Exhibit 10.1

 

BUILDING LOAN AGREEMENT

Dated as of December 21, 2007

 

 

 

 

 

 

 

BUILDING LOAN AGREEMENT ("this Agreement") dated as of December 21, 2007 by and among ALEXANDER'S OF REGO PARK II, INC., a Delaware corporation ("Borrower"), PB CAPITAL CORPORATION (in its individual capacity and not as Administrative Agent, "PB Capital"), NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH ("NordLB"), WELLS FARGO BANK, NATIONAL ASSOCIATION ("Wells Fargo"), LANDESBANK BADEN-WÜRTTEMBERG, NEW YORK BRANCH ("LBBW") and BANK OF IRELAND, CONNECTICUT BRANCH ("Bank of Ireland"; PB Capital, NordLB, Wells Fargo, LBBW, Bank of Ireland and each other lender who may become a Lender pursuant to Section 3.05, Section 7.20 or Section 8.13, each, a "Lender" and collectively, "Lenders") and PB CAPITAL CORPORATION, as Administrative Agent for Lenders (together with its successors in such capacity, "Administrative Agent").

Borrower desires that Lenders extend credit as provided herein, and Lenders are prepared to extend such credit on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained, Borrower, Administrative Agent and Lenders hereby agree as follows:

ARTICLE I

PARTICULAR TERMS, DEFINITIONS AND RULES OF CONSTRUCTION

Particular Terms . As used in this Agreement, the following terms shall have the respective meanings indicated opposite each of them.

"Aggregate Change Order Amount " -- $5,000,000.

" Borrower's Architects " -- ¹ SCLE Architects, LLP.

"Borrower's Interest in the Premises " - Fee.

"Change Order Amount " -- $2,000,000.

" Completion Date " -- (i) With respect to that portion of the Improvements constituting "Pre-Possession Work" under the Lease with Home Depot (the "Home Depot Lease"), June 30, 2009, (ii) with respect to that portion of the Improvements constituting "Pre-Possession Work" under the Lease with Kohl's (the "Kohl's Lease") required to be completed by October 1, 2009, October 1, 2009, (iii) with respect to that portion of the Improvements constituting "Pre-Possession Work" under the Lease with Century 21 (the "Century 21 Lease"), June 30, 2009 and (iv) with respect to that portion of the Improvements constituting "Post-Possession Work" under any of the Home Depot Lease, the Kohl's Lease or the Century 21 Lease and, with respect to the balance of the Improvements not otherwise described above, the earliest date required for completion of "Post-Possession Work" under any of such Leases, but in no event later than December 31, 2009, in each case, subject to the extension by one day for each day a Force Majeure Event exists so long as during the period of any such extension the failure to complete does not give rise to (x) the right of any of Century 21, Home Depot or Kohl's under its Lease to cancel its Lease and/or (y) penalties and/or damages being owed by Borrower to any of Century 21, Home Depot or Kohl's under its Lease (whether as a direct payment obligation, an offset or otherwise) and subject, further, to the provisions of Section 9.04(b).

" Construction Consultant " -- Inspection & Valuation International, Inc., or other firm designated by Administrative Agent.

" Construction Manager " -- Bovis Lend Lease LMB, Inc. and any successors thereof as selected by Borrower and reasonably approved by Administrative Agent.

" Guarantor " (of Payment and Completion Costs) -- Jointly and severally, Alexander's, Inc. and any other Person(s) who may hereafter become a guarantor of any or all of Borrower's obligations in respect of the Loan and the Other Loan.

" Improvements " -- A retail center containing approximately 618,000 rentable square feet in an approximately 1,281,000 gross square foot building, together with a parking garage containing approximately 1,391 parking spots and a vehicular and pedestrian bridge over 62nd Drive.

" Loan Amount " -- $251,785,000.

" Maturity Date " -- December 21, 2010, subject to the extension option contained in Section 9.04.

_________________________

¹  architects and/or engineers responsible for preparing the Plans and supervising construction of the Improvements, and any successor engaged with Administrative Agent's consent.

 

" Additional Costs " -- Any out-of-pocket costs, losses or expenses actually incurred by any Lender which it determines are attributable to its making or maintaining its Pro Rata Share of the Loan, or its obligation to make any Loan advances, or any reduction in any amount receivable by any Lender under the Loan or its Note.

" Administrative Agent " -- Has the meaning specified in the preamble.

" Administrative Agent's Office " -- Administrative Agent's Office as set forth on its signature page of this Agreement, or such other address in the United States as Administrative Agent may designate by notice to Borrower and Lenders.

" Affected Lender " -- Has the meaning specified in Section 3.05.

" Affiliate " -- With respect to any Person, any other Person:

(A) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Person; or

(B) which, directly or indirectly, beneficially owns or holds five percent (5%) or more of any class of stock or any other ownership interest in such Person (but specifically excluding limited partners); or

(C) five percent (5%) or more of the direct or indirect ownership of which is beneficially owned or held by such Person (but specifically excluding limited partners); or

(D) which is a member of the family (as defined in Section 267(c)(4) of the Code) of such Person or which is a trust or estate, the beneficial owners of which are members of the family (as defined in Section 267(c)(4) of the Code) of such Person; or

(E) which directly or indirectly is a general partner (but specifically excluding limited partners), controlling shareholder, managing member or director of such Person.

For purposes of this definition, the term "control" (and its correlative meanings) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of stock, by contract or otherwise.

" Agreement " -- Has the meaning specified in the preamble.

