<PAGE> 1
As filed with the Securities and Exchange Commission on May 26, 1999
Exhibit Index on Page 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 12, 1999
Commission File Number: 001-14525
VORNADO OPERATING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 22-3569068
(State or other jurisdiction of incorporation) (I.R.S. employer
identification number)
PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663
(Address of principal executive offices) (Zip Code)
(201) 587-1000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 1. NOT APPLICABLE.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Incorporated by reference to Item 2 of Vornado Operating Company's
Current Report on Form 8-K, dated March 12, 1999, as filed with the Securities
and Exchange Commission on March 31, 1999.
ITEMS 3 THROUGH 6. NOT APPLICABLE.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) The following financial statements are filed as Exhibit
99.1 of this report:
(1) Consolidated balance sheets of Americold Corporation
as of the last day of February 1996 and 1997 and the
related consolidated statements of operations, common
stockholder's deficit and cash flows for each of the
years in the three-year period ended the last day of
February 1997.
(2) Consolidated balance sheet of Americold Corporation
as of October 31, 1997, and the related statements of
operations and cash flows for the eight months ended
October 31, 1997.
(3) Consolidated balance sheet of Americold Corporation
and Subsidiary as of December 31, 1997, and the
related consolidated statements of income,
stockholder equity and cash flows for the two months
ended December 31, 1997.
(4) Combined balance sheet of AmeriCold Corporation, URS
Logistics, Inc., VC Omaha Holdings, LLC, and VC
Missouri Holdings, LLC as of December 31, 1998 and
the related combined statements of operations,
stockholders' equity and cash flows for the year
ended December 31, 1998.
(5) Consolidated balance sheets of URS Logistics, Inc.
and subsidiary as of October 31, 1997 and December
31, 1996 and the related consolidated statements of
operations, stockholders' equity and cash flows for
the ten months ended October 31, 1997 and the year
ended December 31, 1996.
(6) Consolidated balance sheet of URS Logistics, Inc. and
subsidiary as of December 31, 1997 and the related
consolidated statements of operations, stockholder's
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equity and cash flows for the two months ended
December 31, 1997.
(7) Balance sheets of Freezer Services - West Point, Inc.
as of December 31, 1997 and 1996 and the related
statements of operations, changes in stockholder's
equity and cash flows for the years ended December
31, 1997 and 1996.
(8) Balance sheets of American/Freezer Services, Inc. as
of December 31, 1997 and 1996 and the related
statements of income, changes in stockholders' equity
and cash flows for the years ended December 31, 1997
and 1996.
(9) Combined balance sheet of The Carmar Group of
Companies as of December 31, 1997 and the related
combined statements of income, stockholders' and
members' equity and cash flows for the year ended
December 31, 1997.
(b) The unaudited proforma balance sheet of Vornado Operating
Company as of December 31, 1998 is included as Note 10 to the Company's
Consolidated Financial Statements set forth in Item 8 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 and is filed as Exhibit
99.3 of this report.
(c) The following exhibits are furnished in accordance with the
provisions of Item 601 of Regulation S-K:
Exhibit No. Description
2.1 Asset Purchase Agreement, dated as of February 26, 1999,
between AmeriCold Logistics, LLC, as Purchaser, and
AmeriCold Corporation, as Seller (incorporated by reference
to Exhibit 2.1 of the Company's Current Report on Form 8-K,
dated March 12, 1999 (File No. 001-14525), as filed with the
Securities and Exchange Commission on March 31, 1999 (the
"Prior 8-K")).
2.2 Asset Purchase Agreement, dated as of March 9, 1999, between
Vornado Crescent Logistics Operating Partnership, as
Purchaser, and URS Logistics, Inc., as Seller (incorporated
by reference to Exhibit 2.2 of the Prior 8-K).
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2.3 Asset Purchase Agreement, dated as of March 9, 1999, between
AmeriCold Logistics, LLC, as Purchaser, and VC Omaha
Holdings, L.L.C., as Seller (incorporated by reference to
Exhibit 2.3 of the Prior 8-K).
2.4 Asset Purchase Agreement, dated as of March 9, 1999, between
AmeriCold Logistics II, LLC, as Purchaser, and
VC Missouri Holdings, L.L.C., as Seller (incorporated
by reference to Exhibit 2.4 of the Prior 8-K).
10.1 Agreement, dated March 11, 1999, between Vornado Operating
L.P. and COPI Cold Storage L.L.C. (incorporated by reference
to Exhibit 10.1 of the Prior 8-K).
10.2 Master Lease Agreement, dated as of April 22, 1998, between
URS Real Estate, L.P., as Landlord, and URS Logistics, Inc.,
as Tenant.
10.3 First Amendment to Master Lease Agreement, dated as of March
10, 1999, between URS Real Estate, L.P. and URS Logistics,
Inc.
10.4 Assignment and Assumption of Master Lease, dated as of March
11, 1999, between URS Logistics, Inc. and AmeriCold
Logistics II, LLC.
10.5 Master Lease Agreement, dated as of April 22, 1998, between
AmeriCold Real Estate, L.P., as Landlord, and AmeriCold
Corporation, as Tenant.
10.6 First Amendment to Master Lease Agreement, dated as of March
10, 1999, between AmeriCold Real Estate, L.P. and AmeriCold
Logistics, LLC.
10.7 Assignment and Assumption of Master Lease, dated as of
February 28, 1999, between AmeriCold Corporation and
AmeriCold Logistics, LLC.
10.8 Master Lease Agreement, dated as of March 11, 1999,
between URS Logistics, Inc., as Landlord, and AmeriCold
Logistics II, LLC, as Tenant.
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10.9 Master Lease Agreement, dated as of February 28, 1999,
between AmeriCold Corporation, as Landlord, and AmeriCold
Logistics, LLC, as Tenant.
10.10 Master Lease Agreement, dated as of March 11, 1999, between
Each of the Entities Listed on Exhibit A Thereto,
collectively as Landlord, and AmeriCold Logistics, LLC, as
Tenant.
10.11 Master Lease Agreement, dated as of March 11, 1999, between
VC Omaha Holdings, L.L.C. and Carmar Freezers Thomasville
L.L.C., together as Landlord, and AmeriCold Logistics, LLC,
as Tenant.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consents of Deloitte & Touche LLP.
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of Baird, Kurtz & Dobson.
99.1 Financial statements as listed in Item 7(a) above.
99.2 Press release of Vornado Operating Company, dated March 17,
1999 (incorporated by reference to Exhibit 99.2 of the Prior
8-K).
99.3 Unaudited proforma balance sheet as of December 31, 1998 and
unaudited proforma income data for the year ended December
31, 1998 of the Company.
ITEM 8. NOT APPLICABLE.
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SIGNATURES
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.
VORNADO OPERATING COMPANY
(Registrant)
By: /s/ Irwin Goldberg
--------------------------
Name: Irwin Goldberg
Title: Vice President--
Chief Financial Officer
Date: May 26, 1999
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Index to Exhibits
Exhibit No. Description
2.1 Asset Purchase Agreement, dated as of February 26, 1999,
between AmeriCold Logistics, LLC, as Purchaser, and
AmeriCold Corporation, as Seller (incorporated by reference
to Exhibit 2.1 of the Prior 8-K).
2.2 Asset Purchase Agreement, dated as of March 9, 1999, between
Vornado Crescent Logistics Operating Partnership, as
Purchaser, and URS Logistics, Inc., as Seller (incorporated
by reference to Exhibit 2.2 of the Prior 8-K).
2.3 Asset Purchase Agreement, dated as of March 9, 1999, between
AmeriCold Logistics, LLC, as Purchaser, and VC Omaha
Holdings, L.L.C., as Seller (incorporated by reference to
Exhibit 2.3 of the Prior 8-K).
2.4 Asset Purchase Agreement, dated as of March 9, 1999, between
AmeriCold Logistics II, LLC, as Purchaser, and VC Missouri
Holdings, L.L.C., as Seller (incorporated by reference to
Exhibit 2.4 of the Prior 8-K).
10.1 Agreement, dated March 11, 1999, between Vornado Operating
L.P. and COPI Cold Storage L.L.C. (incorporated by reference
to Exhibit 10.1 of the Prior 8-K).
10.2 Master Lease Agreement, dated as of April 22, 1998, between
URS Real Estate, L.P., as Landlord, and URS Logistics, Inc.,
as Tenant.
10.3 First Amendment to Master Lease Agreement, dated as of March
10, 1999, between URS Real Estate, L.P. and URS Logistics,
Inc.
10.4 Assignment and Assumption of Master Lease, dated as of March
11, 1999, between URS Logistics, Inc. and AmeriCold
Logistics II, LLC.
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10.5 Master Lease Agreement, dated as of April 22, 1998, between
AmeriCold Real Estate, L.P., as Landlord, and AmeriCold
Corporation, as Tenant.
10.6 First Amendment to Master Lease Agreement, dated as of March
10, 1999, between AmeriCold Real Estate, L.P. and AmeriCold
Logistics, LLC.
10.7 Assignment and Assumption of Master Lease, dated as of
February 28, 1999, between AmeriCold Corporation and
AmeriCold Logistics, LLC.
10.8 Master Lease Agreement, dated as of March 11, 1999, between
URS Logistics, Inc., as Landlord, and AmeriCold Logistics
II, LLC, as Tenant.
10.9 Master Lease Agreement, dated as of February 28, 1999,
between AmeriCold Corporation, as Landlord, and AmeriCold
Logistics, LLC, as Tenant.
10.10 Master Lease Agreement, dated as of March 11, 1999, between
Each of the Entities Listed on Exhibit A Thereto,
collectively as Landlord, and AmeriCold Logistics, LLC, as
Tenant.
10.11 Master Lease Agreement, dated as of March 11, 1999, between
VC Omaha Holdings, L.L.C. and Carmar Freezers Thomasville
L.L.C., together as Landlord, and AmeriCold Logistics, LLC,
as Tenant.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consents of Deloitte & Touche LLP.
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of Baird, Kurtz & Dobson.
99.1 (1) Consolidated balance sheet of Americold Corporation as
of October 31, 1997, and the related statements of
operations and cash flows for the eight months ended
October 31, 1997.
(2) Consolidated balance sheet of Americold Corporation and
Subsidiary as of December 31, 1997, and the related
consolidated statements of income,
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stockholder equity and cash flows for the two months
ended December 31, 1997.
(3) Combined balance sheet of AmeriCold Corporation, URS
Logistics, Inc., VC Omaha Holdings, LLC, and VC
Missouri Holdings, LLC as of December 31, 1998 and
the related combined statements of operations,
stockholders' equity and cash flows for the year
ended December 31, 1998.
(4) Consolidated balance sheets of URS Logistics, Inc.
and subsidiary as of October 31, 1997 and December
31, 1996 and the related consolidated statements of
operations, stockholders' equity and cash flows for
the ten months ended October 31, 1997 and the year
ended December 31, 1996.
(5) Consolidated balance sheet of URS Logistics, Inc. and
subsidiary as of December 31, 1997 and the related
consolidated statements of operations, stockholder's
equity and cash flows for the two months ended
December 31, 1997.
(6) Balance sheets of Freezer Services - West Point, Inc.
as of December 31, 1997 and 1996 and the related
statements of operations, changes in stockholder's
equity and cash flows for the years ended December
31, 1997 and 1996.
(7) Balance sheets of American/Freezer Services, Inc. as
of December 31, 1997 and 1996 and the related
statements of income, changes in stockholders' equity
and cash flows for the years ended December 31, 1997
and 1996.
(8) Combined balance sheet of The Carmar Group of
Companies as of December 31, 1997 and the related
combined statements of income, stockholders' and
members' equity and cash flows for the year ended
December 31, 1997.
99.2 Press release of Vornado Operating Company, dated March 17,
1999 (incorporated by reference to Exhibit 99.2 of the Prior
8-K).
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99.3 Unaudited proforma balance sheet as of December 31, 1998 and
unaudited proforma income data for the year ended December
31, 1998 of the Company.
