other Termination (Section 7(V)):

  

 

Initials of Company representative: 

 

Initials of Employee:

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