" Agreement Regarding Instructions " -- The Agreement Regarding Instructions Given by Telephone, Email or Facsimile between Borrower and Administrative Agent, dated the date hereof.

" Applicable Lending Office " -- For each Lender and for its Base Rate Loan or LIBOR Loan, as applicable, the lending office of such Lender (or of an affiliate of such Lender) designated as such on the signature page hereof or in the applicable Assignment and Assumption Agreement, or such other office of such Lender (or of an affiliate of such Lender) as such Lender may from time to time specify to Administrative Agent and Borrower as the office by which its Base Rate Loan or LIBOR Loan, as applicable, is to be made and maintained.

" Approved Lease " and " Approved Leases " -- Any Lease with respect to space in the Improvements which (i) is fully subordinate by its terms to the lien of the Mortgage and the Other Mortgage or with respect to which a subordination and attornment agreement with the tenant under said Lease, in form and substance reasonably acceptable to Administrative Agent has been fully executed and delivered to Administrative Agent, subject to the requirement that Administrative Agent grant non-disturbance in accordance with Section 6.02(e), (ii) complies with the leasing parameters set forth in a letter agreement of even date herewith between Borrower and Administrative Agent (the "Leasing Parameters Letter") for "Non-Major Leases", (iii) provides for an initial term of at least ten (10) years, (iv) does not have a free rent period of more than seven (7) months, unless Administrative Agent agrees otherwise (such agreement not to be unreasonably withheld, conditioned or delayed), (v) with respect to a Lease for space of 25,000 square feet or more, is with a tenant (A) having a credit standing reasonably acceptable to Administrative Agent, provided, however, that a senior long term unsecured debt credit rating, as published by Moody's Investors Service, Inc. (or other comparable rating agency), of "Baa" (or comparable rating from such other rating agency) or higher shall be deemed an acceptable credit standing, or (B) having a net worth reasonably estimated to be ten (10) times such tenant's annual rent obligations, (vi) has as a tenant a Person which is not Borrower, any Guarantor or an Affiliate of any thereof and (vii) is executed on Borrower's standard lease forms approved by Administrative Agent and attached as exhibits to the Initial Advance Open Items Letter as such forms may be modified from time to time with Administrative Agent's approval (such approval not to be unreasonably withheld, conditioned or delayed) or, if

 

such tenant is a national retailer, on such tenant's standard form, in each case with such changes thereto as are commercially reasonable given the then market conditions.

" Assignee " -- Has the meaning specified in Section 8.13.

" Assignment and Assumption Agreement " -- An Assignment and Assumption Agreement, substantially in the form of Exhibit B attached hereto, pursuant to which a Lender assigns and an Assignee assumes rights and obligations in accordance with Sections 3.05 and 8.13.

" Assignment of Leasing Agreement " -- The Assignment, Consent and Subordination Retention Agreement from Borrower and Vornado Realty L.P. for the benefit of Administrative Agent dated of even date herewith.

" Assignment of Management Agreement " -- The Assignment, Consent and Subordination of Management Agreement from Borrower and Vornado Realty L.P. for the benefit of Administrative Agent dated of even date herewith.

" Authorized Representative " -- Means each individual identified in the Requisition Authorization Statement as an authorized signatory of Borrower.

" Base Rate " -- The rate of interest per annum equal to the higher of (1) the Federal Funds Rate plus 1/2 of 1% or (2) the Prime Rate.

" Base Rate Loan " -- The portion of a Lender's share of the Loan bearing interest at a rate per annum equal to the Base Rate plus the Base Rate Margin.

" Base Rate Margin " -- 0.5% per annum.

" Borrower " -- Has the meaning specified in the preamble.

" Building Loan Trust Account " -- A separate non-interest bearing bank account with the Depositary Bank which shall not be drawn upon except to pay Hard and Soft Costs approved by Administrative Agent or the Construction Consultant in accordance with the terms and provisions of this Agreement.

" Business Day " -- Any day (other than a Saturday or Sunday) on which commercial banks are not authorized or required to close in New York City; and, whenever such day relates to a LIBOR Loan, an Interest Period with respect to a LIBOR Loan, or notice with respect to a LIBOR Loan, any such day in which dealings in Dollar deposits are also carried out in the London interbank market and banks are also open for business in London.

" Century 21 " -- Has the meaning specified in Section 4.01(e)(25).

" Certain Changes " -- Has the meaning specified in Section 4.02(c).

" Change Orders " -- Any amendments or modifications (of whatever nature or form, including any "change bulletin") to the Plans and Specifications, Construction Management Agreement or Major Trade Contracts.

" Code " -- The Internal Revenue Code of 1986, as amended.

" Condominium " -- In the event that Borrower elects to so convert the ownership of the Premises and Improvements constructed or to be constructed thereon, a condominium form of ownership in accordance with the Condominium Act.

" Condominium Act " -- Article 9-B of the Real Property Law of the State of New York (§ 339-d et seq .), and all regulations with respect thereto, now or hereafter promulgated.

" Condominium Documents " -- All documents, as required by the Condominium Act and otherwise, necessary for establishing condominium ownership of the Premises and Improvements and creating the Residential Unit and the Retail Unit and no others, including, but not limited to, a declaration of condominium (the "Declaration"), an offering plan (if applicable) accepted for filing by the New York Department of Law including all amendments thereto or a "no action letter" issued by the New York Department of Law (if applicable), tax lot drawings ("Tax Lot Drawings"), management agreement and all exhibits to the Declaration, including, without limitation, the definitions, the articles of incorporation (if applicable), bylaws and the rules and regulations.

