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Exhibit 10.3
VORNADO REALTY TRUST
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
February 6, 1995
ALEXANDER'S, INC.
31 West 34th Street
New York, New York 10001
Re: Mortgage Loan Secured By
Real Property of Alexander's Inc.
Ladies and Gentlemen:
Subject to the terms and conditions set forth below, Vornado
Realty Trust or an entity of which Vornado Realty Trust is at least a 95%
preferred shareholder ("Lender") agrees to lend to Alexander's, Inc., a
Delaware corporation ("Borrower"), and Borrower agrees to borrow from
Lender, on a secured basis as described herein, an aggregate principal
amount of up to SEVENTY-FIVE MILLION DOLLARS ($75,000,000.00) (the "Loan").
The Loan will be made pursuant to a Credit Agreement entered into between
Lender and Borrower (the "Credit Agreement") and evidenced by one or more
promissory notes (collectively the "Notes") made by Borrower in favor of
Lender.
A. The basic terms of the Loan shall be as set forth on Exhibit A
attached hereto and incorporated herein by reference.
B. Lender's obligation under this Commitment to close the Loan and
advance the proceeds thereof is conditioned upon the satisfaction of
all of the following conditions precedent at or prior to the Closing
(each of which is solely for the benefit of Lender and may be waived
by Lender, in whole or in part, in its sole discretion):
1. The Loan and the security therefor being evidenced by
such documentation as Lender's counsel shall deem reasonably
necessary and appropriate, all of which shall be duly executed and
delivered and, where necessary in the opinion of Lender's counsel,
acknowledged by all parties thereto.
2. Lender being furnished, at Borrower's expense, with title
insurance policies with such endorsements as Lender shall require, in
form and substance
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satisfactory to Lender and in an aggregate amount equal to the
aggregate principal amount of the Loan, insuring the mortgages to be
given in connection with this transaction and as referred to on the
attached Exhibit A (the "Mortgages"), such policies to be written by
such title insurance company, and to be with such co-insurance and/or
re-insurance clause(s), as shall be approved by Lender.
3. Lender being furnished, at Borrower's expense, with
current "as-built" surveys of the properties subject to the Mortgages
(the "Properties") in form and substance satisfactory to Lender,
prepared in accordance with standards adopted by the American Land
Title Association and certified to Lender's title insurer and Lender
by a land surveyor duly registered and licensed in the States of New
York and New Jersey, as applicable, and approved by Lender, together
with a current certificate of such surveyor certifying to Lender's
title insurer and Lender, among other things, that the survey is true
and correct.
4. Lender being furnished, at Borrower's expense, with a
favorable opinion of Borrower's independent legal counsel (such
counsel to be reasonably acceptable to the Lender), local counsel and
zoning counsel, all in form and substance acceptable to Lender, with
respect to matters relating to Borrower and the Loan.
5. Lender's consummation of the buyout of Citicorp's stock
position in Borrower.
6. Lender's obtaining funds for purposes of making the Loan
through one or more further borrowings; provided that Lender shall
use its best efforts to obtain such borrowings (including on a full-
recourse basis).
7. Borrower shall not be in default under any debt agreement
or leases after application of the loan proceeds in accordance with
the terms of the Loan documentation.
8. The Management Agreement, substantially in the form
attached hereto, shall be in effect prior to or concurrent with the
closing of the Loan.
9. Bankruptcy Court approval of the Loan and the Management
Agreement and a fairness opinion from an investment bank will be
required.
10. Other conditions customary to transactions of this type.
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C. The obligations of Lender hereunder shall terminate at the option of
Lender if any of the following shall occur on or before the Loan
Closing Date:
1. Borrower fails to fulfill any of the terms and conditions
of this Commitment within the time and in the manner provided herein.
