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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
___________________
February 6, 1995
(Date of Report; Date of Earliest Event Reported)
VORNADO REALTY TRUST
(Exact Name of Registrant as specified in its Charter)
Maryland 1-11954 22-1657560
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
Park 80 West, Plaza II, Saddle Brook, NJ 07663
(Address of Principal Executive Offices) (Zip Code)
(201) 587-1000
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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Items 1-4. Not Applicable.
Item 5. Other Events.
On February 6, 1995, Vornado Realty Trust ("Vornado")
entered into a Stock Purchase Agreement with Citibank, N.A.
("Citibank") to acquire the 1,353,468 shares of common stock
of Alexander's, Inc. ("Alexander's") owned by Citibank for
$40.50 per share in cash. The closing of such purchase is
subject to Alexander's ability to qualify in 1995 as a real
estate investment trust, and approval by the United States
Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court") of the management and development
agreement entered into and the loan agreement to be entered
into between Vornado and Alexander's. The foregoing is a
summary of the Stock Purchase Agreement, a copy of which is
filed with this Form 8-K as Exhibit 2.1.
In connection with the execution of the Stock
Purchase Agreement, Vornado and Alexander's entered into a
management and development agreement (the "Management
Agreement") and a commitment letter with respect to a loan
agreement (the "Commitment Letter"), copies of which are filed
with this Form 8-K as Exhibits 99.1 and 99.2, respectively.
Under the Management Agreement, Vornado would manage all
Alexander's business affairs and be responsible for the
management and development of Alexander's properties for three
years for a fee equal to $3,000,000 per year plus 5% of the
development costs, plus general overhead and
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administrative expenses equal to 1% of the development costs
(with minimum amounts guaranteed in respect of such fee), in
addition to the fees presently payable under an existing
leasing agreement between Alexander's and Vornado. Pursuant
to the Management Agreement, Mr. Steven Roth, Chairman and
Chief Executive Officer of Vornado, would become the Chief
Executive Officer of Alexander's and Mr. Stephen Mann would
remain the Chairman of the Board of Alexander's. Under the
Commitment Letter, Alexander's would borrow $68.5 million
(with Alexander's able to borrow an additional $6.5 million,
subject to Vornado's approval) for three years at 14% per
annum for the first two years and a fixed rate for the third
year of 725 basis points over one-year treasury bills, all on
a secured basis, from Vornado or an affiliate (and any
participants Vornado may secure). The foregoing is qualified
in its entirety by reference to the Management Agreement and
Commitment Letter which are filed with this Form 8-K as
Exhibits 99.1 and 99.2, respectively. Both of these
arrangements are subject to approval of the Bankruptcy Court.
In connection with the execution of the Stock
Purchase Agreement, Vornado and Interstate Properties (a
partnership in which Mr. Roth is a general partner and which
owns, together with Mr. Roth, 34.5% of the outstanding shares
of beneficial interest of Vornado and 27.2% of Alexander's
common stock) also entered into a Standstill and
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corporate governance agreement with Alexander's (the
"Corporate Governance Agreement"), which agreement will
terminate if the acquisition by Vornado of the shares of
Alexander's common stock owned by Citibank is not consummated
on or prior to June 30, 1995. The Corporate Governance
Agreement provides, among other things, that (i) the aggregate
ownership in Alexander's by Vornado and Interstate and their
affiliates and associates will not exceed 66.65% for three
years; (ii) David Mandelbaum and Russell Wight (trustees of
Vornado and general partners of Interstate Properties) will
fill two of the vacancies created by the resignation of the
Citibank directors on Alexander's Board; (iii) the two
independent directors of Alexander's may select a third
independent director; (iv) the independent directors will not
be removable other than for cause for a period of three years;
(v) if an independent director resigns, the other two will
select a replacement; (vi) the independent directors will be
provided with a reasonable budget to employ investment
bankers, counsel or other professionals as they determine to
be necessary for a period of three years; (vii) Vornado and
Interstate will not for a period of three years cause a merger
or other business combination of Vornado or Interstate and
Alexander's without the approval of the majority of the
independent directors; and (viii) if for a period of three
years, Vornado and Interstate wish to sell, in the aggregate,
shares of common
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stock of Alexander's, other than pursuant to an underwritten
public offering, in an amount in excess of the greater or (a)
30% of the outstanding shares of common stock of Alexander's
and (b) a majority of the shares of common stock of
Alexander's held by Interstate and Vornado and their
affiliates and associates at a price greater than 115% of the
then existing market price, they may only do so on terms that
permit the other stockholders to sell on the same terms. The
foregoing is qualified by reference to the Corporate
Governance Agreement, which is filed with this Form 8-K as
Exhibit 99.3.
Item 6. Not Applicable.
Item 7. Financial Statements
Pro Forma Financial Information and Exhibits.
(a)-(b) Not Applicable.
(c) Exhibits Required by Item 601 of Regulation S-K
2.1 Stock Purchase Agreement, dated February 6,
1995, among Vornado Realty Trust and Citibank,
N.A.
99.1 Management and Development Agreement, dated
as of February 6, 1995.
99.2 Commitment Letter, dated February 6, 1995,
between Vornado Realty Trust and Alexander's
Inc.
99.3 Standstill and Corporate Governance Agreement,
dated as of February 6, 1995.
Item 8. Not Applicable.
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SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
Dated: February 21, 1995
VORNADO REALTY TRUST
By: /s/ JOSEPH MACNOW
Name: Joseph Macnow
Title: Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Page
2.1 Stock Purchase Agreement,
dated February 6, 1995, among
Vornado Realty Trust and
Citibank, N.A.
99.1 Management and Development
Agreement, dated as of
February 6, 1995.
99.2 Commitment Letter, dated
February 6, 1995, between
Vornado Realty Trust and
Alexander's Inc.
99.3 Standstill and Corporate
Governance Agreement, dated
as of February 6, 1995.
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated February 6, 1995, by and
between Citibank, N.A., a national banking association organized under the
National Bank Act of the United States of America ("Seller"), and Vornado
Realty Trust, a real estate investment trust organized under the laws of
the State of Maryland ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller desires to sell to Purchaser, and Purchaser
desires to purchase from Seller, 1,353,468 shares of common stock, par
value $1.00 per share, of Alexander's Inc., a Delaware corporation (the
"Company"), (the "Shares") on the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
I. SALE OF SHARES; PURCHASE PRICE
1.1 Sale of Shares. Pursuant to the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter
defined), Seller shall sell and deliver to Purchaser, and Purchaser shall
purchase from Seller, the Shares.
1.2 Purchase Price; Payment.
(a) The aggregate purchase price for the Shares (the
"Purchase Price") shall consist of cash consideration in the amount of
$40.50 per share for an aggregate of Fifty-Four Million Eight Hundred
Fifteen Thousand Four Hundred Fifty-Four Dollars ($54,815,454).
(b) On the Closing Date (as hereinafter defined),
Purchaser shall pay to Seller the Purchase Price in accordance with Section
1.2(a) by wire transfer of immediately available funds to the bank account
of Seller identified by Seller at or prior to the Closing.
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II. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
2.1 Due Organization. Seller is duly organized, validly
existing and in good standing under the laws of the United States of
America.
2.2 Authority Relative to Agreement. Seller has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement. The execution and delivery by Seller of
this Agreement and the consummation by Seller of the transactions
contemplated hereby (i) have been authorized by all necessary corporate
action on the part of Seller, (ii) do not violate any provision of law
applicable to Seller and (iii) do not conflict with or result in a breach
of any provision of, or constitute a default under, any order, judgment or
decree binding upon Seller.
2.3 Effect of Agreement. This Agreement has been duly
executed and delivered by Seller and (assuming the due authorization,
execution and delivery by Purchaser) constitutes a legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
and remedies generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or at
equity).
2.4 The Shares.
(a) Seller is the record and beneficial owner of the
Shares.
(b) Seller will transfer and deliver to Purchaser at the
Closing valid title to the Shares, free and clear of all liens, claims and
encumbrances other than those contained in the Company's Amended and
Restated Certificate of Incorporation (the "Charter").
2.5 Brokers, Finders, etc. Seller is not subject to the valid
claim of any broker, finder, consultant or other intermediary in connection
with the sale of the Shares who would have a valid claim for a fee or
commission from Purchaser or the Company in connection with such
transaction.
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III. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.1 Organization and Good Standing. Purchaser is a real
estate investment trust duly formed and existing under and by virtue of the
laws of the State of Maryland and is in good standing with the State
Department of Assessments and Taxation of Maryland.
3.2 Authority Relative to Agreement. Purchaser has all
requisite power and authority to execute, deliver and perform its
obligations under this Agreement. The execution and delivery by Purchaser
of this Agreement, and the consummation by Purchaser of the transactions
contemplated hereby (i) have been authorized by all necessary action on the
part of Purchaser, (ii) do not violate any provision of law applicable to
Purchaser and (iii) do not conflict with or result in a breach of any
provision of, or constitute a default under, any order, judgment or decree
binding upon Purchaser.
3.3 Effect of Agreement. This Agreement has been duly
executed and delivered by Purchaser and (assuming the due authorization,
execution and delivery by Seller) constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless
of whether such enforceability is considered in a proceeding at law or at
equity).
3.4 Investment Representation. The Shares are being purchased
by Purchaser as principal solely for its own account, for investment
purposes only and not with a view to the distribution thereof in violation
of the Securities Act of 1933 (the "Securities Act") or any applicable
state securities law, and Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of its investment represented by its purchase of the Shares.
Purchaser acknowledges that the Shares have not been registered under the
Securities Act or any other securities law and may not be sold, and
Purchaser hereby covenants that the Shares will not be sold, in whole or in
part, in the United States of America except pursuant to a registration
statement effective under the Securities Act or pursuant to an exemption
from registration under the Securities Act, and in compliance with all
other applicable securities laws.
3.5 Brokers, Finders etc. Purchaser is not subject to the
valid claim of any broker, finder, consultant or other intermediary in con-
nection with the transaction
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contemplated hereby who would have a valid claim for a fee or commission
from Seller in connection with such transaction.
3.6 Potential REIT Status. Purchaser does not know as of the
date of this Agreement of any fact which would preclude the Company from
qualifying as a real estate investment trust ("REIT") within the meaning of
Section 856 of the Internal Revenue Code of 1986 (the "Code") entitled to
the benefits of Section 857 of the Code commencing with its taxable year
beginning January 1, 1995.
IV. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to effect the transactions
contemplated by this Agreement shall, at the option of the Purchaser, be
subject to the satisfaction, on the Closing Date, of the following
conditions:
4.1 Accuracy of Representations and Warranties; Covenants.
Each of the representations and warranties of Seller contained herein shall
be true and correct in all material respects when made and on and as of the
Closing Date, with the same force and effect as though the same had been
made on and as of the Closing Date, and Seller shall have complied in all
material respects with its covenants contained herein to be performed at or
prior to the Closing.
4.2 No Restraint or Litigation. No party hereto shall be
legally enjoined by any injunction or court order from consummating the
transactions contemplated by this Agreement, and no proceeding shall have
been commenced by any governmental authority seeking to enjoin the
consummation of the transactions contemplated hereby.
4.3 REIT Status. No fact shall exist on the Closing Date that
was not known to Purchaser on the date hereof which fact shall give rise to
any circumstance that, in the reasonable judgment of Purchaser, cannot be
remedied by the Company through reasonable action and, if unremedied, would
preclude the Company from qualifying as a REIT within the meaning of the
Code entitled to the benefits of Section 857 of the Code commencing with
its taxable year beginning January 1, 1995 and the Company and the
Purchaser shall have received an opinion dated the Closing Date of Shearman
& Sterling, counsel to the Company, confirming in all material respects the
conclusions set forth in the opinions to the Company, dated the date of
this Agreement, of Shearman & Sterling concerning certain REIT matters.
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4.4 Officer's Certificate. Purchaser shall have received a
certificate from the Seller to the effect set forth in Section 4.1 hereof,
dated the Closing Date, signed by a duly authorized officer of Seller.
4.5 Bankruptcy Court Approval. The United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") shall
have approved (i) the management agreement between the Company and
Purchaser dated the date hereof and (ii) the financing to be provided to
the Company by Purchaser contemplated by the commitment letter therefor
dated the date hereof between Purchaser and the Company.
4.6 Resignations. All directors of the Company who are
employees of Seller shall have resigned as directors of the Company.