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Exhibit 10.2
================================================================================
MASTER LEASE AGREEMENT
Dated as of April 22, 1998
Between
URS REAL ESTATE, L.P.,
as Landlord,
and
URS LOGISTICS, INC.,
as Tenant
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
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ARTICLE I
1.1 Leased Property..................................................1
1.2 Release of Unimproved Parcels. .................................2
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.3
1.4 Initial Term.....................................................4
1.5 Renewal Terms....................................................4
1.6 Condition of the Leased Property.................................5
ARTICLE II
2.1 Definitions......................................................6
ARTICLE III
3.1 Rent............................................................21
3.2 Net Lease.......................................................25
ARTICLE IV
4.1 No Termination, Abatement, etc..................................26
4.2 Abatement Procedures............................................26
ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property................................27
5.2 Tenant's Personal Property......................................27
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Page
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ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants................................................28
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants.....................................33
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations.....................................................34
8.2 Subletting and Assignment; Warehouse Agreements.................38
8.2.1 Generally.................................................38
8.2.2 Certain Sublettings and Assignments.......................39
8.2.3 Landlord's Right to Collect from Assignees and Subtenants.39
8.2.4 No Release................................................39
8.2.5 Required Assignment and Subletting Provisions.............39
8.2.6 Reimbursement of Landlord's Costs.........................40
8.2.7 Warehouse Agreements......................................40
8.2.8 Certain Leases Senior. ..................................40
8.3 Sublease and Warehouse Agreement Limitation.....................41
8.4 Collateral Assignment of Subleases and Warehouse Agreements
to Landlord.....................................................41
8.5 Leasehold Mortgages.............................................41
8.5.1 Landlord's Estate........................................41
8.5.2 Certain Leasehold Mortgage Requirements..................41
8.5.3 Leasehold Mortgagee Provisions...........................42
8.5.4 Leasehold Mortgagee's Rights upon Termination of this
Lease....................................................44
8.5.5 Notice of Arbitration. ..................................45
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Page
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ARTICLE IX
9.1 Maintenance and Repair..........................................46
9.2 Encroachments, Restrictions, etc................................47
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance.......................................................48
10.2 Casualty; Application of Proceeds...............................54
10.3 Condemnation....................................................57
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures......................................58
ARTICLE XII
12.1 Events of Default...............................................58
12.2 Certain Remedies................................................60
12.3 Damages.........................................................60
12.4 Waiver..........................................................61
12.5 Application of Funds............................................62
ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default.......................62
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Page
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ARTICLE XIV
14.1 Holding Over....................................................62
ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance...............................63
15.2 Attornment.....................................................63
15.3 Notice of Default to Landlord's Lender.........................64
15.4 Modifications to Secure Financing..............................64
15.5 Delivery of Notices to Landlord's Lender.......................64
15.6 Right of Landlord's Lender to Enforce Lease....................65
15.7 Exercise of Landlord's Discretion..............................65
ARTICLE XVI
16.1 Indemnification.................................................65
ARTICLE XVII
17.1 No Waiver.......................................................66
ARTICLE XVIII
18.1 Remedies Cumulative.............................................67
ARTICLE XIX
19.1 Acceptance of Surrender.........................................67
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Page
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ARTICLE XX
20.1 No Merger of Title..............................................67
ARTICLE XXI
21.1 Conveyance by Landlord..........................................67
ARTICLE XXII
22.1 Quiet Enjoyment.................................................68
ARTICLE XXIII
23.1 Notices.........................................................68
ARTICLE XXIV
24.1 Appraisers......................................................69
ARTICLE XXV
25.1 General REIT Provisions.........................................70
25.1.1 REIT Requirements........................................70
25.1.2 Satisfaction of REIT Requirements........................71
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
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Page
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ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims.............................................72
27.2 Severability...................................................72
27.3 Maximum Permissible Rate.......................................72
27.4 Headings.......................................................72
27.5 Exculpation....................................................72
27.7 Exhibition of Leased Property..................................72
27.8 Entire Agreement...............................................73
27.9 Governing Law..................................................73
27.10 No Waiver......................................................73
27.11 Successors and Assigns.........................................73
27.12 Modifications in Writing.......................................73
ARTICLE XXVIII
28.1 Memorandum of Lease............................................74
ARTICLE XXIX
29.1 Provisions Relating to Purchase of the Leased Personal
Property.......................................................74
LIST OF EXHIBITS
Exhibit A1 - Legal Description of the Lands
Exhibit 1.5(b) - List of Ground Leases and Expiration Dates
Exhibit 2(a) - GSMC Loan Agreement
Exhibit 3.1(a) - Minimum Rent Allocations
Exhibit 3.1(b) - Calculation of Percentage Rent
Exhibit 6.1(j) - Deferred Maintenance Conditions (excluding environmental)
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Exhibit 8.2.8 - Senior Leases
Exhibit 11.1 - Cash Management Procedures
Exhibit 15.1- Form of Non-Disturbance Agreement
Exhibit 26.1 - Deferred Maintenance Conditions -- Environmental
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MASTER LEASE AGREEMENT (this "Lease"), dated as of the 22nd day of April,
1998, between URS REAL ESTATE, L.P. ("Landlord"), a Delaware limited
partnership, having its principal office c/o Vornado Realty L.P., Park 80 West,
Plaza II, Saddle Brook, New Jersey 07663, Attention: Chief Executive Officer,
and URS LOGISTICS, INC. ("Tenant"), a Delaware corporation, having its principal
offices at One Concourse Parkway, Suite 150, Atlanta, Georgia 30328, Attention:
Chief Executive Officer.
RECITALS
WHEREAS, Landlord has agreed to let to Tenant, and Tenant has agreed to
lease from Landlord, certain parcels of real property and improvements each for
use and operation as dry and cold warehousing facilities and related uses,
defined hereinbelow as the "Leased Property" (all capitalized terms used but not
elsewhere defined herein shall have the meaning provided therefor in Article II
hereof).
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE I
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following
(collectively, the "Leased Property"):
(i) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibits A-1 attached hereto and made a part
hereof (collectively, the "Land");
(ii) all buildings, structures, Fixtures and other improvements of
every kind, including alleyways and connecting tunnels, sidewalks, utility
pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased
Improvements");
(iii) all easements, rights and appurtenances relating to the Land
and the Leased Improvements; and
(iv) all permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components
thereof, now and
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hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Leased Improvements, including all
furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air- and
water-pollution-control, waste-disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire-and theft-protection
equipment, and built-in oxygen and vacuum systems, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto
to constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but excluding all items included within
Tenant's Personal Property (collectively the "Fixtures").
1.2 Release of Unimproved Parcels. Notwithstanding anything herein to the
contrary, Landlord shall have the right from time to time to terminate this
Lease, with respect to any Unimproved Parcels located at the Leased Property as
well as grant in connection therewith in respect of the Leased Property
remaining subject to this Lease reasonable easements, restrictions, covenants,
reservations and rights of way for, among other things, traffic circulation,
ingress, egress, parking, access, water and sewer lines, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes at no
cost to Landlord and with no adjustment in Rent; provided, in each such case,
(x) such Unimproved Parcel shall be used either for the purpose of erecting,
maintaining and operating cold or dry storage structures or other structures and
improvements not inconsistent with the use of the related Leased Property, and
(y) such termination will not materially adversely affect either the value of
the remaining portion of the related Leased Property (as distinguished from the
value of the entire Leased Property) or the net operating income of the
remaining portion of the Leased Property (taking into account, to the extent
applicable, any potential loss of revenue resulting if the transfer and
development of the Unimproved Parcel by Landlord were not to occur), as
supported by the Officer's Certificate of Landlord described below. As used
herein, "Unimproved Parcel" shall mean, with respect to a Leased Property, one
or more land areas comprising such Leased Property on which no improvements
generating Receipts are situate, and not materially required for the generation
of Receipts. In connection with any termination permitted pursuant to this
Section, Tenant agrees to execute and deliver any instrument reasonably
necessary or appropriate to facilitate said action, subject to Tenant's receipt
of:
1. a plot plan identifying the location of the applicable Unimproved
Parcel;
2. a metes and bounds description of the portion of such Unimproved
Parcel; and
3. an amendment to the legal description attached as an exhibit to this
Lease implementing the proposed release, including a metes and
bounds
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description of the portion of the Land at the relevant Leased
Property that will continue to be subject to this Lease after the
proposed termination.
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.
(a) Subject to the terms of this Section, if, at any time during the Term,
in the good faith judgment of Tenant (as evidenced by an Officer's Certificate
on behalf of Tenant which describes the basis for such judgment), (x) any Leased
Property becomes or imminently will become uneconomic or unsuitable for its
Primary Intended Use, and will remain uneconomic or unsuitable for such use for
the foreseeable future, and Tenant undertakes to cease its operation of such
Leased Property for its Primary Intended Use as soon as is reasonably
practicable or (y) a Default hereunder relating to a particular Leased Property
has occurred and is continuing and Tenant, notwithstanding the exercise of
reasonable diligence, is unable to cure such Event of Default other than by
terminating this Lease with respect to the Leased Property in question (in each
case, any such Leased Property, an "Uneconomic Property"), then Tenant shall
have the right, so long as (i) no Event of Default shall have occurred and be
continuing (other than one arising from the Default described in clause (y)
above), and (ii) any other requirements relating to the substitution of such
Uneconomic Property under the GSMC Loan Agreement have been satisfied, to
purchase such Uneconomic Property described in clause (x) above in accordance
with the terms of this Section; provided that in no event shall Tenant be
permitted to purchase more than six (6) Leased Properties during the Term
pursuant to the terms of this Section. Tenant shall signify its election to
exercise such purchase option by giving notice of the election to Landlord,
accompanied by the Officer's Certificate described in the immediately preceding
sentence. Tenant's restoration of the operations at any Uneconomic Property as a
result of events which are not within the control of Tenant and were not
foreseeable by Tenant at the time such Officer's Certificate was delivered shall
not be deemed to evidence Tenant's bad faith in making the determination which
is the subject of such Officer's Certificate.
(b) In the event Tenant elects to exercise its right to purchase a Leased
Property pursuant to this Section, Tenant shall described in clause (x) above,
offer to Landlord a property owned by Tenant of like kind and quality to the
Leased Property proposed to be purchased by Tenant (each a "New Leased
Property"), which New Leased Property, if accepted by Landlord (in Landlord's
reasonable discretion), would serve as consideration for Tenant's purchase of
the Leased Property in question. Upon any purchase of an Uneconomic Property
pursuant to this Section, such New Leased Property shall be a Leased Property
hereunder. As a condition to any such purchase, Tenant shall deliver to Landlord
(i) a deed evidencing the transfer of the fee interest in the New Leased
Property to Landlord, (ii) a Title Policy with respect to the New Leased
Property, (iii) a survey of the New Leased Property, (iv) environmental reports
relating to the New Leased Property, (iv) an amendment to this Lease (x)
terminating this Lease with respect
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to the Uneconomic Property and (y) causing the New Leased Property to become a
Leased Property hereunder and (v) any and all other documents, reports, legal
opinions or other items reasonably requested by Landlord. Upon any such
purchase, the Uneconomic Property removed will no longer be a Leased Property
hereunder and this Lease, as such related to the Uneconomic Property in question
will be terminated. The Release Amount assigned to the Uneconomic Property shall
be assigned to the New Leased Property.
(c) Tenant hereby covenants and agrees that any purchase of an Uneconomic
Property pursuant to this Section shall not in any way impair the obligations of
Tenant to make payments of Rent hereunder.
(d) Tenant hereby agrees to pay all expenses in connection with any
actions taken pursuant to this Section, including all out-of-pocket expenses and
costs incurred by Landlord or Landlord's Lender (or any of their respective
affiliates), regardless whether a substitution is ultimately effected, including
fees and costs of: audits; travel; accounting services; environmental and
engineering reports; credit reports; appraisals; property evaluations;
preparation, negotiation, execution and delivery of any amendments of or
documents supplemental to this Lease or Landlord's Loan Documents; attorneys'
fees and expenses of Landlord and Landlord's Lender; transfer, transfer gains,
intangibles, deed and mortgage recording taxes; title insurance; survey; and
document recordings and filings.
1.4 Initial Term. The initial term of this Lease (the "Initial Term")
shall commence on the Commencement Date and shall expire on April 30, 2013,
unless otherwise terminated as provided herein.
1.5 Renewal Terms. (a) If no Event of Default shall have occurred and be
continuing, Tenant shall have the right to renew this Lease (as to all, but not
less than all, the Leased Property subject to this Lease at such time) for two
(2) successive five (5) year terms ("Extended Terms") upon giving written notice
to Landlord of each such renewal at least eighteen (18) months prior to the
termination of the then current Term. During each such Extended Term, all of the
terms and conditions of this Lease shall continue in full force and effect,
except that the Minimum Rent for and during each Extended Term shall be the
greater of (i) the then current fair market rental ("Fair Market Rental"), which
unless otherwise mutually agreed to by Landlord and Tenant shall be determined
by the appraisal procedure set forth in Article XXIV and (ii) the Minimum Rent
for the Lease Year immediately preceding the Extended Term plus five percent
(5%). Tenant's failure to exercise its renewal option as to the first Extended
Term shall result in the loss of its renewal option as to the second Extended
Term.
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(b) Notwithstanding the terms of Section 1.5(a) to the contrary, with
respect to each of those certain Ground Leases identified on Exhibit 1.5(b)
hereto, the Tenant's right to an Extended Term shall be limited such that the
same shall expire (regardless of the length of any Extended Term that would
otherwise be applicable pursuant to the above provisions of this Section 1.5(a))
on the date that is five (5) years prior to the last expiration date of such
Ground Lease, taking into account any renewal terms in respect of such Ground
Lease.
(c) Landlord shall exercise renewal rights (if any) that are available
under each Ground Lease so as to provide Tenant, to the greatest extent
possible, with an Extended Term described in Section 1.5(a), provided that
Landlord shall not be required to exercise any renewal option in respect of any
Ground Lease unless prior to such time Tenant shall have duly exercised its
renewal option hereunder and, failing such renewal by Landlord, Tenant would not
have the full Extended Term available to it by reason of Section 1.5(b).
(d) If Landlord or any Affiliate of Landlord shall purchase any fee or
other interest in a Leased Property that is superior to the interest of
Landlord, such as the ground lessor's interest in a Ground Leased Property, then
the estate of Landlord and such superior interest shall not merge and, without
limiting the foregoing, Tenant shall continue to be liable hereunder to pay any
ground rent and perform any other obligations of the lessee under such Ground
Lease. Further, in the event Landlord or any Affiliate of Landlord acquires a
ground lessor's interest in a Ground Leased Property and the term of the related
Ground Lease shall have expired, then Landlord or such Affiliate shall have the
right to enter into a new Ground Lease and receive from Tenant reimbursement (or
payment) of ground rent in an amount equal to the same ground rent as was
payable under the expired Ground Lease, increased by 5 percent, and increased
again by 5 percent every fifth anniversary of the commencement of the new Ground
Lease.
1.6 Condition of the Leased Property. Tenant acknowledges (a) receipt and
delivery of possession of the Leased Property, (b) that Tenant has inspected and
otherwise has knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease and (c) that Tenant has found the same to
be in good order and repair and satisfactory for its purposes hereunder. Tenant
is leasing the Leased Property "AS IS" in its present condition. Tenant waives
any claim or action against Landlord in respect of the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, AS TO ACCESS TO THE LEASED
PROPERTY OR AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, OR AS TO THE ABSENCE OF ANY DEFECT, LATENT OR PATENT, IT BEING AGREED
THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
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ARTICLE II
2.1 Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, (iv) the words "herein," hereof" and "hereunder" and other words of
similar import refer to this Lease as a whole and not to any particular Article,
Section or other subdivision, (v) the term "including" and words of similar
import shall be deemed to be followed by the phrase "without limitation," (vi)
the term "attorneys' fees" and "attorneys' fees and expenses" and words of
similar import shall be deemed preceded with the word "reasonable," and (vii)
the phrase "Leased Property" shall be deemed to mean a specific Leased Property
or all of the Leased Property, as the context may require, and shall be deemed
to be followed by the phrase "or any portion thereof".
Additional Charges: As defined in Article III.
Affiliate: A Person or Persons directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with the
Person or Persons in question. The term "control", as used in the immediately
preceding sentence, shall mean, with respect to a Person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting
rights attributable to the shares of the controlled corporation and, with
respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled Person.