" Construction Cost Statement " -- A statement, in form approved by Administrative Agent (such approval not to be unreasonably withheld, conditioned or delayed), setting forth, by category, the costs of completion of the Improvements and the Loan Budget Amounts in respect of the Hard Costs Loan and Soft Costs Loan.

 

" Construction Management Agreement " -- Any contract (together with all riders, addenda and other instruments referred to therein as "contract documents") between Borrower and the Construction Manager or any other Person which requires the Construction Manager or such other Person to provide, or supervise or manage the procurement of, substantially all labor and materials needed for completion of the Improvements.

" Control " -- The ownership, directly or indirectly, in the aggregate of more than fifty percent (50%) of the beneficial ownership interest of an entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity, whether through the ability to exercise voting power, the ownership of beneficial interests, by contract or otherwise, and "Controlled", "Controlling" and "under common control with" shall have the correlative meanings.

" Debt Service " -- The greatest of (each annualized) (x) the aggregate of the actual interest and letter of credit fees charged and payable by Borrower on the Total Commitment (or in the event the Maturity Date has been extended pursuant to Section 9.04, as the same may be reduced in connection with such extension) during the preceding or succeeding, as applicable, Measurement Period(s) in question, (y) the sum of all interest payments that would be payable over such Measurement Period(s) with respect to a loan in an amount equal to the Total Commitment (or in the event the Maturity Date has been extended pursuant to Section 9.04, as the same may be reduced in connection with such extension), assuming an interest rate per annum equal to 6% per annum and (z) the sum of all principal and interest payments that would be payable over such Measurement Period(s) with respect to a loan in an amount equal to the Total Commitment (or in the event the Maturity Date has been extended pursuant to Section 9.04, as the same may be reduced in connection with such extension), based upon a thirty (30) year mortgage-style amortization schedule, assuming an interest rate per annum equal to 1.25% above the yield on United States Treasury Securities with a term of ten (10) years in effect at the time in question, as published in the Federal Reserve Statistical Release ("Release") seven (7) Business Days prior to the date of determination, all as calculated by Borrower, subject, however, to the reasonable approval of Administrative Agent. If the Release is no longer published, a reasonable equivalent substitute therefor as reasonably selected by Administrative Agent in its discretion shall be utilized, and further provided that if the Release is not published seven (7) Business Days prior to the date of determination, then the Release as published on the most recent date prior thereto shall be utilized.

" Debt Service Coverage Ratio " -- As of any date of determination thereof, the ratio of Net Operating Income to Debt Service.

" Declaration " -- Has the meaning specified in the definition of "Condominium Documents".

" Default " -- Any event or circumstance which, with the giving of notice or the passage of time, or both, would become an Event of Default.

" Default Rate " -- The rate(s) of interest per annum then in effect under this Agreement plus, in each case, 5% and in no event, however, to exceed the maximum rate permitted by Law.

" Delinquency Amount "; " Delinquency Notice "; " Delinquent Lender " -- Have the respective meanings specified in Section 7.16.

" Depositary Bank " -- JPMorgan Chase Bank, N.A.

" Distribution " -- Any distributions, payments, dividends, proceeds, disbursements or other consideration arising from or to be made in connection with any direct or indirect membership or other equity interest in Borrower.

" Dollars " and "$" -- Lawful money of the United States.

" Draft Mapping Agreement " -- Has the meaning specified in Section 9.06.

" Electing Lender "; " Election Notice "; " Election Period " -- Have the respective meanings specified in Section 7.16.

" Eligible Lender " -- (i) A real estate investment trust, bank, savings and loan association, investment bank, financial institution, insurance company, trust company, commercial credit corporation, commercial bank (either organized (A) under the laws of the United States or any state thereof or (B) under the laws of any other country that is a member of the Organization for Economic Cooperation and Development, or a political subdivision of such country, including any landesbank or hypothenkenbank), pension plan, pension fund or pension advisory firm, mutual fund or government entity or plan, (ii) investment company or money management firm, (iii) an investment fund, limited liability company, limited partnership or general partnership (a "Permitted Investment Fund") where an Eligible Lender or a Permitted Fund Manager acts as the general partner, managing member or fund manager and at least fifty percent (50%) of the equity interests in such Permitted Investment Fund are owned, directly or indirectly, by an Eligible Lender, (iv) a commercial paper conduit which satisfies the following criteria: (A) an independent third

 

party irrevocably provides the conduit with credit enhancement in the form of liquidity support to satisfy the conduit's obligations, which liquidity support provider is otherwise an Eligible Lender and (B) the conduit is directly administrated by a Person that is otherwise an Eligible Lender or Controlled by an Eligible Lender, (v) a Person substantially similar to any of the foregoing entities described in clauses (i) or (ii) of this definition, and as to each of Persons described in clauses (i), (ii) or (v) provided such Person has total assets (in name or under management) in excess of $600,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder's equity of $250,000,000 or (vi) any Lender.

" Embargoed Person " -- Has the meaning specified in Section 5.22(a).

" Employee Benefit Plan " -- Any employee benefit or other plan established or maintained, or to which contributions have been made, by Borrower or Guarantor.

" ERISA " -- The Employee Retirement Income Security Act of 1974, including the rules and regulations promulgated thereunder.

" ERISA Affiliate " -- Any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as Borrower and/or Guarantor, or any trade or business which is under common control (within the meaning of Section 414(c) of the Code) with Borrower and/or Guarantor, or any organization which is required to be treated as a single employer with Borrower and/or Guarantor under Section 414(m) or 414(o) of the Code.

" Event of Default " -- Has the meaning given to such term in the Mortgage.