4.7 No Breach. The Company shall not have breached in any
material respect Section 2.5 of the Standstill and Corporate Governance
Agreement, dated the date hereof among the Company, Purchaser and
Interstate Properties, a New Jersey general partnership.
4.8 Financing. Purchaser shall have obtained a commitment from
Seller for $27.4 million of financing from Seller on terms substantially
similar to those set forth on the term sheet therefor dated the date hereof
and initialled by Purchaser and Seller if Purchaser shall have notified
Seller in writing prior to February 20, 1995 that Purchaser requests such
financing from Seller.
4.9 Cutoff Date. The Closing shall have been held by June 30,
1995.
4.10 Restrictions on Ownership and Transfer. On the Closing
Date, no Mandatory Exchange Date shall have been fixed by the Board of
Directors of the Company for the purpose of any automatic exchange
described in Section 4(b) of Article IV of the Charter if as a result of
such fixing any shares of common stock of the Company held (or to be held
after the Closing Date) by the Purchaser would be required to be treated as
Excess Stock (as such term is defined in the Charter) following such
Mandatory Exchange Date and the transfer of the Shares from Seller to
Purchaser shall not be prohibited by Section 4(b) of Article IV of the
Charter.
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V. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the sale of the Shares
shall, at the option of Seller, be subject to the satisfaction, on the
Closing Date, of the following conditions:
5.1 Accuracy of Representations and Warranties; Covenants.
Each of the representations and warranties of Purchaser contained herein
shall be true and correct in all material respects when made and on and as
of the Closing Date, with the same force and effect as though the same had
been made on and as of the Closing Date, and Purchaser shall have complied
in all material respects with its covenants contained herein at or prior to
the Closing.
5.2 No Restraint or Litigation. No party hereto shall be
enjoined by an injunction or court order from consummating the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
by any governmental authority seeking to enjoin the consummation of the
transactions contemplated hereby.
5.3 Officer's Certificate. Seller shall have received a
certificate from Purchaser to the effect set forth in Section 5.1 hereof,
dated the Closing Date, signed by a duly authorized officer of Purchaser.
5.4 Certified Resolutions of the Purchaser. Seller shall have
received a certificate of a duly authorized officer of Purchaser, dated the
Closing Date, setting forth the resolutions of the Board of Trustees of
Purchaser, approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and certifying that
such resolutions were duly adopted and have not been rescinded or amended
as of the Closing Date.
5.5 Cutoff Date. The Closing shall have been held by March
31, 1995 unless both the Company shall have filed for the approval
referred to in Section 4.5 hereof promptly following the date hereof and
the Bankruptcy Court shall not have rendered its decision thereon by March
31, 1995, in which event such date shall be extended to April 28, 1995.
5.6 Legal Opinion. Seller shall have received a legal opinion,
dated the Closing Date, from counsel to Purchaser, satisfactory to Seller,
as to the matters set forth in Sections 3.1, 3.2 and 3.3 hereof, in form
and substance reasonably satisfactory to Seller.
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VI. CLOSING
6.1 Closing Date. The closing with respect to the
transactions provided for in this Agreement (the "Closing") shall take
place at 10:00 a.m., local time, at the offices of Weil, Gotshal & Manges,
767 Fifth Avenue, New York, New York 10153 on the Business Day following
the date on which the condition set forth in Section 4.5 hereof shall have
been satisfied (or at such other time or location as Purchaser and Seller
may agree) (such date being herein referred to as the "Closing Date").
6.2 Seller Closing Documents. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser the following:
(a) certificates representing the Shares, duly endorsed
in blank (or in lieu thereof having affixed thereto stock powers duly
executed in blank), and in proper form for transfer; and
(b) the officer's certificate referred to in Section 4.4
hereof.
6.3 Purchaser Closing Documents. At the Closing, Purchaser
shall deliver or cause to be delivered to Seller the following:
(a) the Purchase Price;
(b) the officer's certificate of Purchaser referred to
in Section 5.3 hereof;
(c) the certified resolutions referred to in Section 5.4
hereof; and
(d) the legal opinion referred to in Section 5.6 hereof.
6.4 Proceedings. All proceedings that shall be taken and all
documents that shall be executed and delivered by the parties hereto on the
Closing Date shall be deemed to have been taken and executed simultaneously
and no proceedings shall be deemed taken nor any documents executed or
delivered until all have been taken, executed and delivered. By a party's
proceeding with the Closing, the conditions to such party's obligations set
forth in Article V or VI hereof, as the case may be, shall be deemed
satisfied or waived.
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VII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
7.1 General Survival. The representations and warranties
contained in this Agreement shall survive the Closing.
7.2 Indemnification.
(a) Seller agrees to indemnify, defend and hold harmless
Purchaser from and against and in respect of any and all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities,
interest and penalties, costs and expenses (including, without limitation,
reasonable legal fees and disbursements incurred in connection therewith
and in seeking indemnification therefor, and any amounts or expenses
required to be paid or incurred in connection with any action, suit,
proceeding, claim, appeal, demand, assessment or judgment), net of any
insurance proceeds and current tax benefits, imposed upon or incurred by
Purchaser resulting from, arising out of, or by reason of any breach of any
of Seller's representations or warranties contained in Article II of this
Agreement.
(b) Purchaser agrees to indemnify, defend and hold
harmless Seller from and against and in respect of any and all demands,
claims, actions or causes of action, assessments, losses, damages,
liabilities, interest and penalties, costs and expenses (including, without
limitation, reasonable legal fees and disbursements incurred in connection
therewith and in seeking indemnification therefor, and any amounts or
expenses required to be paid or incurred in connection with any action,
suit, proceeding, claim, appeal, demand, assessment or judgment), net of
any insurance proceeds and current tax benefits, imposed upon or incurred
by Seller resulting from, arising out of, or by reason of (i) any breach of
any of Purchaser's representations or warranties in Article III hereof or
(ii) any Taxes (including, without limitation, Taxes attributable to
indemnity payments hereunder).
(c) Whenever a claim shall arise with respect to which
indemnification may be sought under this Article VII, the party entitled to
indemnification (the "Indemnified Party") shall promptly notify the party
from whom indemnification is sought (the "Indemnifying Party") of such
claim and, when known, the facts constituting the basis for such claim;
provided, however, that in the event of any claim for indemnification
hereunder resulting from or in connection with any claim or legal
proceedings by a third party, the Indemnified Party shall give such notice
thereof to the Indemnifying Party no later than 10 days prior to the time
any response to the asserted claim is required, if possible; and provided
further, however, that failure to give such reasonably prompt notice shall
not
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release, waive or otherwise affect the Indemnifying Party's obligations
with respect thereto except to the extent of any loss and prejudice as a
result thereof.
VIII. COVENANTS
8.1 Further Assurances. Seller shall use reasonable commercial
efforts to satisfy the conditions set forth in Sections 4.1, 4.2, 4.4, 4.6
and 4.9 hereof and Seller shall provide the Company with such information
as is readily available to Seller regarding Seller's ownership of lessees
and sublessees of the Company as Purchaser reasonably requests. Nothing
herein, however, shall be construed to require Seller to provide the
financing referred to in Section 4.8 hereof. Purchaser shall use
reasonable commercial efforts to satisfy the conditions set forth in
Article V hereof and in Sections 4.5 and 4.7 hereof.
8.2 New York State Tax Ruling. If requested by Purchaser,
Seller shall promptly apply to the New York State Department of Taxation
and Finance for a private letter or other guidance to the effect that, for
purposes of the New York State Gains Tax, Seller's "original purchase
price" for the Shares is to be determined by reference to either the fair
market value of the Company's real property at the time of Seller's
acquisition of the Shares (or of a beneficial interest in the Shares) or
Seller's investment in the Shares and, in connection therewith, shall use
reasonable efforts to respond promptly to inquiries and requests for other
information from such Department related to such ruling request. Seller
makes no representation or warranty regarding the likelihood of obtaining
such ruling and the failure to obtain such ruling shall not affect any of
Purchaser's obligations in this Agreement.
8.3 Further Seller Purchases. After the Closing, Seller agrees
that, for a period of three years from the Closing, it will not acquire any
shares of the Company's common stock, other than in a fiduciary capacity or
in respect of a debt previously contracted.
8.4 Notice of Further Purchaser Acquisitions. Purchaser shall
notify Seller promptly in writing if Purchaser or any Affiliate (as defined
in Section 9.7 hereof) of Purchaser acquires or enters into a contract or
option to acquire any equity interest in the Company, or any other entity
that directly or indirectly owns any equity interest in the Company, at any
time during the three year period beginning or ending on the date of the
Closing and shall provide Seller with any additional information reasonably
required by Seller to determine if any Taxes will thereby arise in respect
of the sale of the Shares provided for herein.
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8.5 Filings in Respect of Taxes. If, after receiving the
information provided to Seller by Purchaser pursuant to Section 8.4 hereof,
Seller reasonably determines or Purchaser determines that Seller is
required to file any return in respect of Taxes, Seller shall promptly
prepare and file such return and Purchaser shall, upon such filing, pay all
Taxes due and otherwise satisfy its obligations under Section 7.2(b)
hereof. Purchaser and Seller shall cooperate with each other in making any
future filings required in respect of Taxes.
IX. MISCELLANEOUS
9.1 Waivers and Amendments.
(a) This Agreement may not be amended, modified or
supplemented except by a written instrument executed by the parties hereto.
The provisions of this Agreement may be waived only by an instrument in
writing executed by the party granting the waiver. The waiver by any party
hereto of compliance with any provision of this Agreement shall not operate
or be construed as a further or continuing waiver of such noncompliance or
as a waiver of any other or subsequent noncompliance.
(b) No failure on the part of any party to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy, except as
otherwise provided in Section 7.2(c) hereof.
9.2 Fees and Expenses. Except as otherwise set forth herein,
each party hereto shall be responsible for its costs and expenses,
including all fees and expenses of attorneys, investment bankers, lenders,
financial advisors and accountants, in connection with the negotiation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, whether or not such transactions are
consummated.
9.3 Notices. Any and all notices, requests, consents or any
other communication provided for herein shall be made by hand delivery,
first-class mail (registered or certified, return receipt requested),
telecopier or overnight courier (i) in the case of Seller, to Citibank,
N.A., 599 Lexington Avenue, 24th Floor, New York, New York 10043,
Attention: C.R.E.I. General Counsel (telecopy number: 212-793-6766) and
Wendy Silverstein (telecopy number: 212-793-0158) (or such other address or
telecopy number as Seller may designate), and (ii) in the case of
Purchaser, to Vornado Realty Trust, Park 80 West, Plaza II, Saddle Brook,
New Jersey 07662, Attention: Steven Roth (telecopy number:
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201-587-0600) (or to such other address or telecopy number as may be
designated by the Purchaser). Except as otherwise provided in this
Agreement, each such notice shall be deemed given at the time delivered. A
copy of such notice shall be sent by the same means, in the case of a
notice to Purchaser, to Sullivan & Cromwell, 125 Broad Street, New York,
New York 10004, Attention: Janet T. Geldzahler, Esq. (telecopy number:
212-558-3342) and, in the case of a notice to Seller, to Weil, Gotshal &
Manges, 767 Fifth Avenue, New York, New York 10153, Attention: Ronald F.
Daitz, Esq. (telecopy number: 212-310-8007).
9.4 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes any prior negotiations, agreements,
understandings or arrangements between the parties hereto with respect to
the subject matter hereof.
9.5 Binding Effect; Benefits. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties hereto, or their respective
successors, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
9.6 Assignability. This Agreement and any rights pursuant
hereto shall not be assignable by either party hereto without the prior
written consent of the other party, except that Purchaser may assign its
rights hereunder to a wholly-owned subsidiary of Purchaser in which event
references in Sections 3.2, 3.4 and 5.6 hereof to Purchaser shall be deemed
to refer to Purchaser and such subsidiary and no such assignment shall
relieve Purchaser of any of its obligations hereunder.
9.7 Defined Terms. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "Affiliate" shall mean, as to any Person, any other
Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person. For the purposes of this
definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise.
(b) "Business Day" shall mean any day on which banks are
not required or authorized to close in New York City.
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<PAGE> 12
(c) "Person" shall mean an individual, partnership,
corporation (including, without limitation, a business trust), joint stock
company, trust, unincorporated association, joint venture or other entity,
government or governmental authority.