Aggregate Threshold Amount: As defined in Article VIII.
Alteration: As defined in Section 8.1.
Annual Budget: Tenant's annual budget setting forth, in reasonable detail,
Tenant's good faith estimates of the anticipated results of operations of the
Leased Property (taken as a whole), including Receipts, all Operating Expenses,
management fees and capital expenditures, approved by Landlord in accordance
with Section 6.1(h)(4) hereof.
Atlanta Parent, Inc.: Atlanta Parent, Inc., a Delaware corporation.
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Business Day: Any day other than a Saturday, Sunday or any other day on
which national banks in New York, New York are not open for business.
Cash: Coin or currency of the United States of America or immediately
available federal funds, including such funds delivered by wire transfer.
Cash Management Procedures: As defined in Section 11.1.
Casualty: As defined in Section 10.2.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: The date of this Lease.
Condemnation: As defined in Section 10.3.
CPI Increase: When used to qualify a fixed dollar amount set forth herein
at the date in question, such fixed dollar amount, as increased by the
percentage by which the Consumer Price Index for All Items, Urban Consumers
published by the United States Department of Labor, applicable to the United
States (all items) (base year 1982-84 = 100) (the "Consumer Price Index"), or
any successor index thereof as such successor index may be appropriately
adjusted to establish substantial equivalence with the Consumer Price Index,
shall have increased over such Consumer Price Index (or successor, equivalent or
comparable index, as applicable) for the month in 1998 in which the Commencement
Date occurs. If the Consumer Price Index is converted to a different standard
reference base or otherwise revised, then whenever the determination of a CPI
Increase figure is called for herein, the Consumer Price Index shall be
converted in accordance with the conversion factors published by the United
States Department of Labor, Bureau of Labor Statistics, or, if said Bureau shall
not publish the same, as the same may be published by Prentice-Hall, Inc. or any
other nationally recognized publisher of similar statistical information
selected by Landlord. If the Consumer Price Index ceases to be published and
there is no successor thereto, such other index as Landlord shall reasonably
select shall be substituted for the Consumer Price Index.
Credit Facility: Shall mean a clean, irrevocable, unconditional
transferable letter of credit, payable on sight draft only, which shall not be
secured by any Leased Property, for the benefit of Landlord (or, at Landlord's
option, Landlord's Lender) and entitling such beneficiary to draw thereon in New
York, New York or in such other city as Landlord's office may be located (or, at
Landlord's option, the corporate trust office of Landlord's Lender) may be
located at the time of the issuance of such letter of credit, issued by a
domestic bank or the U.S. agency or branch of a foreign bank the long-term
unsecured debt rating of which at the time such letter of credit is delivered
and throughout
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the term of such letter of credit is not less than the then Required Rating, or,
if the Required Rating is "AAA" and there are no domestic banks or U.S. agencies
or branches of a foreign bank having such long-term unsecured debt rating then
issuing letters of credit, then such letter of credit may be issued by a
domestic bank the long-term unsecured debt rating of which is not lower than
"AA" by the Rating Agencies. Such Credit Facility shall provide that (i) it will
automatically renew unless the issuer of such Credit Facility delivers written
notice to the beneficiary (and to Landlord, if Landlord is not the beneficiary)
at least thirty (30) days prior to its expiration that such Credit Facility will
not be renewed and (ii) if not so renewed, the beneficiary shall be entitled to
draw upon the full amount thereof. Without in any way limiting the generality of
the foregoing, if any Credit Facility is not renewed or replaced with another
Credit Facility prior to the date that is thirty (30) days prior to its
expiration, the beneficiary shall be entitled to draw upon the full amount
thereof.
Crescent Operating: Crescent Operating, Inc., a Delaware corporation.
Crescent Realty: Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership.
Crescent Trust: Crescent Real Estate Equities Company, a Texas real estate
investment trust.
Default: The occurrence of any event hereunder which, but for the giving
of notice or passage of time, or both, would be an Event of Default hereunder.
Depositary: Landlord or, at Landlord's election, Landlord's Lender or a
depositary selected by Landlord, it being agreed that different Persons may
serve as Depositary at any one time and from time to time.
Eligible Collateral: U.S. Government Securities, Debt Securities, a Credit
Facility, Cash and Cash Equivalents, and a guaranty of payment and performance
(in form and substance reasonably satisfactory to Landlord) by Vornado Trust or
Vornado Realty (provided Vornado Trust or Vornado Realty, as applicable, has a
long-term unsecured debt rating at least equal to the Investment Grade rating)
and/or Crescent Trust or Crescent Realty (provided Crescent Trust or Crescent
Realty, as applicable, has a long-term unsecured debt rating at least equal to
the Investment Grade rating), or any combination of the foregoing.
Environmental Laws: Any and all of the following as applicable to Tenant
and/or the Leased Property: present and future federal, state and local laws
(whether under common law, statute, ordinance, rule, regulation or otherwise),
court or administrative orders or decrees, requirements of permits issued with
respect thereto, and other
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requirements of governmental authorities relating to any Hazardous Substances or
Hazardous Substances Activity (including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. ss.ss.9601, et seq.)
as heretofore or hereafter amended from time to time).
Event of Default: As defined in Article XII.
Extended Term: As defined in Article I.
Fair Market Rental: With respect to a particular Leased Property, the
rental that a willing tenant not compelled to rent would pay a willing landlord
not compelled to let for such Leased Property, excluding all capital
improvements (as distinguished from necessary repairs and replacements) paid for
by Tenant, determined in accordance with the appraisal procedures set forth in
Article XXIV or in such other manner as shall be mutually acceptable to Landlord
and Tenant.
Fair Market Value: With respect to a particular Leased Property, the price
that a willing buyer not compelled to buy would pay a willing seller not
compelled to sell for such Leased Property, excluding all capital improvements
(as distinguished from necessary repairs and replacements) paid for by Tenant,
and (a) assuming the same is unencumbered by this Lease, (b) determined in
accordance with the appraisal procedures set forth in Article XXIV or in such
other manner as shall be mutually acceptable to Landlord and Tenant, and (c) not
taking into account any reduction in value resulting from any indebtedness to
which such Leased Property is subject except as expressly provided hereinbelow.
In determining such Fair Market Value, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions of
any encumbrance which is not removed at or prior to the closing of the
transaction as to which such Fair Market Value determination is being made shall
be taken into account.
Fiscal Year: Each twelve (12) month period from January 1 to December 31.
Fixtures: As defined in Article I.
Governmental Authority: Any court, board, agency, commission, office or
authority of any nature whatsoever of or for any governmental unit (federal,
state, county, district, municipal, city or otherwise), whether now or hereafter
in existence.
Ground Lease: Each of the ground leases identified on Exhibit 1.5(b)
hereto.
Ground Leased Property: Collectively, the Leased Property identified on
Exhibit 1.5(b) hereto.
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GSMC Loan Agreement: That certain loan agreement, dated as of the date
hereof, relating to the Initial Landlord's Debt, a copy of which is attached
hereto for convenience of reference as Exhibit 2. Nothing herein shall be
construed to make Tenant a party to such loan agreement.
Hazardous Substances: Any of the following: (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance", "hazardous material", "hazardous waste", "extremely hazardous
waste", "infectious waste", "toxic substance", "toxic pollutant" or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity" and (ii) any
petroleum, natural gas, natural gas liquid, liquefied natural gas, synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas), ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters, and other wastes associated with
the exploration, development or reduction of crude oil, natural gas, or
geothermal resources. Without limiting the foregoing, Hazardous Substances shall
also include asbestos and asbestos-containing materials and polychlorinated
biphenyls.
Initial Term: As defined in Article I.
Institutional Lender: Any one or more of the following: a bank, investment
bank, trust company, broker-dealer, insurance company, separate account, pension
fund, retirement plan, governmental agency, real estate investment trust,
investment company, investment company adviser or pension fund adviser, or any
Affiliate of any of the foregoing, in each case, whether acting for its own
account or as a trustee, fiduciary or agent of others.
Insurance Premiums: As defined in Section 10.1(d).
Interest Rate: 6.99 percent per annum.
Insurance Requirements: All terms of any insurance policy required
hereunder covering or applicable to the Leased Property, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Leased Property or
any use of the Leased Property.
Land: As defined in Article I with respect to the Leased Property.
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Landlord: URS Real Estate, L.P., a Delaware limited partnership, and its
successors and assigns.
Landlord Liens: Liens on or against the Leased Property or this Lease or
any payment of Rent (i) in favor of any taxing authority by reason of any tax
excluded from the definition of "Taxes" hereunder owed by Landlord or (ii)
securing Landlord's Debt.
Landlord's Debt: The outstanding principal amount borrowed by Landlord
from time to time, together with all interest accrued and unpaid thereon, and
all other sums due in connection therewith, including any yield-maintenance
payments or other prepayment premium or penalty, the payment of which may be
secured by Landlord's interest in the Leased Property and the Rent and other
amounts payable hereunder. As of the date hereof, "Landlord's Debt" means that
certain loan in the aggregate principal amount of $253,000,000 made by Goldman
Sachs Mortgage Company, which is secured by mortgages on the Leased Properties
(which mortgages include an assignment of Landlord's interest in this Lease),
and such Landlord's Debt is sometimes referred to herein as the "Initial
Landlord's Debt."
Landlord's Lender: The holder of Landlord's Debt from time to time,
provided that if Landlord's Debt shall be held legally or beneficially by more
than one Person, then Landlord's Lender shall be deemed to refer to only one
such Person as selected by Landlord in a notice to Tenant or, failing such
selection, as selected by Tenant.
Landlord's Loan Documents: The instrument(s) and agreement(s) evidencing,
establishing and securing Landlord's Debt, including (to the extent applicable)
a promissory note, loan agreement, a mortgage, deed of trust or deed to secure
debt and assignment of leases and rents.
Lease Year: Any Fiscal Year or portion thereof during the Term, commencing
with the 1998 Fiscal Year.
Leased Improvements; Leased Property: Each as defined in Article I.
Leasehold Mortgage: Any mortgage, deed of trust or other security interest
encumbering Tenant's leasehold estate hereunder, or direct or indirect ownership
interests in Tenant, which has been granted to secure repayment of debt of
Tenant or the holders of such ownership interests.
Leasehold Mortgagee: The holder of a Leasehold Mortgage from time to time.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions
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of Governmental Authorities affecting Landlord, Tenant or the Leased Property,
or the construction, use, alteration or operation thereof, whether now or
hereafter enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to Tenant,
at any time in force affecting the Leased Property (other than any subleases,
this Lease, and service contracts and other similar agreements now in effect or
hereafter entered into in the ordinary course of Tenant's business), including
any which may (i) require repairs, modifications or alterations in or to the
Leased Property, or (ii) in any way limit the use and enjoyment thereof.
Litigation Costs: All costs reasonably incurred by Landlord in connection
with the enforcement of any provision of this Lease, including attorneys' fees
and expenses, court costs and reasonable consultants' fees and expenses.
Lien: Any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting the Leased Property or Tenant, or any interest therein,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, the
filing of any financing statement, notice or other instrument and mechanics',
materialmen's and other similar liens and encumbrances.
Major Subtenant: A tenant under a Sublease for all or substantially all of
a Leased Property.
Material Agreement: Operating Agreements and agreements (i) requiring
payment by Tenant of more than $2,000,000 per annum and not cancellable without
a penalty of $500,000 or more, or (ii) pursuant to which Tenant is entitled to
receive more than $2,000,000 per year, relating, in each case, to the ownership,
development, use, operation, leasing, maintenance or repair of the Leased
Property, provided "Material Agreements" shall not include agreements pursuant
to which either party thereto may discontinue the provision of, or request for,
services, or the delivery of goods to Tenant for storage, without payment of any
penalty or without notice to the other party (regardless whether the agreement
is formally terminated) .
Material Alteration: Any Alteration to be performed by or on behalf of
Tenant at a Leased Property (other than an Alteration the cost of which a
Subtenant is obligated to reimburse to Tenant and which Tenant reasonably
believes will be so reimbursed), the cost of which as reasonably estimated by a
Qualified Architect or Engineer exceeds the Threshold Amount.
Material Casualty: As defined in Section 10.2.
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Material Condemnation: As defined in Section 10.2.
Minimum Rent: As defined in Article III.
Net Operating Income: Operating Income less Operating Expenses.
New Leased Property: As defined in Article I.
Notice: As defined in Article XXIII (regardless whether the same is
capitalized herein).
Officer's Certificate: A certificate made by an individual authorized to
act on behalf of Tenant and, to the extent applicable, any constituent Person
with respect to Tenant. Without limiting the foregoing, if the individual
signing the certificate is doing so on behalf of a corporation, then such
individual shall hold the office of President, Vice President or Chief Financial
Officer (or the equivalent) with respect to such corporation.
Operating Agreements: Reciprocal easement and/or operating agreements;
covenants, conditions and restrictions; and similar agreements affecting any
Leased Property and binding upon and/or benefitting Landlord or Tenant and other
third parties. Without limiting the foregoing, "Operating Agreements" shall not
include any Warehouse Agreements.
Operating Expenses: For any specified period, on an accrual basis, all
expenses paid (or due and payable, except to the extent that the same constitute
Trade Payables that are not more than 60 days outstanding) by Tenant during such
period in connection with the operation of the Leased Property, as well as
bookkeeping, accounting, insurance costs, wages and other costs and expenses
incurred for the Leased Property and legal expenses incurred in connection with
the operation of the Leased Property, determined, in each case, consistently
with GAAP. "Operating Expenses" shall not include (1) depreciation or
amortization or other noncash items (other than expenses that are due and
payable but not yet paid), (2) the principal of and interest on any indebtedness
(except for any payments required under any Permitted Equipment Leases), (3)
income taxes or other taxes in the nature of income taxes, (4) any expenses
(including legal, accounting and other professional fees, expenses and
disbursements) incurred in connection with and allocable to any indebtedness
(except for any of the same in connection with any Permitted Equipment Leases),
(5) the cost of any capital expenditures (except for any payments required under
any Permitted Equipment Leases), (6) distributions to the shareholders, members
or partners in Tenant or any asset management fees or similar compensation
payable to any Affiliate of Tenant, and (7) any item of expense which otherwise
would be considered within Operating Expenses but is paid directly by any
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Subtenant. Expenses that are accrued as Operating Expenses during any period
shall not be included in Operating Expenses when paid during any subsequent
period.