" Federal Funds Rate " -- For any period, a fluctuating interest rate per annum (based on a 360 day year) equal, for each day of such period, to the rate of interest quoted at 11:00 a.m. New York time charged on overnight federal funds transactions with member banks of the Federal Reserve System, as published by the Federal Reserve Bank of New York.

" Financial Statements " -- Statements of the assets, liabilities (direct and contingent), income, expenses and cash flow and a detailed balance sheet of Borrower and Guarantor, prepared in accordance with GAAP, which shall be unaudited unless otherwise specified herein.

" Force Majeure Event " -- An act of God, strike, lockout, explosion, act of sabotage, riot, civil commotion, act of war, fire, other casualty, a shortage of materials or any other cause beyond the reasonable control of Borrower which shall delay the progress of construction of the Improvements, provided that Borrower shall notify Administrative Agent within a reasonable period of time following the commencement of the Force Majeure Event. For the purposes of this definition of "Force Majeure Event", the following are expressly excluded as a Force Majeure Event: (i) a shortage of funds by Borrower or any party to the Construction Management Agreement, any Subcontract or any other instrument, document and rights relating to the design, construction and development of the Improvements; and (ii) the insolvency of Borrower or any member of Borrower.

" GAAP " -- Those generally accepted accounting principles and practices which are recognized as such by the American Institute of Certified Public Accountants or by the Financial Accounting Standards Board or through appropriate boards or committees of that Board after the date of this Agreement, and which are consistently applied for all periods, so as to properly reflect the financial position of a Person, except that any accounting principle or practice required or permitted to be changed by the American Institute of Certified Public Accountants or the Financial Accounting Standards Board (or other appropriate board or committee of that Board) in order to continue as a generally accepted accounting principle or practice may be so changed only so long as such required or permitted change with all related changes shall not have the effect of permitting Borrower's compliance with any financial covenants or performance tests contained in this Agreement when without such change and related changes, Borrower would not so comply.

" Governmental Authorities " -- The United States, the State of New York and any political subdivision, agency, department, commission, board, bureau or instrumentality of either of them, including any local authorities, which exercises jurisdiction over Borrower, Guarantor, the Premises or the Improvements and any foreign jurisdiction which exercises jurisdiction over Lenders or Postbank.

" Governmental Blacklist " -- (i) The Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, United States Department of the Treasury, or (ii) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the rules and regulations of the Office of Foreign Assets Control, United States Department of the Treasury, or (iii) any similar list maintained by the United States

 

Department of State, the United States Department of Commerce or pursuant to any Executive Order of the President of the United States.

" Guaranty " -- The guaranty(ies) of the performance of all or part of Borrower's obligations, as indicated in Section 1.01, to be executed by Guarantor.

" Hard Costs " or " Direct Costs " -- The aggregate costs of all labor, materials, equipment and fixtures necessary for completion of construction of the Improvements.

" Hard Costs Loan "; " Soft Costs Loan " -- That portion of the Loan Amount applicable and equal to the sum of the Loan Budget Amounts for Hard Costs and Soft Costs, respectively, shown on the Construction Cost Statement.

" Hazardous Materials " -- Has the meaning given to such term in the Mortgage.

" Home Depot " -- Has the meaning given to such term in Section 4.01(e)(25).

" ICIP " -- Has the meaning given to such term in Section 6.27.

" Illegal Proceeds " -- Any proceeds (1) derived from Money Laundering Activities and/or Racketeering Activities; (2) procured in violation of applicable anti-bribery or Foreign Corrupt Practices Act related laws; and/or (3) derived from an Illegal Source.

" Illegal Source " -- Any individual or entity on a Governmental Blacklist.

" Indemnity " -- An agreement from Borrower and Guarantor, whereby, among other things, Administrative Agent and Lenders are indemnified regarding Hazardous Materials.

" Individual Loan Commitment " -- With respect to each Lender, the amount set forth below opposite the name of such Lender (subject to change in accordance with the terms of this Agreement):

 

 

" Initial Advance " -- The first advance of Loan proceeds to be made hereunder.

" Initial Advance Open Items Letter " -- Has the meaning given to such term in Section 4.01(e).

" Interest Payment Date " -- The first Business Day of the first calendar month following the date of the Initial Advance and the first Business Day of each calendar month thereafter until the Notes are repaid in full.

 

" Interest Period " -- (i) With respect to any Base Rate Loan, the period commencing on each Interest Payment Date and ending on the day immediately preceding the next succeeding Interest Payment Date and (ii) with respect to any LIBOR Loan, the period commencing on the borrowing or conversion date, as the case may be, with respect to such LIBOR Loan and ending one (1), two (2), three (3), or, if available, six (6) or twelve (12) months thereafter, as selected by Borrower in its Rate Request; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:

(a)  if any Interest Period pertaining to a LIBOR Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(b)  any Interest Period pertaining to a LIBOR Loan that would otherwise extend beyond the Maturity Date shall end on the Maturity Date; and

(c)  any Interest Period pertaining to a LIBOR Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.

" Kohl's " -- Has the meaning given to such term in Section 4.01(e)(25).

" Law " -- Any United States federal, state or local law, statute, rule, regulation, ordinance, order, decree, directive, requirement, code, notice of violation or rule of common law, now or hereafter in effect, and in each case as amended, and any judicial or administrative interpretation thereof by a Governmental Authority or otherwise, including any judicial or administrative order, determination, consent decree or judgment.

" Lease " -- Any present or future lease, use agreement, occupancy agreement, license or other similar instrument of all or any portion of the Improvements.