(d) "Taxes" shall mean all New York State and New York
City Real Property Transfer Gains Taxes and real estate transfer taxes, and
interest and penalties thereon, attributable in whole or in part, directly
or indirectly, to the transaction contemplated hereby whether or not caused
by any additional, prior or subsequent transaction (but excluding interest
and penalties resulting from Seller's failure to comply with Section 8.5
hereof if Purchaser has first complied with the provisions of Sections 8.4
and 8.5 hereof).
9.8 Applicable Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
9.9 Section and Other Headings. The section and other
headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
9.10 Submission to Jurisdiction. (a) Each of the parties
hereto irrevocably consents that any action or proceeding brought by the
other party hereto in respect of the transaction contemplated hereby may be
brought in the courts of the State of New York or of the United States of
America for the Southern District of New York and, by execution and
delivery of this Agreement, the parties hereto hereby irrevocably waive any
objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens, which any of them
may now or hereafter have to the bringing of any such action or proceeding
in such respective jurisdiction.
(b) Each of the parties hereto irrevocably consents to
the service of process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered mail, postage
prepaid, to such party at its address provided herein.
9.11 Termination. Seller shall be able to terminate this
Agreement and its obligations hereunder if the Closing shall not have
occurred by March 31, 1995 (or April 28, 1995 in the event the two
conditions set forth in Section 5.5 hereof shall be satisfied) other than
by reason of a breach by Seller of a representation, warranty or covenant
of Seller contained herein. Purchaser shall be able to terminate this
Agreement and its obligations
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<PAGE> 13
hereunder if the Closing shall not have occurred by June 30, 1995 other
than by reason of a breach by Purchaser of a representation, warranty or
covenant of Purchaser contained herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
CITIBANK, N.A.
By: /s/ Wendy A. Silverstein
Name: Wendy A. Silverstein
Title: Vice President
VORNADO REALTY TRUST
By: /s/ Joseph Macnow
Name: Joseph Macnow
Title: Executive Vice President
<PAGE> 1
EXHIBIT 99.1
MANAGEMENT AND DEVELOPMENT AGREEMENT
THIS MANAGEMENT AND DEVELOPMENT AGREEMENT, effective
as of the ___ day of _________, 1995 (the "Management
Agreement"), between ALEXANDER'S, INC., a Delaware
corporation, on behalf of itself and each of the subsidiaries
listed in Exhibit B attached hereto, (collectively, "Owner"),
each having an address at 31 West 34th Street, New York, New
York 10001, and Vornado Realty Trust, a Maryland real estate
investment trust having an office at Park 80 West, Plaza II,
Saddle Brook, New Jersey 07663 ("Manager").
IN CONSIDERATION of the mutual promises and
covenants herein contained, Owner and Manager agree as
follows:
ARTICLE I. Appointment of Manager. A. Owner
hereby appoints Manager, on the conditions and for the term
hereinafter provided, to act for it in the management and
direction of all of its business affairs, including, without
limitation, the operation, maintenance and management of the
properties identified on Exhibit A attached hereto and made a
part hereof (each such property being hereafter referred to
individually as a "Property", and all such properties being
hereafter referred to collectively as the "Properties"), which
management duties are more particularly described in Article
IV, and the design, planning, construction and development of
the Properties, which development duties are more particularly
described in Article V. Manager hereby accepts said appoint-
ment to the extent and subject to the conditions set forth
below.
B. It is understood and agreed that in the event
that one or more of the Properties is sold or otherwise
disposed of, Exhibit A shall be deemed amended accordingly and
this Agreement shall, from and after the date of any such sale
or disposition, cease to apply as to any such Property and
shall continue to apply to such remaining Properties as Owner
continues to own.
C. Owner and Manager hereby acknowledge that
affiliates of Owner and Manager have heretofore entered into
that certain Real Estate Retention Agreement, dated as of July
20, 1992 (the "Retention Agreement"), whereby Vornado Realty
Trust, as successor in interest to Vornado, Inc. has agreed to
act as leasing agent with respect to the Properties.
ARTICLE II. Term. A. The term of this Agreement
shall commence on the Effective Date (as hereinafter
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<PAGE> 2
defined) and shall continue until midnight on the date
immediately following the third anniversary of the date hereof
(the "Initial Expiration Date"), subject to paragraph C of
Article III, unless this Agreement shall be terminated and the
obligations of the parties hereunder shall sooner cease and
terminate, as hereinafter provided, provided, however, that
the term of this Management Agreement shall automatically
extend for consecutive one-year periods following the Initial
Expiration Date unless Manager or Board (as hereinafter
defined) provides the other with written notice, at least six
months prior to the beginning of any such additional one-year
period, of its election to terminate this Management
Agreement. The amount of the Management and Development Fee
(as hereinafter defined) shall be subject to review by the
parties at the end of the initial term and at the end of each
one-year term thereafter.
B. The term "Board" shall mean (i) the Board of
Directors of Alexander's, Inc.; or (ii) a committee or officer
designated by such Board of Directors to act on behalf of
Manager in connection with the administration of this
Agreement. The term "Independent Directors" shall mean the
independent directors of the Board of Directors of
Alexander's, Inc. or their designee.
ARTICLE III. Management and Development Fee.
A. Owner shall pay Manager, as Manager's entire
compensation for the services rendered hereunder in connection
with the management of the Properties and the management of
the Owner, a management fee (the "Management Fee") equal to
Three Million Dollars ($3,000,000) per annum, payable in equal
monthly installments, in arrears, in the amount of $250,000
each on the tenth day of each calendar month beginning with
the first calendar month after the Effective Date. All sums
payable to Manager hereunder shall be in addition to the
amounts payable to Manager under the Retention Agreement. In
the event that this Agreement shall commence on a date other
than the first day of a calendar month, or shall terminate on
a date other than the last day of a calendar month the
installment of the Management and Development Fee (as
hereinafter defined) payable for that month shall be prorated
for the actual number of days that this Agreement is effective
in that calendar month. Notwithstanding anything contained
herein, in the event that the scope of the business of
Alexander's, Inc. shall expand beyond that which is
contemplated on the date hereof, Owner and Manager hereby
agree that the Management Fee shall be equitably adjusted
upward to reflect the increase in services rendered. In the
event that Independent Directors and Manager are unable to
agree on the amount of the upward
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<PAGE> 3
adjustment as provided in this paragraph, then the parties
hereto hereby agree that the dispute shall be submitted
promptly by them to the American Arbitration Association for
the City of New York for determination in accordance with its
rules, and such determination shall be binding upon both
parties.
B. Owner shall pay Manager, as Manager's
compensation for the services rendered hereunder in connection
with the development of the Development Properties, a
development fee (the "Development Fee") (the Development Fee
and the Management Fee are sometimes referred to herein,
collectively, as the "Management and Development Fee") equal
to (i) five percent (5%) of the total Development Costs (as
hereinafter defined), allocated with respect to each Property
based on the Development Costs for that Property, plus (ii)
general overhead and administrative expenses equal to one
percent (1%) of the total Development Costs, allocated with
respect to each Property based on the Development Costs for
that Property. Owner shall pay Manager, on account of the
Development Fee, monthly installments (the "Development
Installments") each in an amount equal to the Specified
Installment Amount (as defined below), with each such
installment payable, in arrears, on the tenth day of each
calendar month, beginning with the calendar month immediately
following the Effective Date. In the event that it is
determined, upon Substantial Completion of any Property, other
than Rego Park I, that the aggregate Development Installments
paid to Manager as of such date on account of the Development
Fee, minus $900,000, total less than the amount of the
Development Fee that is due to Manager hereunder in respect of
all Properties other than Rego Park I, Owner shall pay to
Manager, within 15 days after Substantial Completion of such
Property, an amount equal to such difference. In the event it
is determined, upon Substantial Completion of Rego Park I,
that the Development Fee that is due to Manager hereunder, in
respect of Rego Park I, is greater than $900,000, Owner shall
pay to Manager, within 15 days after substantial completion of
Rego Park, I, an amount equal to such difference. Anything in
this Agreement to the contrary notwithstanding, Owner's
obligation to pay the Development Installments, to the extent
of the Minimum Earned Fee Installments, during the twelve
calendar months beginning with the calendar month immediately
following the Effective Date, shall not be affected by the
termination of this Agreement for any reason and the
obligation to pay such amounts shall survive the termination
of this Agreement.
As used herein, the following terms shall have the
following meanings:
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<PAGE> 4
"Development Budget" shall mean, collectively, the
capital budgets and development schedules setting forth
the Development Costs to be incurred in connection with
the Development Properties, as prepared by Manager and
approved by the Board and as more particularly described
in Article V hereof.
"Development Costs" shall mean the costs incurred by
Owner in accordance with the Development Budget in
connection with the planning, design and construction,
and development or redevelopment of the Properties,
including, without limitation, fees of any construction
manager, general contractor or any other third-party
professionals unaffiliated with Manager and costs set
forth in the Development Budget that may be reimbursed by
tenants at the Properties for improvements outside the
leased premises of those tenants. Notwithstanding the
foregoing, in no event shall Development Costs include
costs paid for or reimbursed by the tenants for
improvements inside the leased premises of those tenants,
the Development Fee, costs of the land and, with respect
to loans made to Owner, interest, commitment fees and
points.
"Development Properties" shall mean the Properties
identified in Exhibit A as the "59th Street Property",
the "Kings Plaza Store Property", the "Rego Park I
Property", the "Rego Park II Property" and the "Paramus
Property".
"Specified Installment Amount" means (i) during the
first year of the term of this Agreement, $62,500 plus
the Minimum Earned Fee Installment and (ii) thereafter,
$62,500. "Minimum Earned Fee Installment" means (i)
during the first twelve months of the term of this
Agreement, $75,000 and (ii) thereafter, $0.
"Substantial Completion" shall mean, with respect to
each Property, the date on which (a) all punch list items
and landscaping at that Property have been completed, (b)
the planning, design, construction and development of
that Property have been completed, as certified by the
Owner's architect, in accordance with the plans and
specifications therefor approved by the Board, (c) all
necessary occupancy and other permits have been obtained
with respect to the work completed at that Property for
which Manager has any obligation hereunder and (d) if
leases are then in effect at that Property, the portions
of the Property demised under the leases have been
delivered for possession to the tenants thereunder in
accordance with the terms thereof, the tenants have
otherwise taken possession of
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<PAGE> 5
the demised premises, or, if tenants cannot take
possession due to Owner's obligation to perform tenant
improvement work, tenant improvement work has commenced
thereunder.
B. Notwithstanding the provisions of Article II,
in the event that Substantial Completion of all of the
Development Properties shall not have occurred prior to the
Initial Expiration Date, Manager shall have the option to
cause the term of this Agreement, as it applies to the
development of the Properties, to be extended as to any or all
of the Development Properties as to which construction has
commenced or is scheduled to commence no later than the first
anniversary of the Initial Expiration Date but as to which
Substantial Completion has not occurred. Such option may be
exercised by sending notice to Owner of Manager's intention to
so extend, and listing the Properties as to which the term of
this Agreement shall be extended, not less than thirty (30)
days prior to the Initial Expiration Date, in which event the
rights and obligations of the parties hereto under this
Agreement relating to the development of the Properties, as
provided in Article V, shall be automatically extended with
respect to the Properties listed in such notice, until the
date on which Substantial Completion of all of such Properties
shall have occurred. In the event that the term is so
extended pursuant to this paragraph, no further fee shall be
due to Manager following the Initial Expiration Date until
Substantial Completion of each respective Property. Upon
Substantial Completion of a Property, Owner shall pay to
Manager an amount equal to the positive difference, if any, of
(i) the aggregate Development Fee for the Development
Properties as to which Substantial Completion shall have
occurred minus (ii) the aggregate Development Installments
paid to Manager as of that date. Notwithstanding the
foregoing, in no event shall the rights and obligations of the
parties hereto under this Agreement relating to the management
of Owner's business be deemed to be extended beyond the
Initial Expiration Date except in accordance with Article II
hereof.
