OWNERSHIP LIMIT WAIVER AGREEMENT (VORNADO)
Exhibit 10.8
OWNERSHIP LIMIT WAIVER AGREEMENT (VORNADO)
THIS OWNERSHIP LIMIT WAIVER AGREEMENT (this “Agreement”), dated as of December 31, 2006, is between Lexington Realty Trust, a Maryland real estate investment trust (the “Company”), and Vornado Realty, L.P. (“VRT”), a Delaware limited partnership (together with any entity at least 99% of the voting securities of which are owned by VRT, “Vornado”). Capitalized terms used, but not otherwise defined, in this Agreement shall have the meanings given to them in the hereinafter-mentioned Declaration.
R E C I T A L S
A. The Company and Xxxxxxx Realty Trust, Inc., a Maryland corporation (“Xxxxxxx”) have entered into that certain Agreement and Plan of Merger, dated as of July 23, 2006 (the “Merger Agreement”).
B. Article IX of the Company’s Declaration of Trust (the “Declaration”) contains (1) a restriction prohibiting any Person from Beneficially Owning or Constructively Owning outstanding shares of beneficial interest in the Company which are classified as Common Stock or Preferred Stock (the “Equity Stock”) in excess of 9.8% of the value of the outstanding Equity Stock of the Company (the “Ownership Limit”) and (2) a restriction setting forth that any sale, transfer, gift, hypothecation, pledge, assignment, devise or other disposition of Equity Stock of the Company that, if effective, would result in any Person Beneficially Owning or Constructively Owning Equity Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would be otherwise Beneficially or Constructively Owned by such Person in excess of the Ownership Limit; and the intended transferee shall acquire no rights in such excess shares of Equity Stock.
C. Pursuant to subparagraph (a)(9) of Article IX of the Declaration, the Company’s Board of Trustees has adopted resolutions approving Vornado’s exemption from the Ownership Limit on the terms and conditions hereinafter set forth.
AGREEMENT
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WAIVER OF OWNERSHIP LIMIT |
1.1 Pursuant to Section 7.26 of the Merger Agreement, the Company exempts Vornado, effective as of the Effective Time (as defined in the Merger Agreement) and subject to the terms herein, from the Ownership Limit solely (A) (i) to the extent of Vornado’s ownership of the lesser of (1) the number of shares of Equity Stock of the Company into which [10,186,991] NRT OP Units, NRT Common Stock (each as defined in the Merger Agreement) or any combination thereof are exchangeable pursuant to the Merger (as defined in the Merger Agreement); (2) the number of shares of Equity Stock of the Company into which NRT OP Units, NRT Common Stock or combination thereof, owned by Vornado as of the Effective Time, are exchangeable pursuant to the Merger; and (3) any lesser number of shares of Equity Stock of the Company owned by Vornado from time to time following the Effective Time, plus (ii) to the extent of Vornado’s Beneficial Ownership or Constructive Ownership of any Equity
Stock of the Company that is owned by Winthrop Realty Trust or WRT Realty L.P. (together “Winthrop”), but in no event more than the lesser of (1) the number of shares of Equity Stock of the Company into which [4,375,000] NRT Common Stock owned by Winthrop are exchangeable pursuant to the Merger; (2) the number of shares of Equity Stock of the Company into which NRT Common Stock, owned by Winthrop as of the Effective Time, are exchangeable pursuant to the Merger; and (3) any lesser number of shares of Equity Stock of the Company owned by Winthrop from time to time following the Effective Time, and (B) upon and subject to Vornado’s compliance with Section 2.2 below and its continued compliance with the covenants referred to therein. This exemption shall not apply to any other shares of Equity Stock of the Company Beneficially Owned or Constructively Owned by Vornado.