" Lease Letter of Credit " -- A letter of credit issued for the benefit of Borrower as security for the payment and performance of a tenant's obligation under its Lease.

" Leasing Parameters Letter " -- Has the meaning specified in the definition of "Approved Lease".

" Lender " and " Lenders " -- Has the meaning specified in the preamble.

" Lender Reply Period " -- Has the meaning specified in Section 8.12.

" Lenders' Counsel " -- Schiff Hardin LLP, 900 Third Avenue, 23rd Floor, New York, New York 10022.

" LIBO Rate " -- With respect to any Interest Period pertaining to a LIBOR Loan, the average rate of interest per annum, rounded to the nearest whole multiple of one ten-thousandth of one percent (0.0001%) of interbank offered rates for United States dollar deposits in an amount comparable to the amount of the LIBOR Loan to be outstanding during such Interest Period in the London interbank market as set forth on Bloomberg Screen, code BBAM, meaning the "British Bankers Association LIBOR Rates code" on the monitor of the money rates of the Bloomberg service or any successor code as may replace code BBAM in said service for the purposes of display of the interbank interest rates offered on the London market (London Interbank Offered Rates/LIBOR) at approximately 11:00 a.m. (London time) two (2) Business Days before the first day of the applicable Interest Period for a period of time comparable to the applicable Interest Period.

" LIBO Rate Request Amount " -- The amount, to be specified by Borrower in each Rate Request with respect to a LIBOR Loan, which Borrower desires to bear interest as a LIBOR Loan and which shall in no event be less than $250,000, except in the case of the last advance of the Loan.

" LIBOR Loan " -- All of any portion (as the context requires) of any Lender's share of the Loan or the Other Loan which shall accrue interest at a rate of interest per annum determined in accordance with the following formula:

LIBO Rate

1.00 - Reserve Requirements

" LIBOR Margin " -- 1.2% per annum, subject to adjustment in accordance with Section 2.19.

 

" Lien Law "; " Lien Law Statement " -- The Lien Law of the State of New York; the verified statement of Borrower, annexed hereto as Exhibit A , required by the Lien Law.

" Loan " -- The Hard Costs Loan and Soft Costs Loan, collectively, and in an amount initially equal to the Loan Amount.

" Loan Balancing LC " -- Has the meaning specified in Section 8.01.

" Loan Budget Amounts " -- The portion of the Loan Amount set forth in Column D on the Construction Cost Statement to be advanced for each category of Hard and Soft Costs.

" Loan Documents " -- This Agreement, the Notes, the Mortgage, the Guaranty, the Indemnity, the Lockbox Agreement, the Assignment of Management Agreement, the Initial Advance Open Items Letter, the Assignment of Leasing Agreement, the Requisition Authorization Statement, the Agreement Regarding Instructions, the assignment of interest rate hedging agreement as and when required hereby, Uniform Commercial Code financing statements in respect of the Mortgaged Property and any other collateral given as security for the Loan, and any other documents which evidence or secure the Loan.

" Lockbox Agreement " -- The cash management, security, pledge and assignment agreement between Borrower and Administrative Agent.

" Major Building Materials " -- Has the meaning specified in Section 2.05(c).

" Major Lease " -- Any Lease for space in excess of 45,000 square feet in the Improvements.

" Major Trade Contract "; " Major Trade Contractor " -- Any Trade Contract in which the aggregate contract price is equal to or greater than $2,500,000, whether pursuant to one contract or agreement or multiple contracts or agreements, after taking into account all Change Orders; the Trade Contractor under such Trade Contract.

" Material Adverse Effect " -- Any material adverse effect upon (a) the business operations, economic performance, assets or condition (financial or otherwise) of Borrower, Guarantor or the Mortgaged Property, (b) the ability of any Borrower or Guarantor to perform, in all material respects, its obligations under each of the Loan Documents to which it is a party, (c) the enforceability or validity of any Loan Document or the perfection or priority of any lien or security interest created under any Loan Document, (d) the value of, or cash flow from, the Mortgaged Property or the operations thereof or (e) the rights, interests and remedies of Administrative Agent or any Lender under the Loan Documents.

" Measurement Period "; " Measurement Periods " -- Three (3) consecutive full calendar months or multiples of three (3) consecutive full calendar months.

" Money Laundering Activities " -- Funds which are (a) proceeds of crime in violation of Federal law or (b) derived or potentially derived from any Illegal Source.

" Mortgage " -- Individually and collectively, the Series I Mortgage and the Series II Mortgage.

" Mortgaged Property " -- The Premises and other property constituting the "Mortgaged Property", as said quoted term is defined in the Mortgage.

" Multiemployer Plan " -- Any plan defined as such in Section 3(37) of ERISA.