C. In the event that (i) Owner shall dispose of
any or all of the Development Properties or (ii) shall not
proceed for any reason with the development of any or all of
the Development Properties, then Manager shall use diligent
efforts to reduce or eliminate all allocable costs and
expenses, both direct or indirect, that would otherwise be
incurred by Manager in the performance of its obligations
hereunder. In such event(s), each subsequent Development
Installment, to the extent in excess of the Minimum Earned Fee
Installment, shall be equitably adjusted downward to reflect
the reduction or elimination of such costs and expenses
resulting from the deletion of services required to
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<PAGE> 6
be provided by Manager. In all cases, however, Manager shall
be compensated for services rendered and reimbursed for costs
and expenses incurred to such date including, without
limitation, salaries and other compensation for employees of
Manager. Manager shall also be compensated for costs and
expenses of employees and other such items that will continue
to be incurred to the extent such costs and expenses are not
avoidable or cannot be mitigated by Manager using its diligent
efforts. In the event that Owner fails to obtain the
financing contemplated by, in and in accordance with, the
Commitment (as hereinafter defined) from Lender (as defined
therein) or from a substitute source within ninety (90) after
the Effective Date, the Management Fee shall be equitably
adjusted downward, but in no event to an amount less than
$2,500,000, to reflect the reduction in services until such
time as alternate financing in a comparable amount is
obtained, at which time the Management Fee shall be fully
reinstated. In the event that Independent Directors and
Manager are unable to agree on the amount of the downward
adjustment as provided in this paragraph, then the parties
hereto hereby agree that the dispute shall be submitted
promptly by them to the American Arbitration Association for
the City of New York for determination in accordance with its
rules, and such determination shall be binding upon both
parties.
D. Owner and Manager acknowledge that Manager has
heretofore performed certain development planning services for
Owner in connection with the Property identified on Exhibit A
as the "Rego Park I Property", with respect to which
construction has commenced and is continuing.
E. Manager shall receive no commissions, fees or
other compensation (other than the Management and Development
Fee) in connection with any leasing or sale of all or any part
of any of the Properties or the procuring of any financing or
refinancing with respect thereto; provided, however, that
nothing contained herein shall in any way restrict the
commissions, fees and other compensation otherwise payable to
Manager or any affiliate of Manager by Owner or its affiliates
pursuant to the Retention Agreement.
F. In the event that Manager desires to provide
services not required to be performed hereunder ("Additional
Services") for the benefit of a tenant of any Property,
Manager shall notify Owner in advance of its intention to
provide Additional Services to a tenant or tenants where those
services are substantial in nature. The Independent Directors
shall have the right to prohibit Manager from undertaking such
services, if, in its judgment, the performance by Manager of
the Additional Services would
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<PAGE> 7
adversely affect the professional relationship and duties of
Manager created by this Agreement.
ARTICLE IV. Management Services. A. Manager agrees
to operate and manage the day-to-day business of Owner and to
perform all of the executive functions of Owner other than
those performed by the Board, the Independent Directors, and
any officers of Owner (including, without limitation, the
Chief Executive Officer of Owner) designated by the Board,
including, without limitation, the operation and management of
the Properties and to perform, or cause to be performed by
outside contractors and under Manager's supervision, the
following functions on behalf of Owner in an efficient and
diligent manner using the same standard of care, including
bidding and selection processes, segregation of funds,
internal controls and internal auditing, used by Vornado
Realty Trust in connection with its business and in connection
with properties owned and managed by Vornado Realty Trust:
1. Preparing, or causing to be prepared at
Owner's expense, and filing all income, franchise and
other tax returns required to be filed by Owner.
2. Keeping true and complete books of account
in which shall be entered fully and accurately each
transaction of Owner's business. The books shall be kept
in accordance with the accrual method of accounting, and
shall reflect all transactions of Owner's business.
3. Preparing an annual report within ninety
(90) days after the end of each fiscal year of Owner,
including an annual balance sheet, profit and loss
statement and a statement of changes in financial
position.
4. Preparing a quarterly financial report of
Owner, within forty-five (45) days after the end of each
fiscal quarter of Owner.
5. Preparing or causing to be prepared at
Owner's expense, any reports or filings required by the
New York Stock Exchange or the Securities and Exchange
Commission.
6. Except as otherwise provided hereunder,
procuring, at Owner's expense and at the direction of the
Board or the Owner's insurance brokers or insurance
advisors, any insurance required or desirable in
connection with Owner's business or the employees
required to operate Owner's business and errors and
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<PAGE> 8
omissions insurance for Manager, under which Owner shall
be the sole beneficiary. Manager shall not settle any
claim for a settlement amount in excess of $100,000
without the approval of the Board.
7. Providing all general bookkeeping and
accounting services required by the provisions of this
Agreement at the expense of Manager. Any independent
certified public accountant engaged by Manager shall be
subject to the approval of the Board and all fees and
expenses payable to such accountant shall be at Owner's
expense. Manager shall maintain separate books and
records in connection with its management of the
Properties and Owner, which books and records shall be
kept in accordance with generally accepted accounting
principles. Owner shall have the right to examine or
audit the books and records at reasonable times and
Manager will cooperate with Owner in connection with any
such audit.
8. Investing funds not otherwise required to
pay the costs of day-to-day maintenance and operation of
the Properties or in the operation of Owner's business
pursuant to guidelines set by the Board.
9. Repairing, making replacements and
maintaining the Properties and all common areas at the
Properties and purchasing all materials and supplies that
Manager deems necessary to repair and operate and
maintain the Properties, in order that each Property
shall remain in good, sound and clean condition, and
making such improvements, construction, changes and
additions to the Properties (including capital
improvements), as Manager deems advisable, provided that
Manager shall receive approval of the Board prior to
undertaking any improvements, construction, changes or
additions to the Properties. Owner shall pay all fees,
costs and expenses incurred by Manager in connection with
the retention of outside contractors and suppliers for
the performance of all repairs, replacements and
maintenance of the Properties. In the event that Owner
decides to remodel or extensively refurbish any Property,
or any part thereof, Manager shall be entitled to receive
additional compensation for services required to be
rendered by it for services such as supervision of
construction and allocation of overhead expense (i) to
the extent that tenants at that Property reimburse Owner
for such costs and (ii) if such costs are not
reimbursable by the tenants and such remodeling or
refurbishment shall be on a significant scale and shall
require significant work by the
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<PAGE> 9
Manager, the amount of such additional compensation
payable to Manager shall be equal to Manager's costs in
connection with such work, plus twenty percent (20%) of
Manager's costs.
10. Negotiating and executing contracts for
the furnishing to the Properties of all services and
utilities, including electricity, gas, water, steam,
telephone, cleaning, security, vermin extermination,
elevator, escalator and boiler maintenance and any other
utilities or services, including repairs and maintenance
of the buildings, other improvements and common areas at
the Properties, or such of them as Manager deems
advisable to assure that the Properties shall be caused
to be and remain in a good, sound and clean condition and
properly operating. All fees, costs and expenses under
the contracts shall be paid by Owner.
11. Subject to the terms of any loan or credit
agreement entered into by Owner with a lender and
affecting any of the Properties, demanding, receiving and
collecting all rents, income and other revenues, which
Manager shall deposit in a bank account or accounts of
Owner maintained by Manager (with any interest thereon
for the account of Owner) for the deposit of monies in
regard to the Properties; disbursing, deducting and
paying from such rents, income and revenues, such amounts
required to be disbursed or paid in connection with the
repair, maintenance and operation of the Properties and
in the carrying out of Manager's duties. In the event
that Manager shall determine that funds in the accounts
are insufficient to make necessary disbursements or
payments, Manager shall notify Owner promptly of the
amount of such insufficiency. Promptly after (i) Owner
receives such notice, or (ii) Owner independently
determines that such funds are insufficient, Owner shall
determine and notify Manager as to the order of priority
in which disbursements and payments shall be made.
Disbursements or payments shall include, but not be
limited to, the following items:
a. all assessments and charges of every kind
imposed by any governmental authority having
jurisdiction (including real estate taxes,
assessments, sewer rents and/or water charges) and
interest and penalties thereon; provided, however,
that the interest or penalty payments shall be
reimbursed by Manager to Owner if imposed by reason
of delay in payment caused by Manager's gross
negligence, willful misconduct, bad faith or
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<PAGE> 10
material misapplication of funds (to the extent such
material misapplication of funds is not covered by
insurance) (collectively "Malfeasance");
b. debt service on any loans secured by any of
the Properties;
c. license fees, permit fees, insurance
appraisal fees, fines, penalties, legal fees,
accounting fees incurred in the auditing of tenants'
books and records to establish and collect overage
or percentage rents, and all similar fees reasonably
incurred in connection with the ownership,
management or operation of the Properties, provided,
however, that any fines or penalties shall be
reimbursed to Owner by Manager if imposed by reason
of delay in payment caused by Manager's Malfeasance;
d. premiums on all policies of insurance;
e. salaries, wages and other related expenses,
bonuses and fringe benefits for on-site personnel,
service contracts, utilities, repairs, replacements,
on-site administration expenses and Manager's
compensation;
f. the Management and Development Fee and any
other sums payable hereunder to Manager;
g. contributions to merchants associations, if
and as required by any outstanding agreements; and
advertisement and public relations costs for
promotional activities; and
h. any and all other expenses or costs that
are customarily disbursed by managing agents of
properties comparable to the Properties or that are
required in order for Manager to perform its duties.
In no event shall Manager be required to pay any bills or
charges from its own funds, except as otherwise
specifically provided herein.
12. Engaging, at the expense of Owner, any
outside collection agency Manager deems appropriate for
the collection of rent or other revenues or instituting,
in Manager's name (but only if Manager so elects) or in
the name of Owner, but in any event at the expense of
Owner, any and all legal actions or
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<PAGE> 11
proceedings to collect rent or other income from the
Properties or to oust or dispossess tenants or other
persons therefrom, or cancelling or terminating any lease
or the breach thereof or default thereunder by the
tenant, and holding all security deposits posted by
tenants and occupants and applying the same against
defaults by the tenant or occupant. Manager shall hold
all security deposits in a separate account if required
by law or if requested by Owner. Manager shall not
terminate any lease or evict the tenant thereunder
without the prior approval of the Board.
13. Rendering such statements at such times
and in such formats as Owner shall reasonably request and
as shall be customary for properties comparable to the
Properties, including, without limitation, monthly cash
flows, quarterly reports and operating statements and
annual budgets as provided below.
14. Maintaining, at Manager's expense,
insurance with reasonable deductibles, if any, for any
and all claims or causes of action arising from bodily
injury, disease or death of any of Manager's employees,
agents, or representatives and for any and all claims or
causes of action arising from Manager's negligence,
infidelity or wrongful acts in connection with the
performance of this Agreement, as well as employer's
liability and worker's compensation for Manager's
employees and fidelity bonds for employees of Manager
that handle funds and proceeds from the Properties, in
each case, at customary levels of coverage.
15. Causing, at Owner's expense, all such acts
and things to be done in or about the Properties as shall
be necessary to comply with all statutes, ordinances,
laws, rules, regulations, orders and determinations,
ordinary or extraordinary, foreseen or unforeseen of
every kind or nature affecting or issued in connection
with the Properties by any governmental authority having
jurisdiction thereof, as well as with all such orders and
requirements of the Board of Fire Underwriters, Fire
Insurance Exchange, or any other body that may hereafter
exercise similar functions (collectively, "Applicable
Laws"). In the event that Manager's good faith estimate
of the cost of complying with any Applicable Laws shall
exceed $100,000 in connection with any one Property or in
the aggregate, Manager shall not take any action to
comply with Applicable Laws without first obtaining the
consent of the Board. Notwithstanding the foregoing,
however, Owner shall have no obligation to pay for the
expenses incurred in connection with compliance with
Applicable
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<PAGE> 12
Laws to the extent such costs are incurred due to
Manager's Malfeasance or material breach of this
Agreement. Manager shall have the right to contest such
Applicable Laws, and pending the final determination of
the contest, Manager may withhold compliance, provided
that Manager shall receive the Board's prior consent to
so withhold compliance. Manager agrees to contest any
Applicable Law the Board shall request Manager to
contest.
16. Filing applications, in Manager's name
(but only if Manager so elects) or in the name of Owner,
but in any event at Owner's expense, for the reduction of
real estate tax assessments and/or water charges and
sewer rents, and/or for the cancellation or reduction of
any other taxes, assessments, duties, imposts or other
obligations of any nature imposed by law; and instituting
any and all legal actions or proceedings in connection
therewith; filing, settling, trying or appealing of all
such applications and/or proceedings, upon such terms and
conditions as Manager deems appropriate, provided,
however, that Manager shall receive the consent of the
Board prior to the institution or settling of any legal
action or proceeding.