1.2 For avoidance of doubt, (x) following any sale, assignment, transfer or other disposition by Vornado (or Winthrop) of NRT OP Units or shares of Equity Stock of the Company, the exemption granted by the Company hereunder shall exempt Vornado from the Ownership Limit only with respect to the maximum aggregate number of NRT OP Units and shares of Equity Stock of the Company, as the case may be, owned by Vornado (or Winthrop) immediately after such sale, assignment, transfer or disposition and after each such sale, assignment, transfer or disposition by Vornado (or Winthrop) anytime thereafter and (y) under no circumstances shall this exemption apply to any NRT OP Units or shares of Equity Stock of the Company acquired by Vornado (or Winthrop) at any time after the date of this Agreement.
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LIMITATIONS AND OTHER MATTERS |
2.1 The exemption set forth in Section 1 above (the “Ownership Limit Waiver”) shall not be effective if and to the extent that, as a result of Vornado’s ownership of Equity Stock of the Company permitted by reason of the Ownership Limit Waiver, (A) the Company would be considered to own (actually or Constructively, applying the provisions of Section 856(d)(5) of the Code) an interest described in Section 856(d)(2)(B) of the Code in a “Vornado Related Tenant” (as defined in Section 2.4 herein), or (B) any “individual” (within the meaning of Section 542(a)(2) of the Code) would be considered to “own” (within the meaning of Section 856(h) of the Code) any of the shares of Equity Stock of the Company covered by the Ownership Limit Waiver, of more than 9.8% (by number of shares or value, whichever is more restrictive) of the total outstanding shares of Equity Stock of the Company (whether or not such ownership causes the Company to be “closely held” under the REIT rules). In addition, if the Ownership Limit Waiver is not effective as a result of the operation of any clause(s) of the preceding sentence, the Equity Stock of the Company that otherwise would be Excess Stock shall be deemed to have been transferred to the Company in accordance with subparagraph (b)(1) of Article IX of the Declaration.
2.2 For the Ownership Limit Waiver to be effective, Vornado must execute a counterpart signature page to this Agreement and complete and make the representations and covenants set forth in the Certificate of Representations and Covenants, the form of which is attached hereto as Exhibit A (the “Certificate”), and must deliver such Certificate to the Company. Except as otherwise determined by the Board of Trustees of the Company, the Ownership Limit Waiver shall cease to be effective upon any breach of the representations or covenants set forth herein or in the Certificate. In addition, if the Ownership Limit Waiver
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ceases to be effective as a result of the operation of the preceding sentence, the shares of Equity Stock of the Company that would otherwise be Excess Stock shall be deemed to have been transferred to the Company in accordance with subparagraph (b)(1) of Article IX of the Declaration.
2.3 Vornado shall deliver to the Company, at such times as may reasonably be requested by the Company (it being acknowledged that the Company may reasonably make such request on at least a calendar quarterly basis), a certificate signed by an authorized officer of Vornado to the effect that Vornado has complied and expects to continue to comply with its representations and covenants set forth in this Agreement and the Certificate. If so requested by the Company, Vornado will cooperate with the Company in investigating any direct or indirect relationship that Vornado and any Person whose ownership of shares of Equity Stock of the Company would be attributed to Vornado under Section 318(a) of the Code (as modified by Section 856(d)(5) of the Code), may have with the Company’s tenants or “independent contractors” (within the meaning of Section 856(d)(3) of the Code), including but not limited to Vornado’s relationship with Winthrop, for purposes of determining compliance with the provisions of this Ownership Limit Waiver and in updating the Certificate accordingly. However, the Company’s remedies under this Agreement with respect to Vornado’s representations and covenants set forth in this Agreement and the Certificate shall become effective only if and for the taxable years of the Company during which Vornado requires the exemptions afforded to Vornado under this Agreement (the “Waiver Period”).