" Net Operating Income " -- For any date of determination, annualized based upon the preceding or succeeding, as applicable, Measurement Period(s) in question the excess of revenues over operating expenses determined in accordance with GAAP, with the following modifications: (1) revenues from Leases (including, but not limited to, base rent and reimbursements for reimbursable expenses in accordance with the terms of such Leases) that have been approved by Administrative Agent or are otherwise deemed approved in accordance with this Agreement and in respect of which the tenants are in occupancy, open for business and paying base rent, as well as other revenues (including, but not limited to, parking and other recurring revenue and reimbursements of expenses included in this definition of "Net Operating Income"), shall be included in the calculation of revenues; (2) there shall be excluded from the calculation of revenue, revenue payable under any such Lease (A) which will expire within one hundred eighty (180) days from the date of determination unless the tenant has executed an extension of such Lease, (B) which is in default of rent obligations beyond the applicable cure period or (C) which, in the case of a bankruptcy, insolvency, reorganization or similar proceeding, has not been assumed by the tenant thereunder; (3) expenses shall include on an annualized basis (A) reserves for tenant improvements and capital expenditures in an amount of not less than $0.15 per rentable square foot of space, and (B) the greater of the actual management fees or 2% of revenues; and (4) expenses shall not include (A) depreciation, amortization and federal, state and local income taxes, (B) non-cash items, (C) all

 

capital items, including construction costs and professional fees and other expenses relating thereto and any amortization thereof, (D) costs of removal of Hazardous Materials or compliance with Laws applicable thereto, (E) leasing commissions, fees and other costs and expenses of placing tenants in possession of any portion of the Premises (including professional fees related thereto), (F) costs of repair or restoration after a casualty or condemnation, (G) interest on tenant security deposits, (H) security deposits returned to tenants, (I) debt service on the Total Loan, any other payments, fees or expenses due in connection with the Total Loan and any expenses incurred in connection with the making of the Total Loan or in connection with the recovery of insurance proceeds that are applied toward the repayment of the Total Loan, (J) any item of expense that would ordinarily be considered an operating expense but which is paid by a tenant, (K) general corporate overhead and administrative expenses of Borrower or any other Person, and (L) expenses related to the stock appreciation rights of Guarantor, all as reasonably determined by Borrower and approved by Administrative Agent (which approval shall not be unreasonably withheld, conditioned or delayed).

" Non-Delinquent Lender " -- Each Lender other than the Delinquent Lender(s).

" Non-Excluded Taxes " -- Has the meaning specified in Section 8.25.

" NordLB " -- Has the meaning specified in the preamble.

" Note "; " Notes " -- Have the respective meanings specified in Section 2.10.

" OFAC " -- Has the meaning specified in Section 5.22(b).

" Other Loan Documents " -- Has the meaning specified in Section 8.19.

" Other Notes "; " Other Loan "; " Other Mortgage " -- The notes, dated the date hereof, for an aggregate principal amount of $98,215,000, made by Borrower to Lenders; the loan in said amount by Lenders to Borrower for certain non-cost-of-improvement items with respect to the Premises evidenced thereby to be advanced under a Project Loan Agreement of even date herewith among Borrower, Lenders a party hereto and Administrative Agent (the "Project Loan Agreement"); and, collectively, the series I project loan mortgage, assignment of leases and rents and security agreement and the series II project loan mortgage, assignment of leases and rents and security agreement, each made to Administrative Agent to secure advances under the Project Loan Agreement and Borrower's other obligations in respect thereof.

" Participant "; " Participation " -- Have the respective meanings specified in Section 8.13.

" Patriot Act " -- The USA Patriot Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001)).

" PB Capital " -- Has the meaning specified in the preamble.

" Pension Plan " -- Any employee pension benefit plan within the meaning of Section 3(2) of ERISA with respect to which Borrower, Guarantor or any ERISA Affiliate at any relevant time has liability or an obligation to contribute.

" Permitted Debt " -- With respect to Borrower:

•     Trade Payables, customarily paid by Borrower within ninety (90) days of incurrence, which are incurred in the ordinary course of Borrower's use, maintenance, repair, ownership and operation of the Premises and Improvements and other Mortgaged Property, in amounts reasonable and customary for similar properties and taxes not yet due and payable;

•     written indemnities entered into in the ordinary course of business and on customary terms and conditions in connection with the acquisitions of goods or services;

•     financing leases incurred in the ordinary course of business in connection with the financing or purchase of equipment, automotive and other personal property used on the Premises and Improvements and other Mortgaged Property which are customarily utilized in similar buildings;

•     liabilities under the Leases approved or deemed approved by Administrative Agent in accordance with this Agreement and liabilities under the Construction Management Agreement, the Condominium Documents, any management agreements and any other agreements contemplated herein or necessary or appropriate for the conduct of the business; and

 

 

•     such other unsecured indebtedness approved by the Required Lenders (which approval may be granted or denied in the sole and absolute discretion of each Lender).

" Permitted Fund Manager " -- Any Person which is not subject to a bankruptcy proceeding and is a nationally-recognized manager of investment funds investing in debt or equity interests relating to commercial real estate which is investing through a fund which has committed capital of at least $250,000,000.

" Person " -- An individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other entity of whatever nature.

" Plans and Specifications " -- All final drawings, plans and specifications prepared by Borrower, Borrower's Architects, the Construction Manager or Major Trade Contractors, and approved by Administrative Agent and the Construction Consultant (which approval shall not be unreasonably withheld, conditioned or delayed), which describe and show the labor, materials, equipment, fixtures and furnishings necessary for the construction of the Improvements, including all amendments and modifications thereof, as the same may be amended or supplemented from time to time in accordance with the terms of this Agreement.

" Postbank " -- Deutsche Postbank AG.

" Premises " -- The real property described on Schedule A to the Mortgage and located as indicated on the cover hereof, upon all or part of which the Improvements are to be constructed, subject to the release provisions set forth in Section 9.02.

" Premises Documents " -- Has the meaning given to such term in the Mortgage.

" Prime Rate " -- The rate per annum listed in the "Money Rates" section of The Wall Street Journal as the "prime rate". If The Wall Street Journal ceases publication of such rate, then the Prime Rate shall mean the so-called prime rate or base rate as announced by Citibank, N.A., or its successor from time to time, or, if such rate is not published or available, then the so-called prime rate or base rate announced by J.P. Morgan Chase & Co. or its bank subsidiary. If none of such rates are available, then the Prime Rate shall mean such rate selected by Administrative Agent in its reasonable judgment as most nearly approximates the foregoing. Changes in the Prime Rate shall be effective simultaneously with the change in the "prime rate" as so published, announced or selected.