17. Taking, at Owner's expense and with the
prior consent of the Board, any appropriate steps to
protest and/or litigate to final decision in any
appropriate court or forum any violation, order, rule or
regulation affecting any Property.
18. Engaging, at Owner's expense, counsel,
approved by the Board, and paying counsel fees and court
costs and disbursements in connection with any
proceedings involving any Property.
19. Assisting Owner in obtaining financing for
the Properties and complying with all terms, conditions
and obligations of any lease, mortgage or other
agreement, on behalf of Owner and at Owner's expense,
that shall relate to any matters in connection with the
rental, operation or management of each Property, unless
prevented or delayed by strikes, riot, civil commotion,
war, inability to obtain materials because of
governmental restrictions or acts of God or public enemy,
or any other cause beyond Manager's control.
20. Performing administrative services
required in connection with managing the Properties,
including, without limitation, the following:
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a. administration of tenants' insurance and
enforcement of continuing coverage in accordance
with the terms of the leases.
b. confirmation of lease commencement dates and
termination dates.
c. liaison with the tenants as Owner's
representative.
d. supervision of tenant litigation in
conjunction with Owner's legal counsel.
e. obtaining sales volume reports from tenants
and calculating and collecting percentage rents as a
result of those reports.
f. providing necessary information to Owner
for tax reporting, in a format reasonably approved
by Owner and upon Owner's request, initiating
together with Owner's counsel, property tax appeals.
g. providing quarterly financial statements,
in a format reasonably approved by Owner, reflecting
in reasonable detail the operating income and
expense of the Properties.
h. alerting Owner if tenant sales volume
reports appear inaccurate and recommend audits.
i. reporting and making recommendations
regarding unusual tenant problems requiring Owner's
approval.
j. obtaining contractors to maintain, operate
and provide security for the Properties.
k. coordinating with Vornado Realty Trust and
all other consultants retained by Owner in
connection with the Properties.
Notwithstanding anything contained in this Article IV or
elsewhere in this Agreement to the contrary, Manager shall not
be responsible for the day-to-day management of, or the
collection of income from, the Kings Plaza Shopping Center and
Marina; that Property shall continue to be operated in
accordance with the Management and Operating Agreement, dated
as of December 31, 1986, among Kings Plaza Shopping Center of
Flatbush Avenue, Inc. ("KPA"), Kings Plaza Shopping Center of
Avenue U, Inc. and Centercorp., Inc (the "Centercorp
Agreement"); provided, however, that Manager
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<PAGE> 14
shall, in accordance with the terms of this Agreement,
exercise all rights and have all of the responsibilities of
Alexander's Department Stores of Brooklyn, Inc., as successor
interest to KPA, under the Centercorp Agreement, provided
further, however, that the Board shall retain the right to
approve any successor in interest to Centercorp, Inc.
21. Preventing the use of the Properties for any
purpose that would void any insurance policy covering any of
the Properties or that would render any loss thereunder
uncollectible, or that would be in violation of any
governmental restriction, any tenant lease or any reciprocal
easement agreement.
22. Providing all other services customarily
provided by Vornado Realty Trust in connection with properties
owned and managed by Vornado Realty Trust.
B. Owner shall be responsible for, and shall
indemnify Manager against, all costs incurred in connection
with the operation of Owner's business, except to the extent
such costs are incurred in connection with Manager's
Malfeasance or material breach of this Agreement, and all
past, present and future liabilities of Owner, including,
without limitation:
1. all outside professional fees, including
attorneys, accountants and architects;
2. all filing, registration and other fees payable
to the New York Stock Exchange, the Securities and
Exchange Commission and state securities agencies;
3. taxes;
4. insurance (other than workers' compensation
insurance for Manager's employees and as otherwise
provided herein), including retiree health liability
insurance and directors' and officers' liability
insurance;
5. fees and expenses applicable to the Board of
Directors of Owner; and
6. costs that are at the discretion of Owner, for
services not included in this Agreement, including,
without limitation, rent and other expenses for Owner's
offices, salaries and other related expenses of employees
performing services for Owner (other than employees of
Manager), and expenses incurred in connection with the
winding up of Owner's prior
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<PAGE> 15
retailing activities and activities of Owner related to
Owner's Chapter 11 filing, including, without limitation,
salaries and other related expenses for employees whose
sole or primary function is related to such winding up
activities, including, without limitation the salary and
other related expenses of Brian Kurtz.
7. all costs and expenses incurred by Manager in
connection with the transition to Manager of the
management activities contemplated by this Agreement.
ARTICLE V. Development. Manager agrees to design
and plan the development of the Development Properties and to
manage the construction and development of the Development
Properties and to perform, or cause to be performed by outside
contractors, the following functions on behalf of Owner in an
efficient and diligent manner using the same standard of care,
including bidding and selection processes, used by Vornado
Realty Trust in connection with properties owned and managed
by Vornado Realty Trust, and on a Property by Property basis:
1. Obtaining or assisting Owner in obtaining,
on behalf of Owner and at Owner's expense, all required
building permits and other governmental approvals and
consents, along with any zoning variances or other zoning
approval, necessary to initiate the development of any
Development Property.
2. Retaining, at Owner's expense, all
architects, engineers, contractors, construction managers
and consultants (collectively "Consultants") necessary or
desirable in completing the design and planning of the
development of any Development Property and negotiating,
on behalf of Owner, any contracts with Consultants.
3. Monitoring and coordinating the activities
of the Consultants retained for the planning and design
of the Development Properties.
4. Assisting and cooperating with Owner in all
aspects of arranging or acquiring any construction or
other financing required for the Development Properties,
including, without limitation, meeting with and
furnishing information to prospective lenders.
5. Preparing and filing, or causing the
preparation and filing at the expense of Owner of, all
returns (other than income, franchise and other similar
returns), statements, declarations and filings that may
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<PAGE> 16
from time to time be required of Owner in connection with
the planning, design and development of any Development
Property by any municipal, state, federal or other
governmental or statutory authority having jurisdiction
over the development of any Development Property.
6. Preparing an initial budget as soon as
practicable, but in any event prior to the commencement
of any construction at any of the Development Properties
(including, without limitation, an estimate of the timing
of the incurrence of expenditures contained in the
budget) for such Property and make any revisions or
adjustments necessary to acquire approval of the Board
for such budget, the approved budget for any of the
Properties being herein called the "Development Budget".
Manager shall recommend any revision to the Development
Budget that Manager from time to time may deem
appropriate, or as the Board may reasonably request, in
each case to be approved by the Board, provided, however,
that Manager's obligation to seek Board approval of
change orders shall be limited to change orders
exceeding, in the aggregate, ten percent (10%) of the
applicable line item in the initial Development Budget.
The approval by the Board of the Development Budget and
any revisions thereto shall also constitute authorization
by the Board of the expenditures and commitments provided
for therein and, subject to the other provisions of this
Agreement, Manager then shall be entitled to act for
Owner in incurring the expenditures and making
commitments to the extent provided for in the approved
initial or revised Development Budget, as applicable.
7. Recommending, for the Board's approval,
such Consultants as may be necessary or desirable for the
development of any Property and negotiating on behalf of
Owner any contracts and agreements as are necessary or
desirable in connection with the development of any
Property with such Consultants approved by the Board and
supervising the performance by such Consultants
thereunder, including, without limitation, the
supervision and processing of change requests and change
orders.
8. Monitoring and coordinating the activities
of the Consultants and, where appropriate, assisting
Owner in performing Owner's obligations under the
contracts with Consultants.
9. Supervising the collection and review of
all documentation required to be submitted to any
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<PAGE> 17
construction lender or other lender in connection with
the development of any Property and supervising all
disbursements made pursuant to any financing.
10. Supervising the ordering and installation
of equipment or other supplies necessary for the
development of any Property;
11. Preparing (i) quarterly progress reports
regarding the development of the Properties, detailing
any deviations from the Development Budget and providing
explanations for such deviations, (ii) all reports
required under loan agreements affecting Owner and (iii)
promptly after the completion of the development of any
Property, preparing a report of actual Development Costs
incurred in connection with the development of that
Property, separately identifying as estimated items
those, if any, that cannot be finally determined at the
time of the final report.
12. Providing regular and continuing
accounting services, on the basis of standard accounting
practices for similar projects consistently applied, of
all costs and expenses incurred by Owner in connection
with the development of the Properties, and the receipt
and use of borrowed funds or funds otherwise made
available.
13. Attending meetings as reasonably required
or requested by the Board.
14. Assisting Owner in obtaining and
maintaining in full force and effect at all times during
the term of construction at any of the Properties all-
risk builder's risk insurance (including coverage against
collapse and fire) written on a progress basis and
including commercial public liability insurance with
incidental contract coverage, with such insurers, in such
amounts and under such policies as may be reasonably
satisfactory to the Board and the expense of maintaining
such insurance shall be an expense of, chargeable to, or
paid by Owner.
15. Generally performing such other acts and
things as may be reasonably required for coordinating,
monitoring, administering and supervising the full and
complete planning, design construction and development of
the Development Properties.
ARTICLE VI. Annual Budget. A. On or before the
beginning of each fiscal year of Alexander's Inc., Manager
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<PAGE> 18
shall prepare and submit to Owner a proposed budget
(hereinafter referred to as the "Proposed Budget") of the
estimated operating and capital expenses of the Properties
for the next fiscal year or such other operating period as
may be agreed to by the parties.
B. The Board shall have the right to approve or
disapprove the Proposed Budget. The final budget for the
fiscal year is referred to as the "Approved Budget" in this
Agreement. The Approved Budget shall be subject to quarterly
comparisons and revisions, which revisions the Manager and the
Board mutually shall agree to be appropriate, all such
revisions as approved by the Board shall be considered part of
the "Approved Budget". Manager shall make expenditures
without the specific approval of the Board if:
1. The expenditure (or group of related
expenditures) has been generally identified in an
Approved Budget line item and exceeds the amount shown in
respect thereof in such budget line item by no more than
ten percent (10%).
2. The expenditure (or group of expenditures) has
not been generally identified in the Approved Budget but
does not exceed $100,000.
3. The expenditure (or group of related
expenditures) exceeds $100,000 and was either not
anticipated or exceeded the Approved Budget by more than
ten percent, but is not discretionary.
4. The expenditure is required by a condition or
situation that in Manager's professional judgment
constitutes an emergency. In any case where an emergency
situation exists that is of serious financial or physical
consequence, Manager may act in the best interest of
Owner but Manager shall attempt to notify Owner prior to
making the expenditure, but in any event, Manager shall
report verbally the making of the expenditure to Owner no
later than 24 hours after the occurrence of the
emergency.
ARTICLE VII. Chief Executive Officer. Steven Roth,
Chairman of the Board and Chief Executive Officer of Manager,
shall serve as Chief Executive Officer of Alexander's, Inc.
and provide all services normally associated with such
position, to the extent not inconsistent with his position
with Manager. Owner recognizes that Steven Roth has or may
have other business interests, activities and investments,
including, without limitation, interests in connection with
his interest in
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<PAGE> 19
Manager and Manager's affiliates, some of which may be in
conflict or competition with the business of Owner and that he
is entitled to carry on such other business, activities, and
interests and shall have no duty or obligations to offer to
Owner any interest in such business interests, activities and
interests, including, without limitation, any potential
property acquisition, whether or not competitive with the
business interests of Owner. Manager agrees to cause Steven
Roth to excuse himself from any activities of Owner that are
related to the enforcement of this Agreement.
ARTICLE VIII. Owner to Execute Documents; Reserved
Rights. Owner covenants and agrees that wherever in this
Agreement it is provided that Manager may take any action in
the name of or on Owner's behalf, Owner will promptly execute
any documents that may be required by Manager for the purposes
of carrying out any of Manager's functions as same are set
forth. Anything set forth in this Agreement to the contrary
notwithstanding, Owner reserves to itself the performance of
all duties and obligations of Manager hereunder to be
performed with respect to the 59th Street Property (as
described on Exhibit A hereto) as required pursuant to the
amended and restated partnership agreement of Seven Thirty One
Limited Partnership as the same exists on the date hereof;
provided, however, that no such reservation or performance by
Owner will alter any other rights or obligations set forth in
this Agreement (including, without limitation, the payment of
the fees payable to Manager hereunder).