2. From and after the date hereof, Borrower or any
subsidiary of Borrower (i) files a petition for adjudication as a
bankrupt, (ii) files a petition or answer seeking reorganization or
an arrangement under any bankruptcy or similar statute of the United
States of America or any subdivision thereof or of any foreign
jurisdiction, (iii) makes a general assignment for the benefit of its
creditors, (iv) executes a consent to any type of insolvency or
wage-earner proceeding or to any formal or informal proceeding for
the dissolution or liquidation of, or the settlement of claims
against or winding up of affairs of, Borrower or any such subsidiary,
(v) generally does not pay its debts as they become due, or
(vi) becomes involved in other legal proceedings or takes other
actions that, in the reasonable judgment of Lender, materially affect
the ability of any such person or entity to perform its obligations
under the Loan or with respect to the Loan.
3. From and after the date hereof, there occurs the
appointment of a custodian, receiver, trustee or liquidator, or
officer performing similar functions, for Borrower or any subsidiary
of Borrower, or for any of its or their assets, or the filing against
Borrower or any subsidiary of Borrower of a petition for adjudication
as a bankrupt or insolvent or for reorganization under any bankruptcy
or similar laws of the United States of America or of any subdivision
thereof or of any foreign jurisdiction, or the institution against
Borrower or any subsidiary of Borrower of any other type of
insolvency proceeding or of any formal or informal proceeding for the
dissolution or liquidation of, or the settlement of claims against or
winding up of affairs of, Borrower or any subsidiary of Borrower, in
any such case which has not been dismissed.
4. Any United States federal, state, local or municipal law,
ordinance, rule, regulation or requirement or any applicable
judgment, decree, determination or court order prevents or prohibits
Lender from making or holding the Loan or from receiving the interest
and fees contemplated by this Commitment or, in Lender's judgment,
has or will have a materially adverse effect upon the profitability
of, or Lender's ability to make or hold, the Loan (including, without
limitation, any law or regulation relating to the maximum permissible
interest rate to be charged in connection with the Loan).
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5. Any litigation or proceeding of any kind is threatened,
commenced or pending that may affect the validity, priority,
enforceability or insurability of any lien, security interest or
other collateral to be granted to Lender in connection with the Loan
or that may, in the reasonable judgment of Lender, adversely affect
the cost, nature or time of completion, construction, maintenance or
operation of the Properties.
6. Any material part of the Properties (excluding the
existing improvements on the Paramus property) is damaged or
destroyed by fire or other cause.
7. There is commenced, pending or (except for the existing
threatened condemnation proceedings with respect to the 59th Street
property) threatened against the Properties (or any part thereof) any
condemnation or other similar proceeding, other than the condemnation
proceeding related to the Paramus, New Jersey property of Borrower.
D. Borrower agrees that it will use its best efforts to satisfy the
conditions set forth herein and will take all actions required to be
taken (including the prepayment of existing debt prior to or
contemporaneously with the closing of the Loan, and the payment of
reasonable fees, expenses and other sums, necessary) to pledge the
collateral described in Exhibit A attached hereto (or substitute
collateral acceptable to Lender) to Lender as security for the Loan
and to effectuate the Loan on the terms and conditions set forth
herein. In the event that, notwithstanding Borrower's best efforts,
Borrower cannot satisfy such conditions, Borrower will take
commercially reasonable steps to effectuate the intent of this
commitment.
E. Borrower further agrees that it will neither solicit for nor accept
any financing from any party other than Lender prior to the
expiration of this Commitment without Lender's consent.
F. This Commitment and the agreements of the parties set forth herein
shall terminate if the closing of the Loan has not been made on or
prior to the date which is 45 days after the consummation by Lender
of the buyout of Citicorp's stock position in Borrower and in any
event if the Loan is not made by June 30, 1995.
G. Miscellaneous:
1. Notwithstanding any other provision set forth herein,
Borrower shall use its best efforts to satisfy all closing conditions
and to draw down the Loan upon Lender's consummation of the buyout of
Citicorp's position in Borrower or as soon thereafter as practical.
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2. This Commitment is made only to Borrower, and neither
this Commitment nor any monies which may become payable hereunder,
nor any moneys deposited hereunder, may be assigned by Borrower
without the prior written consent of Lender. Any attempted
assignment in violation of the immediately preceding sentence shall
be null and void ab initio. Any agreement arising hereunder shall be
solely for the benefit of the parties hereto and no third party shall
have any rights hereunder.