" Principal Amount " -- At any time, the aggregate outstanding principal amount of the Notes.

" Pro Rata Share " -- With respect to each Lender, the ratio of such Lender's Individual Loan Commitment to the Loan Amount. As of the date hereof, Lenders' respective Pro Rata Shares are as follows:

 

 

" Racketeering Activities " -- Involvement or affiliation with any organization, group or individual that engages in or encourages its members to engage in any illegal activities specified in Title 18 of the U.S. Code.

" Rate Request " -- Borrower's irrevocable telephonic notice (to be promptly confirmed in writing), to be received by Administrative Agent by 9:30 a.m. (New York time) three (3) Business Days prior to the date specified in the Rate Request for the commencement of the Interest Period (which specified date must be a Business Day), of (a) its intention to have (i) all or any portion of the Principal Amount or the outstanding principal amount under the Other Notes which is not then the subject of an Interest Period (other than an Interest Period which is terminating on the Business Day specified in the notice), and/or (ii) all or any portion of any advance of proceeds of the Loan or the

 

other Loan which is to be made on the Business Day specified in the notice, bear interest as either a Base Rate Loan or a LIBOR Loan and (b) the Interest Period desired by Borrower in respect of the amount specified whenever such notice is for LIBOR Loans, except that during the Syndications Period the Interest Period shall be one (1) month.

" Regulation D "; " Regulation U " -- Regulations D and U, respectively, of the Board of Governors of the Federal Reserve System.

" Regulatory Change " -- With respect to any Lender and the charging and collecting of interest on LIBOR Loans, any change after the date hereof in federal, state or foreign laws or regulations (including Regulation D) or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks including such Lender under any federal, state or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof, excluding any change the effect of which is reflected in a change in the interest rate for LIBOR Loans.

" Replacement Lender " -- Has the meaning specified in Section 7.20.

" Required Lenders " -- At any time, those Non-Delinquent Lenders holding a majority of that portion of the aggregate outstanding principal amount of the Notes held by the Non-Delinquent Lenders.

" Requisition " -- A statement by or on behalf of Borrower in form approved by Administrative Agent (such approval not to be unreasonably withheld, conditioned or delayed), setting forth the amount of the Loan advance requested in each instance, which, if requested by Administrative Agent, shall include:

(ii)  a completed Application and Certificate for Payment (AIA Document G702) or reasonable facsimile in form approved by Administrative Agent, executed by the Construction Manager and Borrower, accompanied by a letter from Borrower's Architects in a form approved by Administrative Agent;

(iv) Payment Receipts/Lien Releases in form approved by Administrative Agent from the Construction Manager and its direct contractors, suppliers and materialmen, evidencing that they have been paid in full upon receipt of the current requisition for all work performed and/or materials supplied to the date of the preceding advance, except for Retainage provided for in this Agreement;

(v)  current requisitions for payment from Trade Contractors and/or any of their subcontractors relating to the Improvements;

(vi) invoices, statements and such other information and documents as may be reasonably requested or required by Administrative Agent or the Construction Consultant with respect to the Hard Costs covered by such Requisition;

(vii)invoices, statements and such other information and documents as may be reasonably requested or required by Administrative Agent with respect to the incurrence of any Soft Costs covered by such Requisition;

(viii) evidence of the payment of all Soft Costs covered by a prior Requisition; and

(ix) an anticipated cost report from the Construction Manager in form approved by Administrative Agent, indicating the direct costs anticipated to complete the Improvements, after giving effect to costs incurred during the previous month and projected costs.

Any approvals by Administrative Agent in this definition shall not be unreasonably withheld, conditioned or delayed.

" Requisition Authorization Statement " -- A statement from Borrower to Administrative Agent in the form of Exhibit F setting forth, among other things, the name of each individual authorized to execute Requisitions hereunder on Borrower's behalf.

" Reserve Requirements " -- For any day as applied to a LIBOR Loan, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such day, if any (including without limitation supplemental, marginal and emergency reserves) under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D) required to be maintained by the applicable Lender or its Participants, if any. Without limiting the effect of the

 

foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by any Lender or any Lender's respective Participants, if any, by reason of any Regulatory Change against (i) any category of liabilities which includes deposits by reference to which the LIBO Rate is to be determined as provided in this Agreement or (ii) any category of extensions of credit or other assets which includes loans the interest rate on which is determined on the basis of rates used in determining the LIBO Rate. Notwithstanding anything to the contrary contained herein, any increase in the reserve requirements described in this definition which arises subsequent to the date of this Agreement shall not be included within "Reserve Requirements" to the extent that the applicable Lender fails to notify Borrower of such increase within thirty (30) days after such Lender should reasonably have been aware of such increase.

" Residential Unit " -- The rental or for-sale residential unit to be constructed above the Retail Unit which is to be created pursuant to the Condominium Documents and upon the submission of the Premises to the Condominium Act, together with its appurtenant interest in the common elements.

" Retail Unit " -- The retail unit to be comprised of the Improvements, including the garage, which is to be created pursuant to the Condominium Documents and upon the submission of the Premises to the Condominium Act, together with its appurtenant interest in the common elements.