Operating Income: For any specified period, on an accrual basis, all
income received or accrued by Tenant during such period in connection with the
operation of the Leased Property, determined consistent with GAAP, including the
following, but without duplication:
(i) all rents, rent equivalents, moneys payable as damages pursuant
to a Lease or in lieu of rent or rent equivalents, royalties (including
all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and
other deposits), accounts, cash, issues, profits, charges for services
rendered, and other consideration of whatever form or nature received by
or paid to or for the account of or benefit of Tenant or its agents or
employees from any and all sources arising from or attributable to the
Leased Property, including any obligations now existing or hereafter
arising or created out of the lease, sublease, license, concession or
other grant of the right of the use and occupancy of property or rendering
of services by Tenant;
(ii) charges received by Tenant for electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any other energy,
telecommunications, telephone, utility or similar items, including
overtime usage, HVAC equipment charges, sprinkler charges, escalation
charges, license fees, maintenance fees, charges for improvements, Taxes
and other amounts payable to Tenant, under any Lease or other agreement
relating to the Leased Property pursuant to which any portion of the
Leased Property, utilities, facilities, equipment, parking facilities or
other services are furnished by Tenant, but excluding any security
deposits received;
(iii) condemnation awards to the extent that such awards are
compensation for lost rent;
(iv) business interruption and loss of "rental value" insurance
proceeds;
(v) income from cash holdings and interest from notes in lieu of
rent; and
(vi) all other amounts received by Tenant during such period in
respect of items which in accordance with GAAP would be included in
Tenant's annual financial statements for such period or any other period
as operating income of the Leased Property and which are reasonably
expected to recur during the next two
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(2) years following the date on which Net Cash Flow or Net Operating
Income is being calculated.
Notwithstanding the foregoing clauses (i) through (vi), Operating Income shall
not include (A) any condemnation or insurance proceeds (other than of the types
described in clauses (i), (ii) and (iii) above), (B) any proceeds resulting from
the sale, exchange, transfer, financing or refinancing of all or any part of the
Tenant's interest in the Leased Property or any interest therein (other than of
the types described in clause (iii) above), (C) any repayments received from
Subtenants of principal loaned or advanced to Subtenants by Tenant, or (D) any
type of income that would otherwise be considered Operating Income pursuant to
the provisions above but is paid directly by any Subtenant to a Person other
than Tenant or its agent.
Other Charges: All ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including vault charges and license fees for
the use of vaults, chutes and similar areas adjoining a Leased Property, now or
hereafter levied or assessed or imposed against any Leased Property or any part
thereof (subject to the same exclusion set forth in the proviso in the
definition of "Taxes").
Overdue Rate: On any date, a rate equal to the greater of (i) the Interest
Rate and (ii) 2% above the Prime Rate, but in no event greater than the maximum
rate then permitted under applicable law.
Percentage Rent: As set forth in Exhibit 3.1(b) attached hereto.
Permitted Encumbrances: Collectively, (a) all Liens disclosed in the Title
Policy, (b) Liens, if any, for Taxes or Other Charges not yet payable or
delinquent or which are being diligently contested in good faith in accordance
with this Lease, (c) Liens in respect of property or assets imposed by law which
were incurred in the ordinary course of business, such as carriers',
warehousemen's, landlord's, mechanics', materialmen's, repairmen's and other
similar Liens arising in the ordinary course of business, and Liens for workers'
compensation, unemployment insurance and similar programs, in each case arising
in the ordinary course of business which are being diligently contested in good
faith in accordance with the terms hereof, (d) Subleases, (e) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances (including any of such matters incurred or
entered into by Tenant in the ordinary course of business) which in each case do
not diminish in any material respect the value of the affected Leased Property
or affect in any material respect the validity, enforceability or priority of
this Lease or the Liens created by Landlord's Loan Documents, and (f) such other
title and survey exceptions as Landlord has approved or may approve in writing.
In addition, "Permitted Encumbrances" shall include any Landlord Liens.
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Permitted Equipment Leases means capital and/or operating lease
obligations in respect of equipment used at the Leased Property with an annual
rent obligation not greater than $7,500,000 (as escalated by the CPI Increase).
Permitted Investments: The following, subject to qualifications
hereinafter set forth:
1. Obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or instrumentality
thereof, when such obligations are backed by the full faith and
credit of the U.S. These obligations include, but are not limited
to:
o U.S. Treasury obligations
All direct or fully guaranteed obligations
o Farmers Home Administration
Certificates of beneficial ownership
o General Services Administration
Participation certificates
o U.S. Maritime Administration
Guaranteed Title XI financing
o Small Business Administration
Guaranteed participation certificates
Guaranteed pool certificates
o U.S. Department of Housing and Urban Development
Local authority bonds
o Washington Metropolitan Area Transit Authority
Guaranteed transit bonds
2. Federal Housing Administration debentures.
3. Obligations of government-sponsored agencies that are not backed by
the full faith and credit of the U.S., where the obligation is
limited to those instruments that have a predetermined fixed dollar
amount of principal due at maturity that cannot vary or change.
These obligations are limited to:
o Federal Home Loan Mortgage Corp. (FHLMC) Debt
obligations
o Farm Credit System (formerly: Federal land Banks,
Federal Intermediate Credit Banks, and Banks for
Cooperatives) Consolidated systemwide bonds and notes
o Federal Home Loan Banks (FHL Banks) Consolidated debt
obligations
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o Federal National Mortgage Association (FNMA) Debt
obligations
o Student Loan Marketing Association (SLMA) Debt
obligations
o Financing Corp. (FICO) Debt obligations
o Resolution Funding Corp. (REFCORP) Debt obligations.
4. Federal funds, unsecured certificates of deposit, time deposits,
banker's acceptances, and repurchase agreements having maturities of
not more than 365 days of any bank, the short-term debt obligations
of which are rated "A-1+" (or the equivalent) by the Rating Agencies
or secured by U.S. Treasury obligations (as described in Paragraph 1
above).
5. Deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC).
6. Debt obligations maturing in 365 days or less that are rated AAA or
higher (or the equivalent) by the Rating Agencies.
7. Commercial paper rated "A-1+" (or the equivalent) by the Rating
Agencies and maturing in 365 days or less.
8. Investments in certain short-term debt of issuers rated "A-1" (or
the equivalent) by the Rating Agencies may be permitted with certain
restrictions. The total amount of debt from "A-1" issuers must be
limited to the investment of an amount equal to Monthly Debt Service
Payment Amount. The total amount of "A-1" investments should not
represent more than 20% of the rated issue's outstanding principal
amount and each investment should not mature beyond 30 days.
Investment in "A-1" (or the equivalent) rated securities are not
eligible for reserve accounts, cash collateral accounts, or other
forms of credit enhancement. Short-term debt for purposes of this
definition includes: commercial paper, federal funds, repurchase
agreements, unsecured certificates of deposit, time deposits, and
banker's acceptances.
9. Investment in money market funds rated "AAAm" or "AAm-G" (or the
equivalent) by the Rating Agencies.
10. Such other investments as shall be approved in writing by Landlord.
Notwithstanding the foregoing, "Permitted Investments": (i) shall exclude any
security with the Standard & Poor's "r" symbol (or any other Rating Agency's
corresponding
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symbol) attached to the rating (indicating high volatility or dramatic
fluctuations in their expected returns because of market risk), as well as any
mortgage-backed securities and any security of the type commonly known as
"strips"; (ii) shall not have maturities in excess of one year; (iii) as to the
investments described in (1), (3), (4), (5), (6), (7) and (8): the obligations
shall be limited to those instruments that have a predetermined fixed dollar of
principal due at maturity that cannot vary or change; interest may either be
fixed or variable; and any variable interest should be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index; and (iv) shall exclude any investment where the right to receive
principal and interest derived from the underlying investment provide a yield to
maturity in excess of 120 percent of the yield to maturity at par of such
underlying investment. No investment shall be made which requires a payment
above par for an obligation if the obligation may be prepaid at the option of
the issuer thereof prior to its maturity. All investments shall mature or be
redeemable upon the option of the holder thereof on or prior to the earlier of
(x) three (3) months from the date of their purchase or (y) the Business Day
preceding the day before the date such amounts are required to be applied
hereunder.
Person: Any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.
Policies: As defined in Section 10.1.
Pre-Approved Party: Shall mean any one or more of the following:
1. Vornado Trust,
2. Vornado Realty,
3. Vornado Operating,
4. Any one or more of the current common shareholders of Atlanta
Parent, Inc., provided that such shareholder is an officer,
director and/or trustee of Vornado Trust, Vornado Realty
and/or Vornado Operating,
5. Atlanta Parent, Inc.
6. Crescent Trust,
7. Crescent Realty,
8. Crescent Operating,
9. Any one or more of the current common shareholders of Crescent
CS Holdings Corp. or Crescent CS Holdings II Corp., provided
that such shareholder is an officer, director and/or trustee
of Crescent Trust, Crescent Realty and/or Crescent Operating,
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10. Crescent CS Holdings Corp. or Crescent CS Holdings II Corp.,
11. Americold Corporation,
12. URS Logistics, Inc.,
13. any Person with or into which any one or more other
Pre-Approved Parties is merged or consolidated or to which any
one or more of such Persons transfer all or substantially all
of its or their assets,
14. any Person 51 percent or more owned, directly or indirectly,
and controlled by one or more other Pre-Approved Parties, and
15. any Person in which one or more Persons described in 1-14
above are operating partners or managing members.
Primary Intended Use: As defined in Section 6.1.
Qualified Architect or Engineer: Any experienced architect, engineer or
construction manager licensed or registered in the jurisdiction where the
applicable Leased Property is located, if required by the laws of such
jurisdiction.
Rating Agencies: Any one or more of the following designated by Landlord:
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA or any
other nationally- recognized statistical rating agency selected by Landlord.
Receipts: The items described in Operating Income, determined, however, on
a cash basis.
REIT: As defined in Article XXV.
REIT Requirements: As defined in Article XXV.
Release Amount: With respect to each Leased Property, shall refer to the
applicable "Release Amount" as set forth in the GSMC Loan Agreement. Landlord
and Tenant hereby agree that, at such time as the Initial Landlord's Debt shall
no longer be outstanding, Landlord and Tenant shall establish new mutually
agreed upon Release Amounts with respect to each Leased Property (taking into
account the requirements of any new Landlord's Debt) and to make any amendments
to this Lease as may be necessary to effect the establishment of the same.
Rent: Collectively, (i) the Minimum Rent, (ii) Percentage Rent and (iii)
Additional Charges.
Rental Period. As defined in Article III.
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Rent Payment Date. As defined in Article III.
Restoration: As defined in Section 10.2.
State: The State or Commonwealth in which the particular Leased Property
in located.
Sublease. Any lease, sublease, license agreement or occupancy agreement
entered into by Tenant affecting all or any portion of the Leased Property,
provided that Warehouse Agreements shall not be included within the definition
of Subleases.
Subtenant: A subtenant, licensee, occupant or other party to any Sublease.
Superior Interests: As defined in Article XV.
Superior Party: As defined in Article XV.
Taxes: All real estate and personal property taxes, assessments, fees,
taxes on rents or rentals, water rates or sewer rents and other governmental
charges now or hereafter levied or assessed or imposed against Landlord, Tenant
or the Leased Property or rents therefrom or which may become Liens, provided
that Taxes shall not include any income, franchise, estate, inheritance or gift
taxes, or any other tax imposed on or measured by the net income of Landlord,
except to the extent that the same is in direct substitution for a tax that
would otherwise be included within the definition of "Taxes" hereunder.
Tenant's Personal Property: All motor vehicles, machinery, equipment,
furniture, furnishings, movable walls or partitions, computers or trade fixtures
or all other personal property, and consumable inventory and supplies, now owned
or hereafter acquired by Tenant and located on the applicable Leased Property or
used or useful in Tenant's business on such Leased Property, including all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, except items, if any, included within the
definition of Fixtures.
Term: Collectively, the Fixed Term and any Extended Terms, to the extent
properly exercised by Tenant pursuant to the provisions of Article I, unless
earlier terminated pursuant to the provisions of this Lease.
Termination Amount: With respect to a specified Leased Property, the
greater of the Fair Market Value thereof and the Release Amount therefor.
Threshold Amount: Two million dollars ($2,000,000).
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Title Policy: The ALTA (or equivalent) title insurance policy acquired by
Landlord (i) naming Landlord as the insured and (ii) insuring Landlord's
ownership of the Leased Property subject to the exceptions and exclusions set
forth therein.
Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto to perform any obligations of such party under this Lease.
Uneconomic Property. As defined in Article I.
Unimproved Parcel. As defined in Article I.
Unsuitable for Its Primary Intended Use: A state or condition at a Leased
Property such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Tenant, reasonably exercised, the
Leased Property cannot by operated on a commercially practicable basis for its
Primary Intended Use.
Vornado Operating: Vornado Operating, Inc., a Delaware corporation.
Vornado Realty: Vornado Realty L.P., a Delaware limited partnership.
Vornado Trust: Vornado Realty Trust, a Maryland real estate investment
trust.
Warehouse Agreements: Warehousing agreements, logistics and services
agreements, distribution agreements, handling agreements and other similar
agreements in connection with the Primary Intended Use to the extent (but only
to the extent) the same are for goods stored or services rendered at any Leased
Property, in such forms and on such terms as are customarily entered into by
Tenant, together with any amendments and modifications to such agreements.
ARTICLE III
3.1 Rent. Tenant will pay to Landlord, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, at Landlord's address set forth above or at such other place or
to such other person, firms or corporations as Landlord may designate in writing
from time to time, (i) Minimum Rent (as defined below), and (ii) Percentage
Rent; provided that so long as the Initial Landlord's Debt is outstanding and
Landlord is the "Borrower" thereunder, Minimum
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Rent and Percentage Rent shall be paid in accordance with the Cash Management
Procedures. In addition, Tenant will pay to Landlord or the Person otherwise
entitled thereto all Additional Charges during the Term on or before the same
are delinquent.