3. Borrower hereby represents and warrants to Lender that it
has not dealt with any broker or finder in connection with the Loan
or this Commitment, and agrees to indemnify and hold harmless Lender
from and against any and all claims which Lender may suffer or incur
by reason of any claim by any broker or other party (other than a
broker or party claiming it has dealt with Lender) for a commission,
fee or other compensation in connection with the Loan or this
Commitment.
4. Borrower represents and agrees that the proceeds of the
Loan are required for business or commercial purposes, and are not
intended to be used, and will not be used, for family, household,
agricultural or personal purposes, and accordingly that truth in
lending and similar Federal, state, local and municipal laws,
ordinances, rules, regulations and requirements do not apply to this
Commitment or the Loan.
5. All instruments and documents to be executed or delivered
in connection with this transaction shall be subject to the approval
of the parties and their counsel as to form and content.
6. This Commitment is made in the State of New York and
shall be governed by the laws of the State of New York applicable to
contracts entered into and to be performed in the State of New York.
7. Upon the execution of the Credit Agreement, the terms of
this Commitment shall be merged therein and this Commitment shall
terminate in all respects.
8. This Commitment constitutes the entire understanding and
agreement between the parties hereto with respect to this
transaction, and may not be modified, amended or supplemented except
pursuant to a written agreement executed by the parties hereto. No
waiver, extension, amendment or modification of any term or provision
hereof shall be binding unless the same shall be in writing and
signed by the party against whom enforcement of such waiver,
extension, amendment or modification is sought.
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Borrower shall acknowledge its acceptance of the foregoing and
its agreements as set forth herein by signing and delivering to Lender a
copy of this Commitment before 9:30 a.m. on February 6, 1995, at which time
this Commitment, if not so accepted, shall expire. The terms of this
Commitment shall not be binding on Lender unless such signed copy hereof is
delivered to Lender before the aforesaid time on the aforesaid date.
Very truly yours,
VORNADO REALTY TRUST
By: /s/JOSEPH MACNOW
Name: Joseph Macnow
Title: Vice President and Chief
Financial Officer
ACCEPTED AND AGREED TO THIS
6th DAY OF FEBRUARY, 1995:
ALEXANDER'S, INC.
By: /s/STEPHEN MANN
Name: Stephen Mann
Title: Chairman
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EXHIBIT A
TERM SHEET FOR TERM LOAN
BORROWER: Alexander's, Inc.
GUARANTORS: Each Subsidiary of Borrower.
LENDER: Vornado Realty Trust or an affiliate thereof
("Vornado").
LOAN AMOUNT: $68,500,000 with an additional availability of
$6,500,000 to be determined by the Lender prior to
closing.
USE OF PROCEEDS: A) Payment of unsecured creditors and other
obligations due contemporaneously therewith.
B) Pay off Chemical Loan on 59th Street.
C) Pay off Chemical Loan to 731 Limited
Partnership.
D) Payment of Real Estate Taxes then due and
payable.
E) General business purposes.
TERM: 3 years
COLLATERAL: 1) Pledge of stock of all subsidiaries.
2) Fordham Road - First mortgage, provided
Lender agrees to accept deeply subordinated
second mortgage approved by Lender behind $25
million first mortgage from another lender.
3) Flushing - Lockbox for collection of rents
and, if reasonably obtainable, first
leasehold mortgage.
4) Rego Park - First mortgage, provided Lender
agrees to accept deeply subordinated second
mortgage approved by Lender behind up to
$52.5 million of financing (provided
approximately $36.5 million is allocated for
construction) from another lender. Lender
further agrees to subordinate to an aggregate
of $77.5 million of permanent financing.
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5) Third Avenue - First mortgage.
6) Paramus - Second mortgage behind a $13.1
million first mortgage held by New York Life.
Lender will subordinate to an additional
$16.9 million of construction financing
approved by Lender, of which $7.5 million
represents tenant site work reimbursements
which will be repaid to Construction Lender
when the tenants reimburse the Borrower,
thereby reducing the total prior debt to
$22.5 million.
7) Kings Plaza Store - First mortgage. Lender
will subordinate to an additional $10 million
of construction financing approved by Lender.
8) Kings Plaza Shopping Center - First or second
mortgage, if reasonably obtainable.