" Retainage " -- The total amount actually held back by Borrower or the Construction Manager, as the case may be, from the Construction Manager and each Trade Contractor with respect to the value of its work in place with respect to the Improvements, which shall not be less at any time (subject to the provisions of Section 2.04) than (a) 10% of the aggregate Hard Costs already incurred by Borrower with respect to the Construction Manager or such Trade Contractor for work in place in completing construction of the first 50% of the work to be performed by the Construction Manager or such Trade Contractor with respect to the Improvements, as verified from time to time by Construction Consultant pursuant to the provisions of this Agreement, and (b) 0% of the aggregate Hard Costs actually incurred by Borrower with respect to the Construction Manager or such Trade Contractor for work in place in completing construction of the last 50% of the work to be performed by the Construction Manager or such Trade Contractor, as verified from time to time by the Construction Consultant pursuant to the provisions of this Agreement.

" SEC " -- Has the meaning specified in Section 6.21(1).

" Security Deposit " -- Has the meaning specified in Section 6.28(1).

" Series I Mortgage " -- The series I building loan mortgage, assignment of leases and rents and security agreement dated as of the date hereof in the amount of $249,285,000 from Borrower to Administrative Agent for the benefit of Lenders to secure the payment and performance of Borrower's obligations under the Loan.

" Series II Mortgage " -- The series II building loan mortgage, assignment of leases and rents and security agreement dated as of the date hereof in the amount of $2,500,000 from Borrower to Administrative Agent for the benefit of Lenders to secure the payment and performance of Borrower's obligations under the Loan.

" Single-Purpose Entity " -- A Person which (a) is formed solely for the purpose of owning its interest in the Premises and the Improvements and such personal property as may be usable for the ownership, use, maintenance, repair or operation of the Premises and Improvements (collectively, the "Property") as well as developing, constructing, using, owning, operating, leasing and financing the Premises, (b) has not engaged and will not engage in any business unrelated to the Property or its interest in Borrower, as the case may be, (c) will not have any assets other than those related to the Property or its interest in Borrower, as the case may be, or any indebtedness, liabilities or indemnification obligations other than Permitted Debt, (d) will maintain books, records, accounts and financial statements separate and apart from those of any other Person, (e) will maintain its books, records, resolutions and agreements, (f) will be subject to and substantially comply with all of the limitations on powers and separateness requirements set forth as of the date hereof in its organizational documentation, (g) will hold itself out as being a Person separate and apart from each other Person, will conduct its business in its own name and will exercise reasonable efforts to correct any known misunderstanding actually known to it regarding its separate identity, (h) will not commingle its funds or assets with those of any other Person, and will continue to hold its assets in its own name (except for pursuant to cash management agency arrangements with Guarantor and/or Vornado Realty Trust, a Maryland real estate investment trust, or any of its Affiliates), (i) will maintain an arm's-length relationship with its affiliates and will not enter into a transaction with any of its affiliates other than on an arm's-length basis in the ordinary course of business, (j) will not guaranty or otherwise oblige itself with respect to the debts of any other Person or hold out its credit as being available to satisfy the obligations of any other Person, (k) will not pledge its assets for the benefit of any other Person or make any loans or advances to any other Person, and will not acquire the obligations or securities of its partners, members or shareholders, (l) intends to maintain adequate capital in light of its

 

contemplated business purposes, (m) will pay its own liabilities out of its own funds (except for pursuant to cash management agency arrangements with Guarantor and/or Vornado Realty Trust, a Maryland real estate investment trust, or any of its Affiliates) and reasonably allocate any overhead for shared office space, (n) will maintain a sufficient number of employees in light of its contemplated business operations, (o) in the case of a limited partnership, will observe all applicable limited partnership formalities in all material respects, has and will have at all times a general partner that is a Single-Purpose Entity, and for so long as the Loan is outstanding or the lending commitment hereunder is in effect, the limited partnership shall not (A) except with the unanimous consent of its partners, file or consent to the filing of a bankruptcy or insolvency petition, or consent to any general assignment for the benefit of creditors, or the institution of any other insolvency proceeding, or the seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for it, for a substantial portion of its property or for any other entity in which it has a direct or indirect legal or beneficial ownership interest; and (B) take or consent to the taking any of the following actions:

•     the dissolution, winding up, liquidation, consolidation, merger or sale of all or substantially all of its assets or the assets of any other entity in which it has a direct or indirect legal or beneficial ownership interest;

•     the engagement by it in any business other than the ownership, maintenance, repair, use and operation of the Property or the ownership of its interest in Borrower (as applicable);

•     the amendment or modification of any provision of its limited partnership agreement or certificate of limited partnership that affects any of the requirements for qualifying as a "Single-Purpose Entity",

(p) in the case of a limited liability company or corporation, will observe all applicable limited liability company or corporation formalities, as the case may be, in all material respects, and has and will have at all times (in the case of a limited liability company) one managing member that is a corporate or limited liability company Single-Purpose Entity, (q) in the case of a limited liability company, has organizational documents which provide that (A) the vote of the majority-in-interest of the remaining members is sufficient to continue its life in the event of a termination event, such as the bankruptcy of the managing member; and (B) if the vote of the majority-in-interest of the remaining members is not obtained to continue its life upon a termination event, the limited liability company may not liquidate collateral without the consent of the Required Lenders, and (r) for so long as all or any portion of the Loan and/or the Other Loan is outstanding or the lending commitment hereunder or under the Project Loan Agreement is in effect, shall not (A) except with the unanimous consent of its board of directors or the board of directors of its managing member, as the case may be, file or consent to the filing of a bankruptcy or insolvency petition, or consent to any general assignment for the benefit of credit