(a) Minimum Rent:
(i) For the period commencing on the Commencement Date through
December 31, 2002, the sum of THIRTY SEVEN MILLION THREE HUNDRED
FIFTEEN THOUSAND AND 00/100 DOLLARS
($37,315,000.00) per annum.
(ii) For the period commencing on January 1, 2003 through
December 31, 2007, the sum of THIRTY NINE MILLION ONE HUNDRED EIGHTY
THOUSAND SEVEN HUNDRED FIFTY AND 00/100 DOLLARS ($39,180,750.00) per
annum.
(iii) For the period commencing on January 1, 2008 through
April 30, 2013, the greater of (x) FORTY ONE MILLION ONE HUNDRED
THIRTY NINE THOUSAND SEVEN HUNDRED EIGHTY SEVEN AND 00/100 DOLLARS
($41,139,787.00) per annum and (y) the Fair Market Rental of the
Leased Property, which unless otherwise mutually agreed to by
Landlord and Tenant shall be determined by the appraisal procedure
set forth in Article XXIV.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable in arrears in twelve
(12) equal installments on the eleventh (11th) day of each calendar month of the
Fixed Term and each Extended Term (the "Rent Payment Date"); provided that if
such 11th day is not a Business Day, then the Rent Payment Date shall be the
next preceding Business Day. Minimum Rent shall be paid for the period of
eleventh (11th) of each month (or, if applicable, the Commencement Date) through
the tenth (10th) of the next month (or, if applicable, the expiration of the
Term) (each, a "Rental Period"), provided that the first and last payments of
Minimum Rent shall be prorated as to any partial Rental Period, based on the
number of days within the Term during such Rental Period and the number of days
in such Rental Period. The first installment payment of Minimum Rent shall be
payable on May 11, 1998, for the Rental Period beginning with the Commencement
Date and ending May 10, 1998.
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(b) Percentage Rent:
(i) Generally. In addition to the Minimum Rent payable with respect
to the Leased Property, Tenant shall pay Percentage Rent for each Lease
Year, annually in arrears in one (1) installment, on the Rent Payment Date
occurring in May of the following Lease Year, commencing in 1999.
(ii) Presentation of Certificate and Audit. Together with the
payment to be made under clause (i) above, Tenant shall deliver to
Landlord an Officer's Certificate setting forth the Receipts for the
Leased Property (on a Leased Property-by-Leased Property basis) (a) for
the preceding Lease Year and (b) for each individual calendar quarter
during the preceding Lease Year, together with an audit of such Receipts
conducted by a "Big Six" firm of independent certified public accountants
proposed by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed).
(iii) Confirmation of Percentage Rent. Tenant shall utilize, or
cause to be utilized, an accounting system for the Leased Property in
accordance with its usual and customary practices and in accordance with
GAAP, which will accurately record Receipts for the Leased Property.
Tenant shall retain such records, for at least three (3) years after the
expiration of each Lease Year. Landlord, at its own expense, except as
provided herein below, shall have the right, exercisable by Notice to
Tenant within two (2) year after receipt of the applicable Officer's
Certificate referred to in clause (ii) above, by its accountants or
representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns). If any such audit discloses a deficiency in the
payment of Percentage Rent and either Tenant agrees with the result of
such audit or the matter is otherwise compromised with Landlord, Tenant
shall forthwith pay to Landlord the amount of the deficiency, as finally
agreed or determined, together with interest at the Interest Rate, from
the date such payment should have been made to the date of payment
thereof. If such deficiency, as determined or agreed upon or compromised
as aforesaid, is more than four percent (4%) of the Receipts reported by
Tenant for such Lease Year and, as a result, Landlord did not receive at
least ninety-five percent (95%) of the Percentage Rent payable with
respect to such Lease Year, Tenant shall pay the reasonable cost of such
audit and examination. If any such audit discloses that Tenant paid more
Percentage Rent for any Lease Year than was due hereunder, and either
Landlord agrees with the result of such audit or the matter is otherwise
determined or compromised, then (provided no Event of Default has occurred
and is continuing) Landlord shall grant Tenant a credit equal to the
amount of such overpayment against the Rent next coming due in the amount
of such difference, as finally agreed or determined, together with
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interest at the Interest Rate accruing from the date of payment by Tenant
until the date such credit is applied. If such credit cannot be made
because the Term has expired prior to application in full thereof, then
(provided no Event of Default has occurred and is continuing and provided
Tenant has paid all amounts required under this Lease), Landlord shall
repay the unapplied balance of such credit to Tenant.
(iv) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public information, (2) disclosed to the extent that Landlord is
advised by counsel that Landlord is required to disclose such information
by subpoena, court order, securities laws and regulations, any other laws
or regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to the Initial Landlord's Debt,
provided that, with respect to the disclosures permitted under clauses
(4), Landlord shall obtain the agreement of the Persons to whom disclosure
is made to maintain such information as confidential in accordance with
terms of this Subsection (iv) and in no event shall public or Rule 144A
holders of Landlord's Debt be permitted to receive such information on an
individual Leased Property basis.
(v) Survival. The obligations of Tenant and Landlord contained in
this Section 3.4 shall survive the expiration or earlier termination of
this Lease.
(c) Additional Charges. In addition to the Minimum Rent and Percentage
Rent payable with respect to the Leased Property, Tenant shall pay and discharge
as and when due and payable the following (collectively, "Additional Charges"):
(1) Taxes and Other Charges. Tenant shall pay all Taxes and Other
Charges as set forth in Section 6.1(b) herein.
(2) Utility Charges. Tenant shall pay all charges for electricity,
power, gas, oil, water, sanitary and storm sewer, refuse collection and
other utilities used or consumed in connection with the applicable Leased
Property during the Term.
(3) Insurance Premiums. Tenant shall pay, as Additional Charges, all
premiums for the insurance coverage required to be maintained pursuant to
Article VIII hereof.
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(4) Other Charges. Tenant shall pay, as Additional Charges, all
other amounts, liabilities and obligations that Tenant assumes or agrees
to pay under this Lease, including all of its indemnification obligations
set forth herein.
(5) Late Payment of Rent. If any installment of Minimum Rent,
Percentage Rent or Additional Charges (but only as to those Additional
Charges which are payable directly to Landlord, if any) shall not be paid
within five (5) Business Days after its due date, Tenant will pay to
Landlord on demand, as Additional Charges, a late charge (to the extent
permitted by law) computed at the Overdue Rate (or at the maximum rate
permitted by law, whichever is the lesser) on the amount of such
installment, from the due date of such installment to the date of payment
thereof. To the extent that Tenant timely pays any Additional Charges to
Landlord pursuant to any requirement of this Lease, Tenant shall be
relieved of its obligation to pay such Additional Charges to the entity to
which they would otherwise be due. If Landlord's Loan Documents shall so
require, or if any Additional Charges shall not be paid to a third party
payee within five (5) Business Days after its due date, Landlord may at
any time thereafter, at Landlord's option, require Tenant to deposit into
an escrow account under the sole dominion and control of Landlord (or the
applicable Landlord's Lender), on the first day of each month (or such
other day(s) as Landlord shall reasonably specify), an amount which,
together with similar escrow deposits on succeeding deposit dates, is
sufficient to ensure that such escrow account shall contain an amount
sufficient to make such payment on its next due date, in which event
Landlord shall make all future payments for such expense from the escrow
account. In the event of any failure by Tenant to pay any Additional
Charges when due, Tenant shall promptly pay and discharge, as Additional
Charges, every fine, penalty, interest and cost that may be added for
non-payment or late payment of such items. Landlord shall have all legal,
equitable and contractual rights, powers and remedies provided either in
this Lease or by statute or otherwise in the case of non-payment of the
Rent. Landlord shall have the right to have such escrows held with a
Depositary.
(d) Funding Required into Cash Collateral Account. To the extent that, on
the third (3rd) Business Day prior to each Rent Payment Date, there are not
sufficient monies on deposit in the Cash Collateral Account (as defined in the
Cash Management Procedures) to fund the amounts required to be funded pursuant
to clauses (a), (c) and (d) of the Cash Management Procedures and pay the
Minimum Rent due on such Rent Payment Date, then Tenant shall be obligated to
fund into the Cash Collateral Account on such third (3rd) Business Day an amount
equal to such deficiency.
3.2 Net Lease. The Minimum Rent and Percentage Rent, as well as such
Additional Charges as are due and payable to Landlord, shall be paid absolutely
net to Landlord, so that this Lease shall throughout the Term yield to Landlord
the full amount
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of the installments of Minimum Rent and Percentage Rent, as well as any payments
of Additional Charges payable to Landlord, subject to any other provisions of
this Lease which expressly provide for adjustment or abatement of Rent or other
charges.
ARTICLE IV
4.1 No Termination, Abatement, etc. Except as otherwise specifically
provided herein, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any abatement, deduction, deferment or reduction of
Rent, or set-off against the Rent, nor shall the respective obligations of
Landlord and Tenant be otherwise affected by reason of (a) any damage to, or
destruction of, any Leased Property from whatever cause or any taking of the
Leased Property, (b) the interruption or discontinuance of any service or
utility servicing the applicable Leased Property, (c) the lawful or unlawful
prohibition of, or restriction upon, Tenant's use of the Leased Property, the
interference with such use by any person, corporation, partnership or other
entity, or by reason of eviction by paramount title, (d) any claim which Tenant
has or might have against Landlord or by reason of any default or breach of any
warranty by Landlord under this Lease or any other agreement between Landlord
and Tenant, or to which Landlord and Tenant are parties, (e) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Landlord or any assignee or transferee
of Landlord, or (f) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Tenant from any such obligations as a
matter of law. Tenant hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property, or (ii) entitle Tenant to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder, except as
otherwise specifically provided in this Lease. The obligations of Landlord and
Tenant hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions this Lease. In any instance where, after the
occurrence of an Event of Default, Landlord retains funds which, but for the
occurrence of such Event of Default, would be payable to Tenant, Landlord shall
refund such funds to Tenant to the extent the amount thereof exceeds the amount
necessary to compensate Landlord for any cost, loss or damage incurred in
connection with such Event of Default.
4.2 Abatement Procedures. In the event of a partial taking or temporary
taking, which taking does not render the Leased Property Unsuitable for its
Primary Intended Use, this Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord. If Landlord and Tenant
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are unable to agree upon the amount of such abatement within thirty (30) days
after such taking, the matter may be submitted by either party to a court of
competent jurisdiction for resolution. Pending such resolution, Tenant shall
remain bound to pay Rent based upon the amounts asserted by Landlord to be due
and payable, provided Landlord shall remain liable for the repayment to Tenant
of amounts ultimately determined to be overpaid to Landlord.
ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease, provided that, until the expiration or earlier
termination of this Lease, all capital improvements and additions made by
Tenant, at Tenant's expense, to any Leased Property shall be the property of
Tenant and, upon the expiration or earlier termination of this Lease, title to
such improvements, additions and replacements shall vest in Landlord.
5.2 Tenant's Personal Property. Tenant may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements any items of Tenant's Personal
Property, and Tenant may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Tenant shall
provide and maintain during the entire Lease Term all such Tenant's Personal
Property as shall be necessary to operate each Leased Property in compliance
with all applicable Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Primary Intended
Use. All of Tenant's Personal Property not removed by Tenant within thirty (30)
days following the expiration or earlier termination of this Lease with respect
to such Leased Property where such Tenant's Personal Property is located shall
be considered abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account
therefor.
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ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants. Tenant hereby covenants and agrees with Landlord
that:
(a) Existence; Use of Leased Property; Legal Compliance; Insurance.
(i) Tenant shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with
all Legal Requirements applicable to it and the Leased Property. Tenant
shall at all times maintain and preserve the Leased Property and shall
keep the Leased Property in good working order and repair, reasonable wear
and tear excepted, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto; provided that Tenant shall, without the consent of
Landlord, make no Alteration to any Leased Property which constitutes
"Nonseverable Improvements" as such term is used in Section 4(4).03 of IRS
Revenue Procedure 75-21, as modified by IRS Revenue Procedure 79-48,
unless the conditions of Section 4(4).03(B) are satisfied and the
alteration is described in at least one of the subparagraphs of Section
4(4).03(C). Tenant will operate, maintain, repair and improve the Leased
Property in material compliance with all Legal Requirements, and will not
cause or allow the same to be misused or wasted or to deteriorate,
reasonable wear and tear excepted.
(ii) After the Commencement Date and throughout the entire Term,
Tenant shall use the applicable Leased Property and the Leased
Improvements thereof as a dry and cold storage warehousing facility and
for such other uses as may be necessary or incidental to such use,
including the provision of distribution services (such use, the "Primary
Intended Use") and, notwithstanding any restrictions on subletting
contained herein, Landlord hereby agrees that Tenant shall have the right
to enter into Warehouse Agreements. Tenant shall not use the applicable
Leased Property or any portion thereof for any other use without the prior
written consent of Landlord, which consent shall not be unreasonably
withheld or delayed (taking into account, among other things, the
provisions hereof relating to Percentage Rent). No use shall be made or
permitted to be made of an Leased Property, and no acts shall be done,
that will cause the cancellation of any insurance policy covering such
Leased Property, nor shall Tenant sell or otherwise provide, or permit to
be kept, used or sold in or about such Leased Property any article which
may be prohibited by law or by Insurance Requirements. Tenant shall, at
its sole cost, comply with all of the requirements pertaining to the
Leased Property or other improvements of any insurance board,
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association, organization or company necessary for the maintenance of
insurance, as herein provided, covering the Leased Property and Tenant's
Personal Property. Absent force majeure and any other event beyond the
reasonable control of Tenant, and except during a period following a
Casualty or Condemnation or in which an Alteration is being performed,
Tenant shall continuously operate the Leased Property for its Primary
Intended Use.
(b) Taxes and Other Charges; Contest for Taxes and Other Charges, Legal
Requirements and Liens.