9) 59th Street - First mortgage on the entire
square block, subject to a release price of
$30 million; provided that such release price
is paid in connection with the closing of
development or construction financing or a
sale of the property; and, provided further,
that any such release shall not obviate the
restrictions on sales, financings,
refinancings and other dispositions set forth
below.
Any other properties acquired by Borrower shall
also be included as collateral for the Loan,
subject to preexisting liens, purchase money liens
and construction liens as approved by Lender.
Where possible the Lender will also receive
assignment of leases and security agreement/UCC1
filings on fixtures and furnishings, at each
Collateral Property. If Lender requires existing
leases to be subordinated to the Loan, Lender must
grant nondisturbance agreements as required by
leases. Lender will grant non-disturbance to
future tenants provided such tenants meet certain
criteria.
All financings and refinancings of properties are
subject to the review and approval by Lender of the
budget for the development or redevelopment of said
properties, including a
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review of plans and cost items, and the
documentation for the senior financing.
NO SALES, FINANCINGS,
REFINANCINGS OR OTHER
DISPOSITIONS: No sale, financing, refinancing or other
disposition of any property listed under the
"COLLATERAL" section above without Lender's
consent, which may be withheld for any reason;
provided, however, that Lender's consent to the
refinancing of existing mortgage debt on any such
property and to construction financing on Kings
Plaza Store, Paramus, 59th Street and Rego Park to
the extent contemplated herein shall not be
unreasonably withheld.
CASH COLLATERAL
ACCOUNT: The proceeds of any sale, financing, refinancing or
other disposition of any property shall be used to
pay down the then outstanding prior position debt
with respect to such property (plus in the case of
59th Street, the estimated costs of construction or
development of such Property).
Borrower will deposit the excess, if any, of such
proceeds remaining after paying down such
obligations and all other net cash proceeds, from
any source whatsoever to the extent not used to pay
down such obligations, into a cash collateral
account maintained with Lender unless otherwise
agreed by Lender.
PREPAYMENT: Prepayable without premium or penalty at the end of
second year. Prepayable during any year with yield
maintenance.
AMORTIZATION: None required
INTEREST RATE: The interest rate will be 14% per annum for the
first two years of the loan and a fixed interest
rate for the third year of the loan fixed at a rate
per annum equal to 725 basis points over the
one-year treasury bill rate on the first day of the
third year.
If, as of the closing date, the rate per annum on
the two-year treasury notes (the "Treasury Rate")
exceeds 7.35% by more than 15 basis points, then
the interest rate of 14% will be adjusted upward by
the difference between 7.35% and the Treasury Rate.
If, as of the closing date, the Treasury Rate is
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lower than 7.05% by more than 15 basis points, then
the interest rate of 14% will be adjusted downward
by the difference between 7.05% and the Treasury
Rate.
INTEREST RESERVE: $5 million of the Term Loan will not be funded at
closing and, until funded, there will be no
interest charged to Borrower on the such amount,
which shall be considered an Interest Reserve.
Advances from the Interest Reserve will only be
used to pay interest payments and then only to the
extent that monthly cash flow is insufficient to
pay interest on the Loan. Any funds advanced from
the Interest Reserve shall be repaid from
subsequent excess cash flows.
FEE: 2.5% on Loan Amount (including Interest Reserve),
to be paid at closing.
EXPENSES: Borrower will pay out-of-pocket expenses of Lender
including, but not limited to, legal expenses and
costs related to documentation and closing of the
loan, whether or not the transaction closes.
REPORTING
REQUIREMENTS: Customary.
COVENANTS: Customary. There will be a negative covenant on
future speculative development (to be defined as
development in the absence of pre-leasing more than
50% of the projected leasable space on any
individual property).
DOCUMENTATION;
PARTICIPATIONS: Lender may participate or assign the Loan in whole
or in part. The Loan and the collateral securing
the Loan may, in the sole discretion of Lender, be
evidenced by one or more Notes secured by one or
more mortgages. At Lender's request, Borrower will
cooperate with Lender and take all actions
necessary to restructure the Loan as one or more
loans with additional lenders (provided Borrower
shall not be required to expend unreasonable sums).
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