2.4 For purposes of this Agreement, “Vornado Related Tenant” means any entity (x) in which Vornado owns during the Waiver Period (actually or Constructively, applying the provisions of Section 856(d)(5) of the Code), in the case of a corporation, shares equal to or greater than the “Threshold Percentage” (as defined in Section 2.5 herein) of either the total combined voting power of all classes of stock of such entity entitled to vote or the total value of shares of all classes of stock of such entity or, in the case of an entity that is not a corporation, an interest equal to or greater than the Threshold Percentage in the assets or net profits of such entity (such actual or Constructive ownership equal to or greater than the Threshold Percentage being hereinafter called a “Related Interest”), (y) from which the Company is or will be deriving rental income (other than a taxable REIT subsidiary, if the requirements of Section 856(d)(8) of the Code are satisfied) and (z) included in the tenant list (the “Tenant List”) attached hereto as Exhibit B (or added to such Tenant List pursuant to the next sentence), unless the Board of Trustees of the Company has determined that the Company derives (and is expected to continue to derive) an amount of gross rental income that is sufficiently small so as not to adversely affect the Company’s ability to qualify as a REIT. The Company may add an entity to the Tenant List from time to time by written notice (which may be made by email with a written confirmation copy to follow within one business day by hand, facsimile or overnight delivery) to Vornado and Vornado shall promptly review any such revisions to the Tenant List (reflecting substitute or additional tenants) at the request of the Company and recertify its acknowledgment and agreement under this Agreement to such Tenant List within three (3) business days of the date of such written notice, which response may initially be made by email, but shall be followed within two (2) business days thereafter with a hard copy of recertification of the Certificate in Exhibit A with the updated Tenant List attached (the “Response Period”), provided, however, that if such notice is delivered at a time when Vornado owns a Related Interest in such entity that would result in the Company’s
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owning (actually or Constructively) an interest in such entity described in Section 856(d)(2)(B) of the Code, then, subject to the following proviso, such entity shall not be added to the Tenant List so long as Vornado so notifies the Company within the Response Period, which response shall include Vornado’s percentage owned in such entity; provided, further, that if such notice is given at a time when either Vornado’s interest in such entity has a fair market value of less than $1,000,000 or Vornado is engaged in active discussions regarding a potential acquisition of a Related Interest in such entity that would result in the Company’s owning (actually or Constructively) an interest in such entity described in Section 856(d)(2)(B) of the Code, then Vornado shall so notify the Company within the Response Period, and the parties shall jointly determine in good faith, based on the parties’ relative economic interests and REIT qualification interests with respect to such entity, whether such entity shall be added to the Tenant List. Notwithstanding the foregoing, Toys “R” Us, Inc. shall not be included in the Tenant List. Vornado shall advise the Company of the percentage ownership that its Related Interest represents in each Vornado Related Tenant not later than five days following the date of the Company’s request for such information.
2.5 For purposes of Section 2.4 above, the “Threshold Percentage” shall mean the percentage which, taking into account the shares or other ownership interests in the applicable tenant held by each other holder of shares of Equity Stock of the Company (as of the date of determination) who or which has been granted an exemption from the Ownership Limit (an “Exempt Holder”), would cause the Company to own (actually or Constructively, applying the provisions of Section 856(d)(5) of the Code) stock or other ownership interests in such applicable tenant equal to or greater than 9.8%. If more than one Exempt Holder owns shares or other ownership interests with respect to the applicable tenant that, in the aggregate, amount to 9.8% or greater , then each such Exempt Holder’s Threshold Percentage in such applicable tenant shall mean the percentage determined by dividing 9.8% by the number of such Exempt Holders as of the date of determination. The Company hereby represents and warrants that as of the date hereof, the Company has granted waivers of Article IX of the Declaration to those Persons and in such amounts as set forth on Exhibit C hereto.
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MISCELLANEOUS |
3.1 All questions concerning the construction, validity and interpretation of this Agreement shall be governed by and construed in accordance with the domestic laws of the State of Maryland, without giving effect to any choice of law or conflict of law provision (whether of the State of Maryland or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Maryland.
3.2 This Agreement may be signed by the parties in separate counterparts, each of which when so signed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.
3.3 All references to any Code provision shall be deemed to include any successor provisions of the Code and any regulatory, judicial or administrative amendment or interpretation of such statutory provisions.