ARTICLE IX. Assignment; Cancellation. A. Neither
Owner nor Manager shall assign this Agreement or any of its
rights hereunder without the consent of the other party;
provided, however, (i) qualification by Alexander's, Inc. as a
REIT (as defined herein) shall not be deemed to constitute an
assignment and (ii) that Manager shall have the right to
assign its rights and delegate its duties under this Agreement
to any Specified Vornado Affiliate without the consent of
Owner provided that, (a) in connection with any such
assignment, Vornado Realty Trust provides to Owner a
guarantee, in form and substance reasonably satisfactory to
Owner, of the duties and obligations of the Specified Vornado
Affiliate under this Agreement and agrees, to the extent
necessary, to make available to the Specified Vornado
Affiliate the resources of Vornado Realty Trust for the
purposes of carrying out such duties and obligations, (b)
notwithstanding any such assignment to a Specified Vornado
Affiliate, the indemnification of Owner by Manager set forth
in Article XII hereof shall remain the obligation of Vornado
Realty Trust and (c) references to the standard of care,
customarily provided services and reporting standards
applicable to Manager in performing its duties under this
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<PAGE> 20
Management Agreement shall be the same standard of care and
reporting standards applicable to Vornado Realty Trust in
connection with properties owned by Vornado Realty Trust. For
purposes of this Article IX, "Specified Vornado Affiliate"
shall mean (i) any wholly-owned subsidiary of Vornado Realty
Trust or (ii) any entity at least 95% of the preferred stock
of which is owned by Vornado Realty Trust.
(b) In the event that there is a change of control of
Vornado Realty Trust or Manager after the date of this
Agreement, the Independent Directors shall have the right to
terminate this Agreement if the Independent Directors shall
determine that such change of control is reasonably likely to
have a material adverse effect on the ability of Manager to
perform its obligations under this Agreement. For purposes of
this Article IX, "change of control" shall mean that the
aggregate interest of Interstate Properties and its partners
in Vornado Realty Trust shall be less than twenty percent of
the ownership interests therein.
(c) This Agreement shall be non-cancelable, except
as permitted by the terms of this Agreement.
ARTICLE X. Breach; Termination. A. If either
party shall commit a material breach of this Agreement, the
other party shall serve written notice upon the allegedly
breaching party, and the notice shall set forth the details of
such alleged breach. Owner covenants and agrees that Manager
shall not be deemed to have committed a material breach of
this Agreement unless Manager wilfully violates any provision
hereof, is grossly negligent in the observance or performance
of any of its obligations hereunder, acts in bad faith in
connection with its duties under this Agreement, or materially
misapplies any funds received from the Properties (to the
extent not covered by insurance).
B. Owner shall, within ten (10) days after its
receipt of said notice, cure such breach unless it disputes
the claim as set forth in Paragraph D of this Article X. If
Owner does not cure within such ten-day period, Manager shall
have the right, but not the obligation, to cease providing
services hereunder until the breach shall be cured. In the
event that Manager shall cease providing services hereunder
pursuant to this Paragraph, Owner shall have the right to
terminate this Agreement and replace Manager in which event
Manager promptly shall deliver to Owner all books and records
with respect to the Properties and Owner that are in Manager's
possession and otherwise comply with paragraph H below, and
upon its receipt of any outstanding payments due to it, shall
cooperate with the successor Manager to effect a smooth
transition in the
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<PAGE> 21
management, operation and development of the Properties and
the management and operation of Owner.
C. Manager shall, within thirty (30) days after its
receipt of a notice under Paragraph A of this Article X, cure
such breach unless it disputes the claim as set forth in
Paragraph D of this Article X; or if said breach cannot be
cured within said thirty (30) day period, Manager shall within
said time period commence and thereafter diligently and
continuously proceed with all necessary acts to cure such
breach, subject to the terms of any loan documents and other
material agreements affecting the Properties. If Manager
shall fail within said time period to cure the said breach,
Owner shall have the right, by sending a second written notice
to Manager, to terminate this Agreement effective immediately
or as of a particular date which shall be specified in said
second notice.
D. If the party who receives the notice of breach
shall, within five (5) days after receipt of such notice, send
the notifying party a written notice disputing the claim of
material breach and demanding arbitration thereof, then the
parties hereto hereby agree that the dispute shall be
submitted promptly by them to the American Arbitration
Association for the City of New York for determination in
accordance with its rules, and such determination shall be
binding upon both parties. During the pendency of said
arbitration, Manager shall continue to perform all of its
obligations as Manager under this Agreement. If it is
determined that the party did commit a breach, then the breach
shall be cured within ten (10) days after service of a copy of
the award or determination on the breaching party; and if not
so cured, this Agreement shall be terminated.
E. If, at any time during the term of this Agree-
ment there shall be filed against either of the parties hereto
in any court, pursuant to any statute either of the United
States or any state, a petition in bankruptcy or insolvency or
for reorganization of or for the appointment of a receiver or
trustee of all or a portion of the property of either party,
and such petition is not discharged within thirty (30) days
after the filing thereof, or if either party makes an
assignment for the benefit of creditors, or petitions for or
enters into an arrangement, or permits this Agreement to be
taken under any writ of execution or attachment, then in any
of such events, the other party hereto shall have the right to
terminate this Agreement by giving written notice, by
certified mail, effective as of a particular date specified in
said notice.
F. Manager and Owner shall each have the further
right to terminate this Agreement or any portion or
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<PAGE> 22
provision thereof or activity thereunder on not less than
thirty (30) days' prior written notice to the other party if
Manager or Owner shall determine in good faith that this
Agreement shall or may deprive Manager or Alexander's, Inc. of
any benefits appurtenant to that Party's future qualification
as a REIT under all applicable laws, including without
limitation, the Internal Revenue Code of 1986, as amended from
time to time (the "Code") or continued benefits if that party
is a REIT.
G. Upon any termination, partial termination with
respect to one or more Properties or as set forth in paragraph
C of Article III or expiration of this Agreement, all of the
obligations of either party to the other shall terminate
immediately except (i) Manager shall comply with the
applicable provisions of Subsection H below, (ii) Owner shall
pay to Manager all Management and Development Fees and
expenses earned and/or due hereunder to the date of
termination or expiration and (iii) as otherwise expressly
stated herein. Upon any termination of any portion, provision
or activity of or under this Agreement, the provisions of the
preceding sentence shall apply in respect of the terminated
portion, provision or activity. Owner shall pay Manager any
amount owed to Manager under this Agreement within 30 days
after any termination of this Agreement.
H. Upon the expiration or earlier termination or
partial termination of this Agreement with respect to any or
all of the Properties, Manager shall:
1. Deliver to Owner, or such other person or
persons designated by Owner, all books and records of any
Property as to which this Agreement has been terminated
and all funds in its possession belonging to Owner or
received by Manager pursuant to this Agreement with
respect to such Properties, together with all leases and
all other contracts related to such Properties; provided,
however, that Manager shall have the right to keep a copy
of all such records; and
2. Assign, transfer or convey to Owner, or
such other person or persons designated by Owner, all
service contracts and personal property of Owner relating
to or used in the operation or maintenance of any
Property as to which this Agreement has been terminated.
Upon the expiration or termination, in whole or in part,
of this Agreement, Manager shall render a full account to
Owner and shall deliver to Owner a statement outlining in
detail all management fees due to Manager hereunder with
respect to such terminated Property, shall cause the net
amount of any
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<PAGE> 23
funds held by Manager in connection with any such
Property to be delivered to Owner and shall cooperate
with Owner in the transition by Owner to a replacement
property manager, if applicable.
Owner shall compensate Manager for all costs and expenses
incurred by Manager in good faith in connection with the
transition of the management of Owner and the management of
the Properties from Manager to any new manager.
ARTICLE XI. No Joint Venture. It is the intent of
this Agreement to constitute Manager as an independent
contractor and as agent of Owner under any contract entered
into by Manager on behalf of Owner in accordance with the
terms of this Agreement, and this Agreement shall be so
construed and Manager agrees at all times to act in conformity
therewith. Nothing herein contained shall be deemed to have
created, or be construed as having created any joint venture
or partnership relationship between Owner and Manager. At all
times during the performance of its duties and obligations
arising hereunder, Manager shall be acting as an independent
contractor.
ARTICLE XII. Indemnity. A. Owner shall, to the
fullest extent permitted by applicable law, indemnify, defend
and hold harmless Manager, its officers, directors, trustees,
partners, agents, employees and representatives against any
losses, claims, damages or liabilities to which such person
may become subject in connection with any matter arising out
of or in connection with this Agreement or Owner's business or
affairs, except for any loss, claim, damage or liability
caused by Manager's Malfeasance. If Manager becomes involved
in any capacity in any action, proceeding or investigation in
connection with any matter arising out of or in connection
with this Agreement or Owner's business or affairs, Owner
shall reimburse Manager for Manager's legal and other expenses
(including the cost of any investigation and preparation) as
they are incurred in connection therewith; provided, however,
that Manager shall promptly repay to Owner the amount of any
such reimbursed expenses paid to it to the extent that it
shall ultimately be determined that Manager, its officers,
directors, trustees or agents were not entitled to be
indemnified by Owner in connection with such action,
proceeding or investigation.
B. Vornado Realty Trust shall indemnify, defend
and hold harmless Owner and each of their respective officers,
directors, trustees, partners, representatives, employees and
agents from and against any and all claims, losses, damages or
liabilities, to which such person may become subject and
arising out of Manager's Malfeasance or
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<PAGE> 24
the Malfeasance of any of its employees, representatives or
agents in performing its or their duties under this Agreement,
except to the extent caused by the Malfeasance of Owner or any
of their respective officers, directors, trustees,
shareholders, partners, representatives, employees or agents.
If Owner becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter
arising out of or in connection with this indemnity, Manager
shall reimburse Owner for Owner's legal and other expenses
(including the cost of any investigation and preparation) as
they are incurred in connection therewith; provided, however,
that Owner shall promptly repay to Manager the amount of any
such reimbursed expenses paid to it to the extent that it
shall ultimately be determined that Owner, its officers,
directors, trustees or agents were not entitled to be
indemnified by Manager in connection with such action,
proceeding or investigation. Notwithstanding anything
contained herein, Manager's liability hereunder shall be
limited (except to the extent covered by insurance) to the
aggregate amount of the Management and Development Fee
received by Manager as of the date such liability is
determined.
C. The terms of this Article XII shall survive the
expiration or termination of this Agreement.
ARTICLE XIII. Notices. Any and all notices,
consents or directives by either party intended for the other
shall be in writing sent by hand delivery or reputable
overnight courier service to the respective addresses first
herein set forth in this Agreement, unless either party shall
have designated different addresses, by serving written
notices of change of addresses on the other party by
registered or certified mail, return receipt requested.
ARTICLE XIV. Miscellaneous. A. This Agreement
cannot be changed or modified, varied or altered except by an
agreement, in writing, executed by each of the parties hereto.
This Agreement constitutes all of the understandings and
agreements of whatsoever kind or nature existing between the
parties in connection with the relationship created herein.
B. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
C. Neither Owner nor Manager shall make (and each
hereby waives) any claim against the other party's directors
personally or against the other party's trustees,
beneficiaries or shareholders personally. Manager shall (and
is hereby authorized to) insert in all leases,
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<PAGE> 25
documents and agreements executed by it on behalf of Owner, a
provision that Manager's directors, trustees, beneficiaries or
shareholders shall not be personally liable thereunder.
D. Owner shall have the right to collaterally
assign this Agreement to a lender providing financing to Owner
and Manager agrees to execute and deliver a recognition
agreement, in a commercially reasonable form, providing that
(a) such lender may assume Owner's interest in this Agreement
without obligation for payment of any fees accrued and payable
to Manager for a time prior to such assumption or with respect
to performance of any obligation relating to a time prior to
such assumption, (b) Manager will perform the services set
forth herein for so long as such lender continues to perform
the obligations of Owner hereunder and (c) any termination
hereof by the lender other than in accordance with the terms
of this Agreement (as opposed to in accordance with the
recognition agreement) shall not relieve Owner of its
obligations hereunder. In no event shall an assumption by the
lender under such a recognition agreement release Owner from
its obligation hereunder with respect to accrued fees or
otherwise.
E. Any approval or consent required by or
requested of any of Owner, the Board, or the Independent
Directors pursuant to the terms of this Agreement may be
withheld in the sole and absolute discretion of Owner, the
Board or the Independent Directors, as applicable, unless
otherwise expressly provided.