(i) Subject to the provisions of Section 6.1(b)(ii), Tenant shall
pay all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Leased Property prior to the date on which such sums
become delinquent. Tenant will deliver to Landlord, upon request, receipts
for payment or other evidence satisfactory to Landlord that the Taxes and
Other Charges have been so paid (provided Tenant shall not be required to
furnish such receipts for payment of Taxes in the event such Taxes have
been (or were to have been) paid by Landlord's Lender pursuant to
Landlord's Loan Documents). Subject to the provisions of Section
6.1(b)(ii) and other than Permitted Encumbrances, Tenant shall not suffer
and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Leased
Property, and shall promptly pay for all utility services provided to the
Leased Property. Subject to Section 6.1(b)(ii), Tenant shall pay, bond or
otherwise discharge, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers and others that, if
unpaid, might result in, or permit the creation of, a lien or encumbrance
on any Leased Property, or on the rents arising therefrom.
(ii) After prior written notice to Landlord, Tenant, at its own
expense, may contest by appropriate legal, administrative or other
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges or Lien therefor or any Legal Requirement or
Insurance Requirement or the application of any instrument of record
affecting the Leased Property (other than this Lease or Landlord's Loan
Documents) or any claims or judgments of mechanics, materialmen,
suppliers, vendors or other Persons or any Lien therefor, and may withhold
payment of the same pending such proceedings if permitted by law; provided
that (A) no Event of Default has occurred and remains uncured, except for
an Event of Default caused by the matter being contested, (B) such
proceeding shall suspend any collection of the contested Taxes, Other
Charges or Liens from the Leased Property, Tenant or Landlord, or adequate
time shall at all times remain prior to such collection, (C) such
proceeding shall be permitted under and be conducted in accordance with
the provisions of any other instrument to which
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Tenant is subject and shall not constitute a default thereunder, (D)
neither any Leased Property nor any part thereof or interest therein will
be in danger of being sold, forfeited, terminated, canceled or lost, (E)
to the extent not already reserved with Landlord (or Landlord's Lender) or
bonded or otherwise deposited or paid in connection with such proceedings,
Tenant shall have furnished Landlord with security (in an amount
reasonably approved by Landlord) to insure the payment of any such Taxes
or Other Charges, or the cost of the contested Legal Requirement or
Insurance Requirement or the removal of the Lien, in each case together
with all reasonably anticipated interest and penalties thereon, (F) in the
case of an Insurance Requirement, the failure of Tenant to comply
therewith shall not impair the validity of any insurance required to be
maintained by Tenant hereunder or the right to full payment of any claims
thereunder, (G) in the case of any essential or significant service with
respect to any Leased Property, any contest or failure to pay will not
result in a discontinuance of any such service, (H) in the case of any
instrument of record affecting any Leased Property or any part thereof,
the contest or failure to perform under any such instrument shall not
result in the placing of any Lien on any Leased Property or any part
thereof (except if such Lien would be removed upon completion of such
proceedings and the compliance by the parties with the terms of the
resulting order, decision or determination and the removal costs for such
Lien have been escrowed with Landlord or in the proceeding or bonded or
otherwise deposited or paid in connection with such proceedings), (I)
except to the extent Tenant has provided sufficient Eligible Collateral
therefor or bonded or otherwise deposited or paid in connection with such
proceedings, neither the failure to pay or perform any obligation which
Tenant is permitted to contest under this Section nor an adverse
determination of any such contest shall result in a material adverse
effect on the utility, value or operation of the applicable Leased
Property, and (J) Tenant shall promptly upon final determination thereof
pay the amount of any such Taxes, Other Charges or Liens, together with
all costs, interest and penalties which may be payable in connection
therewith. Landlord may pay over any such cash deposit or part thereof
held by or on behalf of Landlord to the claimant entitled thereto at any
time when, in the judgment of Landlord, the entitlement of such claimant
is finally established, and Landlord shall otherwise remit any remaining
such amounts to Tenant. Landlord shall give Tenant written notice of any
such payments promptly following the making thereof. Subject to the
foregoing, at Tenant's timely request, Landlord shall not pay and shall
not cause to be paid from the Tax and Insurance Escrow Account the
contested Taxes or Other Charges being contested.
(c) Litigation. Tenant shall give prompt written notice to Landlord of any
litigation or governmental proceedings pending or threatened in writing against
Landlord, Tenant or against or affecting the Leased Property which, if
determined adversely to Landlord, Tenant or the Leased Property, might
reasonably be expected to materially
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adversely affect Landlord, or Tenant's condition (financial or otherwise) or
business or the operation or value of the Leased Property.
(d) Inspection. Tenant shall permit agents, representatives and employees
of Landlord and/or Landlord's Lender (including any servicer or special servicer
on behalf of Landlord's Lender) to inspect the Leased Property on any Business
Day at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Tenant shall promptly advise Landlord of any
material adverse change in Tenant's condition (financial or otherwise) that
could reasonably be expected to materially impair the ability of Tenant to
comply with its obligations hereunder, or of the occurrence of any Default or
Event of Default under this Lease of which Tenant has knowledge.
(f) Cooperate in Legal Proceedings. Tenant shall cooperate fully with
Landlord (and with Landlord's Lender) with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the
rights of Landlord (or Landlord's Lender, as the case may be) hereunder or in
respect of the Leased Property and, in connection therewith, permit Landlord
(and Landlord's Lender, as applicable), at its election, to participate in any
such proceedings.
(g) Insurance Benefits. Tenant shall cooperate with Landlord (and
Landlord's Lender) in obtaining for Landlord (and Landlord's Lender, as
applicable) the benefits of any insurance proceeds lawfully or equitably payable
in connection with the Leased Property, and Landlord (and Landlord's Lender, as
applicable) shall be reimbursed for any out-of-pocket expenses reasonably
incurred in connection therewith (including attorneys' fees and disbursements,
and, if reasonably necessary to collect such proceeds, the expense of an
appraisal on behalf of Landlord in case of a fire or other casualty affecting
any Leased Property) out of such insurance proceeds.
(h) Financial Reporting and Other Information.
1. Tenant will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis proper and accurate books, records and
accounts reflecting all of the financial affairs of Tenant and all items of
Operating Income, Operating Expenses and capital expenditures. Landlord and/or
Landlord's Lender shall have the right from time to time at all times during
normal business hours upon reasonable notice to examine such books, records and
accounts at the office of Tenant set forth in Article XXIII or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof, at Landlord's expense, as Landlord and/or Landlord's Lender shall
desire, provided, after the occurrence of an Event of Default, Tenant shall pay
any reasonable out-of-pocket costs and expenses incurred by Landlord and/or
Landlord's Lender in any such examination and copying (or extraction).
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2. Tenant agrees to furnish to Landlord, at such time as may be
required pursuant to any Landlord's Loan Documents or as may reasonably be
requested by Landlord, such financial reports (including annual and quarterly
financial statements and monthly operating statements, including a comparison of
the actual income, expense and Net Cash Flow to the Annual Budget), and other
information as may reasonably be requested by Landlord.
3. Tenant shall furnish to Landlord, promptly after receipt, a copy
of any notice received by or on behalf of Tenant from any Governmental Authority
having jurisdiction over any Leased Property with respect to any material
violation of Legal Requirements or any condition existing or alleged to exist or
emanate therefrom or thereat involving Hazardous Substances.
4. Tenant shall prepare and deliver to Landlord, for Landlord's
approval, which approval shall not be unreasonably withheld or delayed,
forty-five (45) days prior to the commencement of each year, a proposed Annual
Budget in respect of the Leased Property (and, to the extent otherwise prepared
by Tenant, each Leased Property individually) for the ensuing Fiscal Year.
(i) Business and Operations. Tenant will continue to engage in the
businesses currently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management, subleasing and operation of the
Leased Property. Tenant will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the conduct of its business (including the operation and management
of the Leased Property as refrigerated warehousing facilities and related uses).
(j) Deferred Maintenance. Tenant shall, at Landlord's sole cost and
expense, cure or cause to be cured the conditions described on Exhibit 6.1(j) as
requiring remediation, correction, replacement or repair on an "immediate" basis
in a diligent manner and shall complete the same not later than the second
anniversary hereof. Landlord shall avail itself, and shall to the fullest extent
possible permit Tenant to avail itself, of the monies on deposit in the Deferred
Maintenance Reserve Account (as defined in the GSMC Loan Agreement) that are
available pursuant to the GSMC Loan Agreement for the payment of such cure.
(k) Intentionally Omitted.
(l) Material Agreements. Tenant shall:
(i) promptly perform and/or observe all of the material covenants
and agreements required to be performed and observed by it under any
Material
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Agreement, and do all things necessary to preserve and to keep unimpaired
its material rights thereunder;
(ii) promptly notify Landlord of the giving of any notice of any
material default by any party under any Material Agreement of which it is
aware; and
(iii) promptly enforce the performance and observance of all of the
material covenants and agreements required to be performed and/or observed
by the other party under each Material Agreement.
(m) Ground Leased Property. With respect to the Ground Leased Property,
Tenant shall observe and perform all of the obligations of Landlord under each
Ground Lease.
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants. Tenant covenants and agrees with Landlord
that it will not do, directly or indirectly, any of the following:
(a) Operation of Property. Tenant shall not, without Landlord's prior
consent, which consent shall not be unreasonably withheld or delayed (except as
elsewhere herein expressly provided): (i) surrender or terminate any Material
Agreement (unless the other party thereto is in material default and the
termination of such agreement would be commercially reasonable), (ii) increase
or consent to the increase of the amount of any charges payable by Tenant under
any Material Agreement, except as provided therein or on an arms'-length basis
and commercially reasonable terms; or (iii) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and remedies
under any Material Agreement in any material respect that is materially adverse
to the interests of Landlord, except on an arms'-length basis and commercially
reasonable terms.
(b) Liens. Subject to Section 6.1(b)(ii), Tenant shall not, without the
prior written consent of Landlord, create, incur, assume, permit or suffer to
exist any Lien on any portion of the Leased Property (or any of them), except
(i) Permitted Encumbrances, (ii) Liens created by or permitted pursuant to
Landlord's Loan Documents and (iii) Liens for Taxes or Other Charges not yet
delinquent.
(c) Affiliate Transactions. Tenant shall not enter into, or be a party to,
any transaction with an Affiliate of Tenant except in the ordinary course of
business and on terms which are fully disclosed to Landlord in advance and are
no less favorable to
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Tenant or such Affiliate than would be obtained in a comparable arms'-length
transaction with an unrelated third party.
(d) Zoning and Uses. Tenant shall not (i) initiate or support any limiting
change in the permitted uses of any Leased Property (or to the extent
applicable, limiting zoning reclassification of any Leased Property), (ii) seek
any variance under existing land use restrictions, laws, rules or regulations
(or, to the extent applicable, zoning ordinances) applicable to any Leased
Property or use or permit the use of any Leased Property in each case in a
manner that would result in the existing use becoming a non-conforming use under
applicable land-use restrictions (and, if any, zoning ordinances) with any
materially adverse effect on the value of the Leased Property or that would
violate the terms of any Lease, Operating Agreement, Legal Requirements or any
Permitted Encumbrance, (iii) modify, amend or supplement any of the terms of any
Permitted Encumbrance in a manner adverse in any material respect to the
interests of Landlord, (iv) impose or permit or suffer the imposition of any
restrictive covenants, easements or encumbrances upon the Leased Property in any
manner that adversely affects in any material respect the value or utility of
the Leased Property, (v) execute or file any subdivision plat affecting any
Leased Property, institute, or permit the institution of, proceedings to alter
any tax lot comprising any Leased Property or (vi) permit or suffer any Leased
Property to be used by the public or any Person in such manner as might make
possible a claim of adverse usage or possession or of any implied dedication or
easement.
(e) Nonexempt ERISA Transactions. Tenant shall not engage in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Tenant, or in any transaction that would cause
any obligation or action taken or to be taken hereunder (or the exercise by
Landlord's Lender of any of its rights under the Lender's Loan Documents) to be
a non-exempt prohibited transaction under ERISA.
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations. Tenant will not make any demolition, alteration,
installation, improvement, expansion, reduction or decoration (each, an
"Alteration") of or to any Leased Property or any part thereof, except in
accordance with the following terms and conditions:
(a) The Alteration shall be undertaken in accordance with the applicable
provisions of this Lease, Landlord's Loan Documents, the Operating Agreements,
the Leases and all Legal Requirements.
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(b) No Event of Default shall have occurred and be continuing or shall
occur as a result of such action.
(c) The Alteration shall not materially adversely affect the (i) Primary
Intended Use or (ii) fair market value of the Leased Property in question.
(d) A Material Alteration shall be conducted under the supervision of a
Qualified Architect or Engineer and shall not be undertaken until ten (10)
Business Days after there shall have been delivered to Landlord, for information
purposes only and not for approval by Landlord, detailed plans and
specifications and cost estimates therefor, prepared and approved in writing by
such Qualified Architect or Engineer. Such plans and specifications may be
revised at any time and from time to time, provided that material revisions of
such plans and specifications shall be delivered to Landlord for information
purposes only.
(e) Other than in connection with any Restoration, the Alteration may not,
in and of itself, either during the Alteration or upon completion, materially
adversely affect the Receipts derived from the Leased Property in question,
taking into account the Percentage Rent requirements hereunder; provided that
if, as reasonably determined by Landlord, such Alteration would materially
adversely affect the Net Operating Income at such Leased Property (taking into
account any amount then in any reserve account funded pursuant to the Cash
Management Procedures and permitted to be used in connection with such Material
Alteration), then in order to proceed with the Alteration, Tenant shall deliver
to a Depositary Eligible Collateral in the total amount of the estimated
reduction in Net Operating Income resulting from the Alteration, which Eligible
Collateral shall be returned to Tenant after substantial completion of the
Alteration if the reduction in Net Operating Income has been restored and no
Event of Default has occurred and is continuing.
(f) All work done in connection with any Alteration shall be performed
with due diligence in a good and workmanlike manner, all materials used in
connection with any Alteration shall be not less than the standard of quality of
the materials generally used at the applicable Leased Property as of the date
hereof (or, if greater, the then-current customary quality in the submarket in
which such Leased Property is located) and all work shall be performed and all
materials used in accordance with all applicable Legal Requirements and
Insurance Requirements.
(g) The cost of any Alteration shall be promptly and fully paid for by
Tenant, subject to the next succeeding sentence. No payment made prior to the
Final Completion of an Alteration or Restoration to any contractor,
subcontractor, materialman, supplier, engineer, architect, project manager or
other Person who renders services or furnishes materials in connection with such
Alteration shall exceed ninety five percent (95%) of the
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value of the work performed from time to time and materials furnished and
incorporated into the Improvements.