[Signature Page Follows]
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Each of the parties has caused this Agreement to be signed by its duly authorized officers as of the date set forth in the introductory paragraph hereof.
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THE COMPANY |
VORNADO |
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Vornado Realty, L.P. | |
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By: Vornado Realty Trust |
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By: /s/ X. Xxxxxx Eglin |
By: /s/ Xxxx X. Xxxx |
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Name: X. Xxxxxx Eglin |
Name: Xxxx X. Xxxx |
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Title: Chief Executive Officer |
Title: SVP |
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Ownership Waiver Agreement (Vornado)
EXHIBIT A TO THE WAIVER AGREEMENT
CERTIFICATE OF REPRESENTATIONS AND COVENANTS
FOR
OWNERSHIP LIMIT WAIVER
The undersigned desires that the Ownership Limit Waiver Agreement (the “Waiver Agreement”) dated as of December 31, 2006, between the undersigned and Lexington Realty Trust, a Maryland real estate investment trust (the “Company”), be applicable to the shares of Equity Stock of the Company owned or to be received by the undersigned to the extent provided in the Waiver Agreement. Capitalized terms used, but not otherwise defined, in this Certificate shall have the meanings given to them in the Waiver Agreement.
In connection with the Waiver Agreement, the undersigned makes the following representations effective as of the date of execution hereof:
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(a) |
For U.S. federal income tax purposes, Vornado is a United States person within the meaning of Section 7701(a)(30) of the Code. |
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(b) |
The Equity Stock of the Company covered by the Waiver Agreement will be acquired by Vornado for its own account. |
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(c) |
Except as disclosed to the Company in writing, Vornado does not own (actually or Constructively, applying the provisions of Section 856(d)(5) of the Code) a Related Interest in any of the entities included in the Tenant List attached hereto as Schedule A, as the same may be supplemented from time to time in accordance with the Waiver Agreement. |
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(d) |
Vornado agrees that, during the Waiver Period, it will not increase its ownership in any of the entities included in the Tenant List attached hereto without the prior consent of the Company, which consent will be granted based on the analysis of the shareholdings of all Exempt Holders. |
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(e) |
Vornado shall not take any affirmative action in the future that could reasonably be expected to cause the Company to be treated as deriving “impermissible tenant service income” (within the meaning of Section 856(d)(7) of the Code), provided that any “independent contractor” for purposes of Section 856 of the Code is identified in Schedule B attached hereto. |
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(f) |
Vornado further represents and warrants to the Company that: |
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(i) |
as of the date of execution and delivery hereof; it Beneficially Owns or Constructively Owns ____ shares of Equity Stock of the Company; and |
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(ii) |
no “individual” (as defined in Section 542(a)(2) of the Code) who “owns” (within the meaning of Section 856(h)(1) of the Code) any of the shares of Equity Stock of the Company covered by the Ownership Limit Waiver, shall own shares of Equity Stock of the Company in an amount greater than 9.8% (by number of shares or value, whichever is more restrictive) of the total outstanding shares of Equity Stock of the Company. |
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(g) |
The undersigned covenants to notify the Company promptly after the undersigned obtains knowledge that any of the foregoing representations (including any disclosures provided in connection with its representation in (c) above) is or may no longer continue to be accurate. |
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Dated:_________________ |
Vornado Realty, L.P. |
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By: |
Vornado Realty Trust |
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General Partner |
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By: /s/ Xxxx X. Xxxx |
Name: Xxxx X. Xxxx
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Title: Senior Vice President |
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SCHEDULE A TO THE CERTIFICATE
TENANT LIST
(i) Structure , LLC (Infocrossing Inc.)
Xxxxxxxx Associates/Met Life
Advance PCS, Inc.
Airport Center West
Xxxxxxxxx'x Inc.
Allied Holdings, Inc.
Allstate Insurance Company
Alstom Powers, Inc.
American Electric Power
AmeriCredit Corporation
Ameritech Services, Inc. (SBC)
ANDA Pharmaceuticals, Inc.