F. Manager and Owner hereby expressly acknowledge
and agree that any third party engaged in accordance with the
terms of this Agreement to perform any of the services
contemplated hereunder shall be at Owner's expense.
G. Owner and Manager acknowledge that nothing
contained in this agreement shall restrict or otherwise affect
the rights of Vornado Realty Trust or any affiliate thereto in
connection with any loan facility provided by Vornado Realty
Trust or such affiliate to Alexander's, Inc. and/or its
subsidiary.
H. Anything contained in this Agreement to the
contrary notwithstanding, Manager's agreement to undertake the
obligations set forth in this Agreement shall not constitute
or be deemed to constitute an express or implied warranty
concerning the general affairs, financial position,
stockholders' equity, financial results of operations or
prospects of Owner.
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<PAGE> 26
ARTICLE XV. Declaration of Trust.
A. Manager shall use every reasonable means to
assure that all persons having dealings with Alexander's
through Manager shall be informed that no trustee,
shareholder, officer or agent of Alexander's, or any
subsidiary of Alexander's established for purposes of electing
tax treatment as a REIT, shall be held to any personal
liability, nor shall resort be had to their private property
for the satisfaction of any obligation or claim or otherwise
in connection with the affairs of Owner, but the trust estate
only shall be liable. Manager recognizes and agrees that
every agreement or other written instrument entered into by
Manager on behalf of Owner shall contain a provision stating
the above limitation.
B. Manager represents, warrants and agrees that
neither it nor any affiliated or related person or entity
(including any person or entity owning any interest in
Manager) is now, or shall become during the term of this
Agreement, a borrower of any funds advanced by Alexander's and
Manager shall advise Alexander's promptly, in writing, should
such representation and warranty become untrue. Manager
shall, from time to time, furnish such information as may
reasonably be requested by Owner in order to facilitate
Alexander's qualification as a REIT under the Code.
ARTICLE XVI. Continued Qualification as a REIT. A.
Manager shall make reasonable efforts not to enter into any
agreement (including, without being limited to, any agreement
for the furnishing of non-customary services), without the
consent of Alexander's, with any tenant or other occupant of
any Property, that would result in (A) the disqualification of
Alexander's as a REIT entitled to the benefits of Section 856
et seq., of the Code, (B) the imposition of any penalty or
similar tax on Alexander's (including, without being limited
to, the tax imposed on the failure to meet certain income
requirements under Section 857(b)(5) of the Code and the tax
imposed on income from prohibited transactions under Section
857(b)(6) of the Code) or (C) any part of the rental or other
consideration paid thereunder by such tenant or occupant to
Alexander's, or to Manager on behalf of Alexander's, being
held not to constitute either "rents from real property" or
"interest on obligations secured by mortgages on real property
or on interests in real property" or "interest on obligations
secured by mortgages on real property or on interest in real
property" or other income described in Sections 856(c)(2) and
(c)(3) of the Code.
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<PAGE> 27
B. Alexander's shall make reasonable efforts to
assure, by prior review of agreements to be entered into by
Manager, that no such agreement contains provisions that would
result in the disqualification of Alexander's as a REIT
entitled to the benefits of Section 856 et seq. of the Code,
receipt by the Owner of non-qualifying income, or imposition
of a penalty or similar tax (including, without being limited
to, the tax imposed on the failure to meet certain income
requirements under Section 857(b)(5) of the Code and tax
imposed on income from prohibited transactions under Section
857(b)(6) of the Code), and specifically agrees that Manager
shall be entitled to rely upon the advice of Alexander's
designated counsel as to any such matter; provided, however,
that, without regard to whether such review has been performed
or advice rendered, if any document or other written
undertaking entered into or made by or on behalf of Owner or
any constituent entity of Owner shall, in the reasonable
opinion of counsel to Alexander's, contain any provision that
would result in a significant risk of the disqualification of
Alexander's as a REIT, receipt by Alexander's of non-
qualifying income, imposition on Alexander's of any penalty or
similar tax (including, without being limited to, the tax
imposed on the failure to meet certain requirements under
Section 857(b)(5) of the Code and the tax imposed on income
from prohibited transactions under Section 857(b)(6) of the
Code), all as provided for in said Section 856 et seq., then:
(i) such provision shall promptly be amended or
modified, to the reasonable satisfaction of counsel to
Alexander's so as to remove the risk of such result, such
amendment or modification to be retroactive to the date
of such document or other undertaking, or to a date
approved by counsel to Alexander's; or
(ii) if a satisfactory amendment or modification
cannot be agreed upon as set forth in clause (i) above,
any such document or other undertaking shall be
terminated by Alexander's, such termination to be
retroactive to the date of such document or other
undertaking, or to a date approved by counsel to
Alexander's, and effective as to all terms and provisions
of such document or other undertaking, except such
provisions thereof as call for the making of any
distribution or the payment of any compensation to any
third party, for the purposes of which provisions, the
termination date shall be deemed to be without
retroactive effect.
C. Manager agrees that it shall cooperate with
Owner in accomplishing a satisfactory amendment or
modification of any such document or other undertaking, or
<PAGE>
<PAGE> 28
the termination thereof, and shall, on request, execute and
deliver any and all agreements and other documents reasonably
required to effect such amendment or modification, or such
termination. Manager shall submit any agreement proposed to
be entered into by or on behalf of Owner to Owner's designated
counsel for review a reasonable period of time prior to the
proposed execution of such agreement.
ARTICLE XVII. Effectiveness of this Agreement;
Further Termination Right. This Agreement shall not become
effective until the date on which Vornado Realty Trust shall
have purchased all outstanding shares of stock in Alexander's
held by Citibank, N.A., pursuant to that certain Stock
Purchase Agreement, dated as of February 6, 1995, between
Citibank, N.A. and Vornado Realty Trust and Citibank, N.A.,
shall have transferred to Vornado Realty Trust all such shares
of stock. Manager shall have the right to terminate this
Agreement in the event that Owner shall either (i) fail to use
its best efforts to satisfy the conditions set forth in that
certain commitment letter, dated February 6, 1995, between
Vornado Realty Trust and Alexander's (the "Commitment") and to
take all actions required to be taken to pledge the collateral
and effectuate the Loan (as defined in the Commitment) on the
terms and condition set forth therein; or (ii) breach its
obligations to refrain from soliciting for or accepting any
financing from any party other than as defined in the
Commitment prior to the expiration of the Commitment. In the
event that the Effective Date shall not have occurred by June
30, 1995, this Agreement shall terminate and neither party
shall have any obligations hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have hereunto
executed this Agreement as of the ___ day of February, 1995.
OWNER: ALEXANDER'S INC.
By:___________________________
MANAGER: VORNADO REALTY TRUST
By:___________________________
23950.2/NYL1
<PAGE>
<PAGE> 30
EXHIBIT A
1. "FORDHAM ROAD PROPERTY"
BUILDING
ADDRESS: commonly known as 2501-2511 Grand
Concourse, Bronx, New York
TAX MAP DESIGNATION:
BLOCK: 3167 LOT: 1
CITY: New York COUNTY: Bronx STATE: New York
PARKING LOT
ADDRESS: commonly known as Creston Avenue, Bronx,
New York
TAX MAP DESIGNATION:
BLOCK: 3167 LOT: 26
CITY: New York COUNTY: Bronx STATE: New York
2. "FLUSHING PROPERTY"
ADDRESS: 136-20 through 136-30 Roosevelt Avenue,
a/k/a 40-17-19 Main Street
Queens, New York
TAX MAP DESIGNATION:
BLOCK: 5019 LOT: 5
CITY: New York COUNTY: Queens STATE: New York
3. "THIRD AVENUE PROPERTY"
ADDRESS: 2948-54 Third Avenue;
633 Bergen Avenue;
2964 Third Avenue; and
2970 Third Avenue
Bronx, New York
TAX MAP DESIGNATION:
SECTION: 9 BLOCK: 2362 LOTS: 44,72,71,52 & 53
CITY: New York COUNTY: Bronx STATE: New York
4. "59TH STREET PROPERTY"
ADDRESS: 162-64 East 59th St a/k/a 976-88 Third Ave
135-39 East 58th St a/k/a 723-33 Lexington Ave
136-40 East 59th St a/k/a 735-41 Lexington Ave
New York, New York
TAX MAP DESIGNATION:
BLOCK: 1313 LOTS: 40, 42, 43 & 50
CITY: New York COUNTY: New York STATE: New York
<PAGE>
<PAGE> 31
5. "KINGS PLAZA STORE PROPERTY"
ADDRESS: Kings Plaza
Brooklyn, New York
TAX MAP DESIGNATION:
BLOCK: 8470 LOT: P/O 55
CITY: New York COUNTY: Kings STATE: New York
6. "KINGS PLAZA SHOPPING CENTER PROPERTY"
ADDRESS: Kings Plaza
Notwithstanding Avenue & Avenue U
Brooklyn, New York
TAX MAP DESIGNATION:
BLOCK: 8470 LOTS: P/O 55, P/O 50 & P/O 1
CITY: New York COUNTY: Kings STATE: New York
7. "REGO PARK PROPERTY"
ADDRESS: Junction Boulevard
Rego Park, New York
"REGO PARK I" (includes store and parking garage)
TAX MAP DESIGNATION:
BLOCK: 2080 LOT: 101
AND
BLOCK: 2084 LOT: 101
CITY: New York COUNTY: Queens STATE: New York
"REGO PARK II" (includes parking lot and "Z" parcel)
TAX MAP DESIGNATION:
BLOCK: 2077 LOTS: 90 & 98
AND
BLOCK: 2076 LOTS: 50 & 63
CITY: New York COUNTY: Queens STATE: New York
8. "PARAMUS PROPERTY"
TAX MAP DESIGNATION:
LOT: 1 BLOCK: 1202 TAX MAP SHEET NO.: 12
<PAGE> 1
EXHIBIT 99.2
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
<PAGE>
<PAGE> 2
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.
<PAGE>
<PAGE> 3
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).
<PAGE>
<PAGE> 4
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.
<PAGE>
<PAGE> 5
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.
<PAGE>
<PAGE> 6
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: Executive Vice President
ACCEPTED AND AGREED TO THIS
6th DAY OF FEBRUARY, 1995:
ALEXANDER'S, INC.
By: /s/Stephen Mann
Name: Stephen Mann
Title: Chairman
<PAGE>
<PAGE> 7
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.
<PAGE>
<PAGE> 8
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
<PAGE>
<PAGE> 9
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
<PAGE>
<PAGE> 10
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).
<PAGE> 1
EXHIBIT 99.3
STANDSTILL AND CORPORATE GOVERNANCE AGREEMENT
THIS STANDSTILL AND CORPORATE GOVERNANCE AGREEMENT (the
"Agreement") dated as of February 6, 1995, by and among Alexander's, Inc.,
a Delaware corporation (the "Company"), Vornado Realty Trust, a Maryland
real estate investment trust ("Vornado"), and Interstate Properties, a New
Jersey general partnership ("Interstate").
W I T N E S S E T H
WHEREAS, Vornado and Interstate collectively own beneficially
and of record approximately 29.3% of the outstanding shares of common
stock, par value $1.00 per share, of the Company (the "Common Shares");
WHEREAS, Vornado and Citibank, N.A. ("Citibank") have entered
into an agreement (the "Citibank Agreement") pursuant to which Vornado will
acquire an additional approximately 27.1% of the outstanding Common Shares
from Citibank; and
WHEREAS, Vornado, Interstate and the Company desire to enter
into certain restrictions and agreements with respect to Vornado's and
Interstate's investments in the Company.
NOW THEREFORE, in consideration of the mutual covenants
hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
ARTICLE I.