(h) All items (other than Eligible Collateral) to be delivered to the
Depositary hereunder shall also be delivered to Landlord (if Landlord is not the
Depositary), and, if required under Section 15.5, Landlord's Lender (if
Landlord's Lender is not the Depositary).
(i) For any Material Alteration (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner), Tenant shall be obligated to deliver to a Depositary Eligible
Collateral in an amount that, when taken together with any amount then in any
reserve account funded pursuant to the Cash Management Procedures and permitted
to be used in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant as such work progresses in accordance with Section 8.1(j). In
addition, if all Material Alterations (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner) then being performed exceeds $15,000,000 (the "Aggregate Threshold
Amount"), Landlord shall be obligated to deliver to the Depositary Eligible
Collateral in amount that, when taken together with (x) any Eligible Collateral
previously delivered under this subsection (i) and (y) any amounts then in any
reserve funded pursuant to the Cash Management Procedures and permitted to be
used in connection with such Material Alteration, shall be sufficient to pay all
of the costs of the Material Alteration in excess of the Aggregate Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant at such time as the remaining costs of the Material Alteration are
less than the Aggregate Threshold Amount.
(j) With respect to any Material Alteration as to which Tenant shall have
delivered Eligible Collateral in accordance with Section 8.1(i):
(i) Tenant shall deliver to the Depositary a schedule (which shall
be concurred in by the Qualified Architect or Engineer) setting forth the
projected stages of completion of such Alteration(s) and the corresponding
amounts expected to be due and payable by or on behalf of Tenant in
connection with such completion, such schedule to be updated quarterly by
Tenant (and concurred with by a Qualified Architect or Engineer) during
the performance of such Alteration(s).
(ii) Any Eligible Collateral that Tenant delivers to the Depositary
pursuant hereto (and the proceeds of any such Eligible Collateral) shall
be
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invested (to the extent such Eligible Collateral can be invested) by the
Depositary in Permitted Investments for a period of time consistent with
the date on which Tenant notifies the Depositary that Tenant expects to
request a release of such Eligible Collateral in accordance with the next
succeeding sentence. From time to time as the Alteration progresses, the
amount of any Eligible Collateral so furnished may, upon the written
request of Tenant to the Depositary, be withdrawn by Tenant and paid or
otherwise applied by or returned to Tenant in an amount equal to the
amount Tenant would be entitled to so withdraw if Section 10.2 (d) hereof
were applicable, and any Eligible Collateral so furnished which is a
Credit Facility may be reduced by Tenant in an amount equal to the amount
Tenant would be entitled to so reduce if Section 10.2(d) hereof were
applicable, subject, in each case, to the satisfaction of the conditions
precedent to withdrawal of funds or reduction of the Credit Facility set
forth in said Section 10.2(d). In connection with the above-described
quarterly update of the projected stages of completion of the Material
Alteration (as concurred with by an Qualified Architect or Engineer),
Tenant shall increase (or be permitted to decrease, as applicable) the
Eligible Collateral then deposited with the Depositary as necessary to
comply with Section 8.1(i) hereof.
(iii) At any time after final completion of such Alterations, the
whole balance of any Cash deposited with the Depositary pursuant to
Section 8.1(j) then remaining on deposit may be withdrawn by Tenant and
shall be paid by the Depositary to Tenant, and any Eligible Collateral so
deposited shall, to the extent it has not been called upon, reduced or
theretofore released, be released by the Depositary to Tenant, within ten
(10) days after receipt by the Depositary of an application for such
withdrawal and/or release together with an Officer's Certificate, and as
to the following clauses (A) and (B) of this clause also a certificate of
the Qualified Architect or Engineer, setting forth in substance as
follows:
(A) that such Alteration(s) has been completed substantially
in accordance with any plans and specifications therefor previously
filed with Landlord under Section 8.1(d) hereof;
(B) that, to the knowledge of the certifying Person, (x) such
Alteration(s) has been completed in compliance, in all material
respects, with all Legal Requirements, and (y) to the extent
required for the legal use or occupancy of the portion of the Leased
Property affected by such Alteration(s), Tenant has obtained a
temporary or permanent certificate of occupancy (or similar
certificate) or, if no such certificate is required, a statement to
that effect;
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(C) that to the knowledge of the certifying Person, all
amounts that Tenant is or may become liable to pay in respect of
such Alteration(s) through the date of the certification have been
paid in full or adequately provided for and, to the extent that such
are customary and reasonably obtainable by prudent property owners
in the area where the Leased Property is located, that Lien waivers
have been obtained from the general contractor and major
subcontractors performing such Alteration or, at its sole cost and
expense, Tenant shall cause a nationally recognized title insurance
company to deliver to Landlord either (x) an endorsement or other
affirmative coverage with respect to the then-current loan policy in
favor of Landlord's Lender, updating such policy and insuring over
such Liens without further exceptions to such policy other than
Permitted Encumbrances, or (y) owner's and loan title insurance
policies, in such form, in such amounts and with such endorsements
as shall be reasonably satisfactory to Landlord and Landlord's
Lender, which policies shall be dated the date of completion of the
Material Alteration and shall contain no exceptions other than
Permitted Encumbrances; and
(D) that to the knowledge of the certifying Person, no Event
of Default has occurred and is continuing.
provided that if, for any reason, Tenant is unable to deliver the
certification required by clause (C) above with respect to any costs or
expenses relating to the Alteration, then, assuming Tenant is able to
satisfy each of the other requirements set forth in clauses (A), (B), (C)
and (D) above, Tenant shall be entitled to the release of the difference
between the whole balance of such Eligible Collateral and the total of all
costs and expenses to which Tenant is unable to certify.
8.2 Subletting and Assignment; Warehouse Agreements.
8.2.1 Generally. Except as expressly provided herein, Tenant shall
not, without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion, assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer this Lease or sublease all or any part of the Leased Property
or suffer or permit this Lease or the leasehold estate created hereby or thereby
or any other rights arising under this Lease to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily or involuntarily or by operation of law, or permit the use or
occupancy of the applicable Leased Property to be offered or advertised for
assignment or subletting except as hereinafter provided. For purpose of this
Section 8.2, an assignment of this Lease shall be deemed to include any change
in control of Tenant, as if such change in control or transaction were an
assignment of this Lease.
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8.2.2 Certain Sublettings and Assignments. Subject to the provisions
of Section 8.2.3 and any other express conditions or limitations set forth
herein,
(a) without the consent of Landlord, Tenant may assign this
Lease (in whole but not in part) to any Pre-Approved Party and sublet all
or any part of the Leased Property to any Pre-Approved Party; and
(b) without the consent of Landlord, Tenant may sublet all or
any part of any one or more Leased Property (i) in the normal course of
the Primary Intended Use and (ii) to concessionaires or other third party
users or operators of portions of the Leased Property in furtherance of
the Primary Intended Use.
8.2.3 Landlord's Right to Collect from Assignees and Subtenants. If
this Lease is assigned or if the applicable Leased Property or any part thereof
is sublet (or occupied by any entity other than Tenant and its employees),
Landlord, after an Event of Default occurs and so long as it is continuing, may
collect the rents from such assignee, Subtenant or occupant, as the case may be,
and apply the net amount collected to the Rent herein reserved, but no such
collection shall be deemed (i) a waiver of the provisions set forth in Section
8.2.1, (ii) the acceptance by Landlord of such assignee, Subtenant or occupant,
as the case may be, as a tenant or (iii) release of Tenant from the future
performance of its covenants, agreements or obligations contained in this Lease.
8.2.4 No Release. No subletting or assignment shall in any way
impair the continuing primary liability hereunder of the Tenant named herein, as
well as of each subsequent Tenant, and no consent to any subletting or
assignment in any particular instance shall be deemed a waiver of the
prohibition set forth in this Section 8.2. No assignment, subletting or
occupancy shall affect the obligation to use the Leased Property in accordance
with Section 6.1(a)(ii). Any subletting, assignment or other transfer of
Tenant's interest in this Lease in contravention of this Section 8.2 shall be
void at Landlord's option.
8.2.5 Required Assignment and Subletting Provisions. Any assignment
and/or Sublease must provide that:
(a) it shall be subject and subordinate to all of the terms
and conditions of this Lease,
(b) the use of the applicable Leased Property shall be
restricted to the uses and purposes expressly permitted by this Lease and
shall not conflict with any Legal Requirement, Insurance Requirement or
any other provision of this Lease,
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(c) no Subtenant or assignee shall be permitted to further
sublet all or any part of the applicable Leased Property or assign this
Lease or its sublease except as expressly provided in this Lease,
(d) in the event of cancellation or termination of this Lease
for any reason whatsoever or of the surrender of this Lease (whether
voluntary, involuntary or by operation of law) prior to the expiration
date of such Sublease, including extensions and renewals granted
thereunder, then, at Landlord's option, the Subtenant shall make full and
complete attornment to Landlord for the balance of the term of the
Sublease, which attornment shall be evidenced by an agreement in form and
substance satisfactory to Landlord and which the Subtenant shall execute
and deliver within five (5) days after request by Landlord and the
Subtenant shall waive the provisions of any law now or hereafter in effect
which may give the Subtenant any right of election to terminate the
Sublease or to surrender possession in the event any proceeding is brought
by Landlord to terminate this Lease, and
(e) in the event the Subtenant receives a written notice from
Landlord stating that Tenant is in Default under this Lease, the Subtenant
shall thereafter be obligated to pay all rentals accruing under said
sublease directly to Landlord or as such party may direct; all rentals
received from the Subtenant by Landlord shall be credited against the
amounts owing by Tenant under this Lease.
8.2.6 Reimbursement of Landlord's Costs. Tenant shall pay to
Landlord, within ten (10) business days after request therefore, all costs and
expenses, including reasonable attorney's fees, incurred by Landlord (including,
to the extent Landlord is liable for the same, by Landlord's Lender) in
connection with any request made by Tenant to Landlord to assign this Lease or
sublet the applicable Leased Property.
8.2.7 Warehouse Agreements. The above provisions of this Section 8.2
shall not be applicable to Warehouse Agreements, provided that Tenant shall use
commercially reasonable efforts to include in any Warehouse Agreement entered
into from and after the date hereof that the other party thereto shall permit
the collateral assignment described in Section 8.4 hereof, and the collateral
assignment by Landlord to Landlord's Lender of Landlord's security interests in
respect of each Sublease and Warehouse Agreement and such amounts to secure
Landlord's obligations under Landlord's Loan Documents.
8.2.8 Certain Leases Senior. With respect to those leases listed on
Exhibit 8.2.8, hereto, the parties acknowledge that Landlord is, as of the
Commencement Date, the lessor thereunder (whether by operation of law or
otherwise) and that such leases are, by operation of law, senior to this Lease.
Tenant shall perform and comply with all obligations of lessor under such leases
and, provided no Event of Default shall
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have occurred and be continuing, Tenant shall be entitled to the receipt of all
amounts payable by the lessees under such leases.
8.3 Sublease and Warehouse Agreement Limitation. Anything contained in
this Lease to the contrary notwithstanding, Tenant shall not sublet the Leased
Property, or enter into Warehouse Agreements, on any basis such that (i) the
rental or other consideration to be paid by the Subtenant or other party
thereunder would be based, in whole or in part, on the income or profits derived
by the business activities of the Subtenant or such other Party, or (ii) any
portion of the amounts received or accrued by Landlord hereunder would fail to
qualify as "rents from real property" within the meaning of Section 856(d) of
the Code, or any similar or successor provision thereto.
8.4 Collateral Assignment of Subleases and Warehouse Agreements to
Landlord. As security for Tenant's obligations under this Lease and not
otherwise, but subject to any limitations pursuant to applicable law or
contracts (including the terms of any existing or future Subleases and Warehouse
Agreements), Tenant hereby assigns, transfers and sets over unto Landlord all of
Tenant's right, title and interest in and to all Subleases and Warehouse
Agreements, and Tenant hereby confers upon Landlord, its agents and
representatives, a right of entry in, and sufficient possession of, the Leased
Property to permit and assure the collection by Landlord of all sums payable to
Tenant, if any, under the Subleases and all sums payable to Tenant pursuant to
the Warehouse Agreements. The exercise of this right of entry and qualified
possession by Landlord shall not constitute an eviction of Tenant from the
Leased Property. Further, Tenant acknowledges that Landlord shall collaterally
assign its rights under this Section 8.4 to Landlord's Lender, to secure
Landlord's obligations in respect of Landlord's Debt. This assignment, although
presently effective, is operative only upon the occurrence of an Event of
Default hereunder and not before. Nothing in this Section 8.4, however, shall be
deemed to limit or qualify the rights of any Leasehold Mortgagee pursuant to
Section 8.5 below.
8.5 Leasehold Mortgages.
8.5.1 Landlord's Estate. No Leasehold Mortgage or any extension
thereof made by Tenant shall be a lien or encumbrance upon the estate or
interest of Landlord in and to the Leased Property or any part thereof.
8.5.2 Certain Leasehold Mortgage Requirements. No Leasehold Mortgage
shall be valid or of any force or effect, or be deemed for purposes of this
Lease to be a Leasehold Mortgage, unless and until (a) a true copy of the
original of each instrument creating and effecting such Leasehold Mortgage,
certified by the Leasehold Mortgagee to be a true copy of such instrument, and
written notice containing the name and post office address of the Leasehold
Mortgagee, shall have been delivered to
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Landlord, (b) any consent required hereunder by Landlord shall have been given,
and (c) the Leasehold Mortgage shall contain in substance the following
provisions:
"This mortgage is executed upon the condition that no purchaser at
any foreclosure sale or assignee under an assignment in lieu of
foreclosure shall acquire any right, title or interest in or to the
lease hereby mortgaged, unless the said purchaser or assignee, or
the person, firm or corporation to whom or to which such purchaser's
or assignee's right has been assigned, shall in the instrument
transferring to such purchaser or to such assignee the interest of
tenant under the lease hereby mortgaged, assume and agree to perform
all of the terms, covenants and conditions of that lease thereafter
to be observed or performed on the part of such tenant (subject to
the terms of Section 8.5.3(d) and/or Section 8.5.6 thereof, to the
extent applicable), that no further or additional mortgage or
assignment of the lease hereby mortgaged shall be made except in
accordance with the provisions contained in Article VIII of that
lease, and that a duplicate original of said instrument containing
such assumption agreement, duly executed and acknowledged by such
purchaser or such assignee and in recordable form, shall be
delivered to the landlord under the hereby mortgaged lease
immediately after the consummation of such sale, or in any event,
prior to taking possession of the premises demised thereby as
"Tenant" under the lease."