Ansys
Apria Healthcare
ASM Lithography
Associates First Financial Corp./Citigroup
AT&T
Atlantic Parking
Atlas Cold Storage America LLC
Aventis, Inc. (Aventis Pharma Holding GmbH)
Avnet, Inc.
Xxxxx Xxxxxx
Bank of America NA
Bank of the West
Bank One Indiana, N. A.
Bank One/AEP
BASF Corporation
Bay Valley Foods, LLC
Xxxx South Mobility
Best Buy Co., Inc.
Biovail Pharmaceuticals
Black Canyon Office Center
Blue Cross Blue Shield of South Carolina, Inc.
BMW Financial Services
Boeing North American Services, Inc.(The Boeing Company)
Cadence Design Systems Inc.
CAE Systems
California Culinary Academy
Capital One Services Inc.
Xxxxxxx Restaurants Worldwide, Inc. (Xxxxxxx Companies, Inc.)
Catalfumo Construction ltd
Xxxxxxxxxxx Ponds/Unilever
Cingular Wireless
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Circuit City Stores, Inc.
Citizens Bank
City of Buenaventura
Clear Channel Outdoor
Corning
Corporate Express Office Products, Inc. (Xxxxxxxx N.V.)
Xxx Communications, Inc.
CSK Auto (Albertsons Guaranty)
Cummins Engine Company Inc.
Daimler Chrysler
Xxxxx
Xxxx Corp
Employers Reinsurance Corp.
Entergy Arkansas
Entergy Gulf States
Equant
Exel Logistics Inc. (NFC plc)
Experian Information Solution, Inc.
Faiz Development
FCB
Fedderated Department Stores
Federal Express Corporation
Federal Mogul
Federated Department Stores, Inc.
First USA Management Services, Inc.
Food Lion, Inc. (Delhaize America Inc.)
Frontier Corporation
Furrs Cafeterias
Galderma Laboratories
Gartner, Inc
Gateway
Georgia Power Company
GFS Realty, Inc(Giant Food, Inc.)
Giant Foods/Royal Ahold
Goodyear Tire & Rubber
Greenpoint Mortage Funding/North Fork Bancorp Inc.
Greyhound Lines, Inc.
Xxxxxxxxx North America. Inc.
Haggar
Harbor Freight Tools
Harcourt Brace
Heidelberg
Hercules Credit, Inc.
Hershey Foods Corporation
Hibernia Bank
Xxxxxxx Development Partners
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Xxxxxxx Fastener
Hnedak Xxxx
Honeywell
Honeywell Consumer Products
Honolulu Superblock
Ikon Office Solution, Inc.
Infocrossing Inc.
ING
Xxxxxx Micro, Inc.
Internet Security Systems Inc.
Invensys
Xxxxxxxx Companies
Xxxxx Xxxxxx Building Products, Inc. (Xxxxx Xxxxxx NV)
Xxxx Xxxxx, Inc.
Xxxxxxx Controls, Inc.
Xxxxx Apparel Group
Jordan Associates
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxx Company
Xxxx-XxXxx Corporation
Kmart Corp
Kohls Department Stores Inc.
Kraft Foods North America, Inc.
KS Management Services, LLP
La-Z-Boy
Linens N Things
Lithia Motors
L'Oreal
Lucent Technologies, Inc.
Xxxxx Supermarkets, Inc.
Xxxxxx Xxxxxxxx (Lockheed Xxxxxx)
XxXxxx Xxxx
Mervyns
Metris Direct, Inc.
Michaels Stores, Inc.
Xxxxx.xxx, Inc.
Minesota Mining and Manufacturing
Xxxxxxxxxx County Management Company, LLC
Motel 6 Operating, L.P. (Accor SA)
National Louis University / Primms / Xxxxx Xxxxx
Nevada Power Company
Newpark Resources Inc. (Park 10 Centre)
Nextel Communications of the Mid-Atlantic, Inc.