STANDSTILL RESTRICTIONS
1.1. Standstill. During the term of this Agreement unless
approved by the Independent Directors (as hereinafter defined), Vornado and
Interstate will not, and will cause each of their respective Affiliates (as
such term is defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) and Associates (as such term is
defined in Rule 12b-2 under the Exchange Act), whether or not any such
Affiliate or Associate was such on the date of this Agreement, not to:
(a) acquire, offer to acquire, or agree to acquire, directly
or indirectly (including repurchases by the Company), by purchase or
otherwise, any Common Shares or
<PAGE>
<PAGE> 2
direct or indirect rights or options to acquire (through purchase,
exchange, conversion or otherwise) any Common Shares, if such acquisition,
at the time it is made, together with the Common Shares otherwise owned
collectively by Vornado, Interstate and their respective Affiliates and
Associates (excluding the Company) (collectively, the "Vornado Group"),
would result in the Vornado Group's aggregate Beneficial Ownership (as such
term is defined in Rule 13d-3 under the Exchange Act) or record ownership
of Common Shares during the term of this Agreement exceeding 66.65% of the
then outstanding Common Shares; or
(b) sell, transfer, or otherwise dispose of any Common Shares
owned or subsequently obtained by each of them in the aggregate in excess
of the Permitted Transfer Amount, in one or a series of related
transactions, at a price or prices per Common Share in excess of 115% of
the average of the last reported sales price per Common Share, as reported
by the New York Stock Exchange, Inc. for the previous 20 trading days,
unless the transferee of such Common Shares irrevocably offers to purchase
the same pro rata percentage of the Common Shares of all other Beneficial
Owners of outstanding Common Shares, other than the members of the Vornado
Group, on the same terms and at the same price per Common Share, it being
understood that any transfers occurring within a 360-day period involving,
directly or indirectly, the same transferee or its Affiliates or Associates
or any other person who would constitute a "group" as defined in Exchange
Act Rule 13d-3 with any of the foregoing ("Related Parties") shall be
deemed to be part of a series of related transactions, but that
transactions with persons who are not Related Parties shall not be
considered a series of related transactions for purposes of this Section
1(b). "Permitted Transfer Amount" means the number of Common Shares
included in any transaction or related series of transactions which in the
aggregate is equal to the greater of (i) 30% of the outstanding Common
Shares or (ii) a majority of the Common Shares owned in the aggregate by
the Vornado Group, in each case at the time of such transfer or transfers.
Notwithstanding the foregoing, the members of the Vornado Group shall be
permitted to transfer any Common Shares pursuant to a broad public
distribution in an underwritten public offering registered under the
Securities Act of 1933, as amended.
<PAGE>
<PAGE> 3
ARTICLE II.
CORPORATE GOVERNANCE MATTERS
2.1. Directors. (a) During the term of this Agreement,
Interstate and Vornado agree to use their best efforts to cause the Board
of Directors of the Company to include three members who are Independent
Directors. For purposes hereof, a person shall be deemed to be an
"Independent Director" if he or she is not, or was not at any time during
the five years preceding his or her election as a director, (i) a member of
the Vornado Group, (ii) an Affiliate or Associate of any entity which
Beneficially Owns 25% or more of the voting securities of the Company,
(iii) an Affiliate or Associate of any entity who has had any material
business dealings with a member of the Vornado Group during such period or
(iv) a family member of any of the above-named persons. If the Independent
Director or Independent Directors so request, Interstate and Vornado agree
to use their best efforts to cause an individual or individuals chosen by
the remaining Independent Director or Independent Directors, who is
reasonably satisfactory to a majority of the remaining members of the
Company's Board of Directors, to fill the vacancy discussed in Section
2.1(b) or any vacancy caused by the resignation, removal or death of an
Independent Director. Any action to be taken by the Independent Directors
shall be taken by majority vote of the Independent Directors in office.
(b) The Parties hereto agree that on the date hereof, Stephen
Mann and Thomas DiBenedetto are the only members of the Board of Directors
of the Company who are Independent Directors. Interstate and Vornado agree
to use their best efforts to cause Messrs. Mann and DiBenedetto and a third
Independent Director designated by Messrs. Mann and DiBenedetto in
accordance with Section 2.1(a) to serve on the Board of Directors of the
Company as Independent Directors during the term of this Agreement. The
parties hereto further agree that the Independent Directors can only be
removed for "cause."
(c) The Company shall, and Interstate and Vornado agree to
use their best efforts to cause the Company to, provide the Independent
Directors with a reasonable budget to employ investment bankers,
independent counsel or other professionals that the Independent Directors
determine are necessary to carry out their responsibilities. The Company
shall maintain its current indemnification of officers and directors under
its Amended and Restated Certificate of Incorporation and By-Laws and shall
maintain its directors
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and officers insurance to the extent available at current premiums (which
do not exceed $250,000 per annum).
(d) The Board of Directors has approved of the appointment of
Russell Wight and David Mandelbaum as members of the Company's Board of
Directors, to fill two of the three vacancies created by the resignations
of the Citibank designees.
2.2. Business Combinations and Other Affiliate Transactions.
During the term of this Agreement, Interstate and Vornado agree not to
cause the Company to engage in any transaction with a member of the Vornado
Group (i) that is described in or contemplated by the definition of
"business combination" contained in Section 203 of the Delaware General
Corporation Law, or (ii) in which any member of the Vornado Group has an
interest (other than as a stockholder of the Company), unless in each case,
such transaction has been approved by a majority of the Independent
Directors.
2.3. REIT Qualification. The Company agrees that it will not
knowingly take any action that will cause the Company to cease to qualify
as a real estate investment trust within the meaning of Section 856 of the
Internal Revenue Code of 1986, as amended, unless such action shall have
been approved by a majority of the Board of Directors of the Company.
2.4. Registration Rights. Upon the request of the Vornado
Group, the Company agrees to use its best efforts to cause a registration
statement to become effective under the Securities Act of 1933, as amended,
relating to the offer and sale of the Common Shares held by the Vornado
Group, on customary and usual terms to be agreed upon between the Company
and the Vornado Group. The parties hereto agree that, in connection with
such registration, the Vornado Group shall pay for all costs and expenses
relating to its legal fees, any blue sky fees and any underwriter discount,
and the Company shall pay for all costs and expenses relating to its legal
and accounting fees, and any printing or listing fees. Interstate and
Vornado agree that the Vornado Group shall not make more than one such
request during any twelve-month period nor request that the Company
register less than 10% of the outstanding Common Shares at any one time.
The Company shall have no liability to the Vornado Group if such
registration statement does not become effective for any reason, provided
that the Company has responded to such request in good faith.
2.5. Conduct of Company's Business. From the date hereof to
the earlier of (i) Closing or termination of
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the Citibank Agreement or (ii) June 30, 1995, the Company shall not take
any action not approved by Vornado to (a) conduct its business other than
in the ordinary course, (b) amend its Amended and Restated Certificate of
Incorporation or its By-Laws, (c) declare, set aside or pay any dividend
payable in cash, stock or property with respect to the Company's common
stock, (d) issue, sell, pledge, dispose of or encumber any additional
shares of, or securities convertible or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, the
Company's common stock, (e) acquire directly or indirectly by redemption or
otherwise any Common Shares, (f) incur any indebtedness for money borrowed,
(g) make or commit any expenditure (not previously committed) in excess of
$50,000 or (h) agree to do any of the foregoing.
2.6. Terms of Office. The Company will use its best efforts
to adjust the classes in which directors serve so that the Independent
Directors will stand for election at the next annual meeting of
shareholders.
ARTICLE III.
MISCELLANEOUS
3.1. Authorization and Enforceability. Each of the parties
hereto represents and warrants that it is duly authorized to execute and
deliver this Agreement and that this Agreement is a valid and binding
obligation of such party enforceable against such party in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the rights
of creditors generally and by general equitable principles.
3.2. Specific Performance. Interstate and Vornado acknowledge
that the Company would not have an adequate remedy at law for money damages
in the event that any of the covenants of Interstate and Vornado in this
Agreement were not performed in accordance with its terms and therefore
agree that the Company shall be entitled to specific enforcement of such
covenants in addition to any other remedy to which it may be entitled, at
law or in equity.
3.3. Term. If the closing of the Citibank Agreement occurs,
this Agreement shall terminate three years from the date of such closing.
If the closing of the Citibank Agreement has not occurred, this Agreement
shall terminate on the earlier of (i) termination of the Citibank
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<PAGE> 6
Agreement or (ii) June 30, 1995. This Agreement is effective immediately
except that Sections 2.1, 2.2, 2.4 and 2.6 shall not become effective until
the closing of the Citibank Agreement has occurred.
3.4. Waivers. The failure at any time of any party to require
performance by any other party of any responsibility or obligation required
by this Agreement shall in no way affect a party's right to require such
performance at any time thereafter, nor shall the waiver by the party of a
breach of any provision of this Agreement by any other party constitute a
waiver of any other breach of the same or any other provision of this
Agreement nor constitute a waiver of the responsibility or obligation
itself.
3.5. Assignability. This Agreement shall be binding upon and
inure to the benefit of the successors, heirs and legatees of each party
hereto, as appropriate. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated in whole or in part to any other
person without the prior written consent of the other parties.
3.6. Notices. In any case where any notice or other
communication is required or permitted to be given hereunder such notice or
communication shall be in writing and (a) personally delivered, (b) sent by
registered United States mail, postage prepaid, return receipt requested,
(c) transmitted by telecopy of (d) sent by way of a recognized overnight
courier service, postage prepaid, return receipt requested with
instructions to deliver on the next business day, in each case as follows:
If to the Company, to:
Alexander's Inc.
31 West 34th Street
New York, New York 10001
Attention: Brian Kurtz
Telecopy: (212) 695-4221
With copy to:
Stephen Mann
c/o Clifford Companies
292 Madison Avenue
New York, New York 10017
Telecopy: (212) 689-8490
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<PAGE> 7
and
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Douglas Bartner, Esq.
Telecopy: (212) 848-7179
If to Vornado or Interstate, to or in care of:
Vornado Realty Trust
Park 80 West
Plaza II
Saddle Brook, NJ 07662
Attention: Steven Roth
Telecopy: (201) 587-0600
With copy to:
Sullivan & Cromwell
1701 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attention: Janet T. Geldzahler, Esq.
Telecopy: (202) 293-6330
All such notices or other communications shall be deemed to
have been given or received (i) upon receipt if personally delivered, (ii)
on the fifth day following posting if by registered United States mail,
(iii) when sent if by confirmed telecopy or (iv) on the next business day
following deposit with an overnight courier.
3.7. Choice of Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of
Delaware without giving effect to the principles of conflict of laws
thereof.
3.8. Severability. Should any provision of this Agreement be
deemed in contradiction with the laws of any jurisdiction in which it is to
be performed or unenforceable for any reason, such provision shall be
deemed null and void solely for the purpose of the performance thereof in
such jurisdiction, but this Agreement shall remain in force in all other
respects. Should any provision of this Agreement be or become ineffective
because of changes in applicable laws or interpretations thereof or should
this Agreement
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<PAGE> 8
fail to include a provision that is required as a matter of law, the
validity of the other provisions of this Agreement shall not be affected
thereby. If such circumstances arise, the parties hereto shall negotiate
in good faith appropriate modifications to this Agreement to reflect those
changes that are required by law.
3.9. Third Party Beneficiaries. In the event the Independent
Directors shall not be in office or the Company has failed to seek
enforcement of its rights or the rights of its shareholders under this
Agreement despite a demand by the Independent Directors that the Company do
so, the present and future beneficial owners of voting securities of the
Company are intended third party beneficiaries of this Agreement and any
such person may take such action as may deemed necessary or appropriate to
enforce the rights and obligations arising pursuant to this Agreement or to
obtain the benefits intended to be conferred hereby.
3.10. References to Agreement. Any reference herein to this
Agreement shall be deemed to be a reference to such Agreement as the same
may be modified, varied, amended or supplemented from time to time by the
parties in accordance with the provisions hereof. Unless the context
otherwise expressly requires, the words "herein," "hereof" and "hereunder"
and other words of similar importance refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision.
3.11. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior agreement or
understanding between the parties hereto whether oral or written, with
respect to the matters contemplated hereby.
3.12. Headings, etc. The Article and Section headings in this
Agreement are intended for convenience of reference only and shall not
affect the interpretation of this Agreement. Whenever the context shall
require, each term stated in either the singular or plural shall include
the singular and the plural. References herein to masculine, feminine or
neuter pronouns shall be construed to refer to another gender when the
context may require.
3.13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
3.14. Amendments and Waivers. This Agreement may be amended
or modified and any provision hereof may be
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<PAGE> 9
waived only by a written instrument approved by the Independent Directors
and executed by each of the parties or by their respective successors,
assigns, heirs and legatees, as appropriate.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first written above.
ALEXANDER'S, INC.
By:/s/ STEPHEN MANN
Name: Stephen Mann
Title: Chairman
VORNADO REALTY TRUST
By:/s/ JOSEPH MACNOW
Name: Joseph Macnow
Title: Executive Vice President
INTERSTATE PROPERTIES
By:/s/ STEVEN ROTH
Name: Steven Roth
General Partner