Nextel of Texas, Inc
Nissan North America
NJ Natural Gas
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Nordstrom, Inc.
North American Van Lines (SIRVA, Inc.)
Northrop Grumman
Northwest Pipeline Corp.
OCE Printing Systems USA
ODW Logistics
Xxxxx Corning
Xxxxx-Illinois
Pacificare Health Systems, Inc.
Parkway Chevrolet, Inc
Pathmark Stores, Inc.
PerkinElmer Instruments LLC
Playboy
Principal Financial Group
Progressive Casualty Insurance Company
Quest Diagnostics, Inc.
Quick Shop
Quickie Manufacturing Corp.
Raytheon Company
Xxxx Elsevier, Inc.
Rotron Inc/EG&G/URS
Royal Appliance Mfg. Co.
Ryder Integrated Logistics, Inc. (Ryder Systems, Inc.)
Safeway, Inc.
Xxxx Real Estate Business Trust
Scandinavian Health Spa, Inc.(Bally Total Fitness Holding Corp.)
Sears, Xxxxxxx & Company
Siemens Dematic Postal Automation
Silverhorn Golf Club
Six Penn Center
SKF USA, Inc.
Sony
Specialty Laboratories
St Xxxx Fire and Marine Insurance Co.
Steelcase
Structural Dynamics Research Corp.
Sun Trust Bank
Sygma Network, Inc. (Sysco Corporation)
T Mobile
Temic North America
Tenneco Automotive Operating Company, Inc.(Tenneco Automotive, Inc.)
The Hartford Fire Insurance Company
The Kroger Co.
The Xxxx Group, Inc.
The Wackenhut Corp.
TI Automotive
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Time Customer Service, Inc. (Time, Inc.)
T-Mobile
T-Mobile USA
TNT Logistics North America, Inc.
TNT Logistics North America, Inc.(TNT Logistics Holdings BV)(TPG N.V.)
Tower Automotive Products Company
Transocean Inc (Park 10 Centre)
Travelers Express Company, Inc
True North Communications, Inc.
Unisource Worldwide, Inc.
United Technologies Corp.
Vastar Resources, Inc.
Veritas
Visiting Nurse Association/Xxxxxxx
Wachovia
Walgreen Company
Washington Mutual Home Loans, Inc.
Xxxxx Fargo & Co.
Xxxxx Fargo Home Mortgage, Inc.
Xxxxx Fargo II
Xerox Corporation
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SCHEDULE B TO THE CERTIFICATE
INDEPENDENT CONTRACTOR LIST
B&Z Properties, Inc.
Xxxxxxxxxxx Property Services, Inc.
CAC Real Estate Management & Co. Inc.
Capstar Commercial Real Estate Services
CB Xxxxxxx Xxxxx, Inc.
Colliers Xxxxxx Xxxxxxxxxxx
Crossgates Management, Inc.
Duke Realty Services Limited Partnership
Easlan Capital Inc.
Xxxxxx & Associates
Xxxxx & Xxxxx Management Services, Inc.
Highwoods Realty Limited Partnership
Xxxxxxxx Property Services Midwest, Inc.
Xxxxx Xxxx LaSalle Americas, Inc.
Xxxxx Management, LLC
LXP Olympe SA
Means-Xxxxx Partners, LP
Pitcairn
Pizutti Company
PM Realty Group Inc.
Xxxxx Xxxxx Group
Schnitzer Northwest, LLC
SIMEON Commercial Properties
Xxxxxxxx Xxxx Dallas/Fort Worth, LTD.
Xxxxxxxx Xxxx Services, Inc.
Xxxxxx Commercial Real Estate Services, LTD
Winthrop Management, L.P.
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EXHIBIT B TO THE WAIVER AGREEMENT
TENANT LIST
Toys “R” Us
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EXHIBIT C TO THE WAIVER AGREEMENT
EXEMPT WAIVER HOLDERS
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Apollo Real Estate Investment Fund III |
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Vornado Realty LP |
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