8.5.3 Leasehold Mortgagee Provisions.
(a) If Tenant shall enter into a Leasehold Mortgage and complies, in
connection therewith, with the provisions of Section 8.5.1 and 8.5.2, Landlord
shall give to such Leasehold Mortgagee, at the address of such Leasehold
Mortgagee set forth in the notice mentioned in Section 8.5.2, a copy of each
notice of Default by Tenant and each notice of termination of this Lease at the
same time as, and whenever, any such notice of Default or termination shall be
given to Tenant, and no such notice shall be deemed to have been duly given to
Tenant unless and until a copy thereof shall have been so given to each such
Leasehold Mortgagee. Each Leasehold Mortgagee (i) shall thereupon have a period
of ten (10) days more in the case of a monetary Default and twenty (20) days
more in the case of any non-monetary Default, after notice of such Default is
given to the Leasehold Mortgagee, for curing the Default, or causing the same to
be cured by Tenant or otherwise, than is given Tenant after such notice is given
to Tenant, and (ii) shall, within such period and otherwise as herein provided,
have the right to cure such Default, cause the same to be cured by Tenant or
otherwise. Landlord shall accept performance by a Leasehold Mortgagee of any
covenant, condition, or agreement on Tenant's part to be performed hereunder
with the same force and effect as though performed by Tenant.
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(b) Notwithstanding the provisions of Section 8.5.3(a) hereof,
no Event of Default shall be deemed to exist as long as a Leasehold
Mortgagee, in good faith, (i) shall have commenced promptly to cure the
Default in question and prosecutes the same to completion with reasonable
diligence and continuity, subject to Unavoidable Delays, which for the
purpose of this Section 8.5.3(b) shall include causes beyond the control
of such Leasehold Mortgagee instead of causes beyond the control of
Tenant, or (ii) if possession of the Leased Property is required in order
to cure the Default in question, such Leasehold Mortgagee (x) shall have
entered into possession of the Leased Property with the permission of
Tenant for such purpose or (y) shall have notified Landlord of its
intention to institute foreclosure proceedings to obtain possession
directly or through a receiver, and within fourteen (14) days of the
giving of such notice commenced such foreclosure proceedings and
thereafter (1) prosecutes such proceedings with reasonable diligence and
continuity (subject to Unavoidable Delays) or (2) receives an assignment
of this Lease in lieu of foreclosure from Tenant, and, upon obtaining
possession pursuant to clause (x) or (y), commences promptly to cure the
Default in question and prosecutes the same to completion with reasonable
diligence and continuity (subject to Unavoidable Delays) or (iii) if the
Leasehold Mortgagee is a collateral assignee or the holder of a security
interest in ownership interests in Tenant and the foreclosure of its
collateral assignment or security interest is required in order to act
under (i) or (ii) above, such Leasehold Mortgagee shall have notified
Landlord of its intention to institute proceedings to foreclose such
collateral assignment or pledge and within fourteen (14) days of the
giving of such notice commences such foreclosure proceedings, and
thereafter (1) prosecutes such proceedings with reasonable diligence and
continuity (subject to Unavoidable Delays) or (2) receives a direct and
absolute assignment from the assignor under the collateral assignment of
its interest in the Leasehold Mortgage or of the ownership interest, in
lieu of foreclosure, and upon the completion of such foreclosure, or the
obtaining of such assignment, commences promptly to act under (i) or (ii)
above; provided that the Leasehold Mortgagee shall have delivered to
Landlord, in writing, its agreement to take the action described in clause
(i), (ii) or (iii) herein and shall have assumed the obligation to cure
the Default in question and that during the period in which such action is
being taken (and any foreclosure proceedings are pending), all of the
other obligations of Tenant under this Lease, to the extent they are
susceptible of being performed by the Leasehold Mortgagee, are being duly
performed within any applicable grace periods. However, at any time after
the delivery of the aforementioned agreement, the Leasehold Mortgagee may
notify Landlord, in writing, that it has relinquished possession of the
Leased Property or that it will not institute foreclosure proceedings, or
if such proceedings have been commenced, that it has discontinued them,
and in such event, the Leasehold Mortgagee shall have no further liability
under such agreement from and after the date it delivers such notice to
Landlord (except for any obligations assumed by the Leasehold
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Mortgagee and accruing prior to the date it delivers such notice), and,
thereupon, Landlord shall have the unrestricted right to terminate this
Lease and to take any other action it deems appropriate by reason of any
Default by Tenant, and upon any such termination the provisions of Section
8.5.4 shall apply. Anything contained in this Section 8.5.3(b) to the
contrary notwithstanding, the provisions of this Section 8.5.3(b) shall
not apply in the case of a Leasehold Mortgagee which is not an
Institutional Lender unless such Leasehold Mortgagee shall provide
Landlord with security for the performance of the assumed obligation in
amount and form reasonably satisfactory to Landlord, during the period
that such Leasehold Mortgagee is taking the required action to cure the
Default in question.
(c) Landlord and Tenant agree that, from and after the date upon
which Landlord receives the notice and documents mentioned in clause (a) of
Section 8.5.2, they shall not modify or amend this Lease in any respect
materially adverse to the right of Tenant or Leasehold Mortgagee or cancel or
terminate this Lease other than as provided herein without the prior written
consent of the Leasehold Mortgagees which have given such notice.
(d) Except as provided in Section 8.5.3(b), no Leasehold Mortgagee
shall become liable under the provisions of this Lease unless and until such
time as it becomes, and then only for as long as it remains, the owner of the
leasehold estate created hereby.
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease.
(a) In case of termination of this Lease by reason of any Event of
Default or for any other reason, Landlord, subject to the provisions of Section
8.5.4(e), shall give prompt notice thereof to each Leasehold Mortgagee under a
mortgage made in compliance with the provisions of Sections 8.5.1 and 8.5.2,
which notice shall be given as provided in Section 8.5.3(a) hereof. Landlord, on
written request of such Leasehold Mortgagee made any time within thirty (30)
days after the giving of such notice by Landlord, shall execute and deliver
within thirty (30) days thereafter a new lease of the Leased Property to the
Leasehold Mortgagee, or its designee or nominee, for the remainder of the Term,
upon all the covenants, conditions, limitations and agreements herein contained,
provided that the Leasehold Mortgagee (i) shall pay to Landlord, simultaneously
with the delivery of such new lease, all unpaid Rent due under this Lease up to
and including the date of the commencement of the term of such new lease and all
expenses including attorneys' fees and disbursements and court costs, incurred
by Landlord in connection with the Default by Tenant, the termination of this
Lease and the preparation of the new lease, and (ii) shall deliver to Landlord a
statement, in writing, acknowledging that Landlord, by entering into a new lease
with the Leasehold Mortgagee or its nominee or designee, shall not have or be
deemed to have waived any rights or remedies with respect to Defaults existing
under this Lease, notwithstanding that any such
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Defaults existed prior to the execution of the new lease, and that the breached
obligations which gave rise to the Defaults and which are susceptible of being
cured by the Leasehold Mortgagee or its nominee or designee are also obligations
under said new lease, but such statement shall be subject to the proviso that
the applicable grace periods, if any, provided under the new lease for curing
such obligations shall begin to run as of the first day of the term of said new
lease.
(b) Any such new lease and the leasehold estate thereby created
shall, subject to the same conditions contained in this Lease, continue to
maintain the same priority as this Lease with regard to any Leasehold Mortgage
or any other lien, charge or encumbrance whether or not the same shall then be
in existence. Concurrently with the execution and delivery of such new lease,
Landlord shall assign to the tenant named therein all of its right, title and
interest in and to moneys received from any Subleases and Warehouse Agreements
that have not been applied to Rent and have not been applied or being held for
application to the costs incurred by Landlord to operate, maintain and repair
the Leased Property.
(c) Upon the execution and delivery of a new lease under this
Section 8.5.4, all Subleases and Warehouse Agreements which theretofore may have
been assigned to Landlord thereupon shall be assigned and transferred, without
recourse, representation or warranty, by Landlord to the tenant named in such
new lease. Between the date of termination of this Lease and the earlier of (i)
the date of execution and delivery of the new lease and (ii) the date of
Leasehold Mortgagee's option to request a new lease pursuant to this Section
8.5.4 expires without the exercise of such option, Landlord shall not enter into
any new Subleases or Warehouse Agreements, cancel or modify any then existing
Subleases or Warehouse Agreements, or accept any cancellation, termination or
surrender thereof (unless such termination shall be effected as a matter of law
on the termination of this Lease) without the written consent of the Leasehold
Mortgagee, except as permitted in the Subleases or Warehouse Agreements.
(d) If there is more than one Leasehold Mortgage, Landlord shall
recognize the Leasehold Mortgagee whose Leasehold Mortgage is junior in lien as
the Leasehold Mortgagee entitled to the rights afforded by Sections 8.5.3, 8.5.4
and 8.5.5 (unless a Leasehold Mortgagee senior in lien requires that the holder
thereof have a superior entitlement to such rights, in which event such
recognition shall be of the holder of that Leasehold Mortgage), provided that
such Leasehold Mortgagee shall have complied with the provision of Sections
8.5.1 and 8.5.2. A security agreement providing for a security interest in the
ownership interests in Tenant and otherwise complying with the terms hereof for
a Leasehold Mortgage shall be treated as a Leasehold Mortgage that is junior in
lien.
8.5.5 Notice of Arbitration. In any circumstances where arbitration
is provided for under this Lease, Landlord agrees that Landlord shall give any
Leasehold
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Mortgagee who shall have given Landlord a notice as provided in Section
8.5.2(a), notice of any demand by Landlord for any arbitration, and Landlord
shall recognize the Leasehold Mortgagee entitled to the rights afforded
hereunder in accordance with Section 8.5.4(d) as the only proper party to
participate in the arbitration. In such case, Tenant agrees not to participate
in such arbitration.
ARTICLE IX
9.1 Maintenance and Repair.
(a) Subject to Landlord's obligation under Section 9.1(b), Tenant,
at its expense, shall keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto and which are under Tenant's control
(and Tenant's Personal Property) in good order and repair, reasonable wear and
tear excepted (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of such Leased Property or
Tenant's Personal Property, or any portion of either) and shall promptly make
all necessary and appropriate repairs and replacements thereto, of every kind
and nature, whether interior or exterior, structural or non-structural, ordinary
or extraordinary, foreseen or unforeseen, arising by reason of a condition
(concealed or otherwise) occurring subsequent or prior to the Commencement Date.
All repairs shall, to the extent reasonably achievable, be made in good,
workmanlike and first-class manner, in accordance with all applicable federal,
state and local statutes, ordinances, by-laws, codes, rules and regulations
relating to such work. Tenant will not take or omit to take any action the
taking or omission of which might materially impair the value or usefulness of
the Leased Property or any part thereof for the Primary Intended Use.
(b) Notwithstanding anything herein to the contrary, Landlord shall
promptly make all necessary and appropriate repairs and replacements to the
Leased Property (other than those repairs and replacements (i) caused by the
negligence or wilfull misconduct of Tenant or any Person claiming by, through or
under Tenant or (ii) required as a result of Casualty or Condemnation to the
Leased Property) the costs of which are required to be depreciated under the
Internal Revenue Code on a 39-year basis (or any successor period of
depreciation for buildings), provided that Tenant shall make such repairs or pay
such expenditures (as applicable) to the extent the same exceed, on a cumulative
basis, $1,000,000 per annum, increased 5 percent as of January 1, 2003 and
January 1, 2008. Landlord's obligation pursuant to the prior sentence, however,
shall be subject to prior reasonable notice from Tenant as to the need to make
such repair and replacement. Further, Landlord may elect that Tenant perform
such repair and replacement, in which event, Landlord shall reimburse or pay to
Tenant, within fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in making such
repairs and replacements.
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(c) Except as expressly specified in Section 9.1(b), Landlord shall
not under any circumstances be required to build or rebuild any improvements on
the Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or non-structural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, or to
maintain the Leased Property in any way, except as expressly provided herein.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or thereafter enacted.
(d) Nothing contained herein and no action or inaction by Landlord
shall be construed as (i) constituting the consent or request of Landlord,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property for the construction, alteration, addition,
repair or demolition of or to the Leased Property, or (ii) giving Tenant any
right, power or permission to contract for or permit the performance of any
labor or services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other encumbrance upon the
estate of Landlord in the Leased Property.
(e) Tenant will, upon the expiration or prior termination of the
Term with respect to any Leased Property, vacate and surrender the same to
Landlord in the condition in which the same was originally received from
Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the Term). In addition, Tenant shall
not be permitted to remove any of Tenant's Personal Property from the Leased
Property unless such removal shall not damage the Leased Property in any
material respect.
9.2 Encroachments, Restrictions, etc. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other agreement affecting the Leased
Property, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of any adverse final determination, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment, whether
the same shall affect Landlord
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or Tenant or (ii) make such changes in the Leased Improvements, and take such
other actions, as Tenant in good faith exercise of its judgment deems reasonably
practicable, to remove such encroachment, and to end such violation or
impairment, including, if necessary, the alteration of any of the Leased
Improvements, and in any event take all such actions as may be necessary in
order to be able to continue the operation of the Leased Improvements for the
Primary Intended Use substantially in the manner and to the extent the Leased
Improvements were operated prior to the assertion of such violation or
encroachment. Any such alteration shall be made in conformity with the
applicable requirements of Article VIII. Tenant's obligations under this Section
9.2 shall be in addition to and shall in no way discharge or diminish any
obligation of any insurer under any policy of title or other insurance, and
Tenant shall be entitled to a credit for any sums recovered by Landlord under
any such policy of title or other insurance.
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance. Tenant shall at all times keep the applicable Leased
Property, and all property located in or on the applicable Leased Property,
including Tenant's Personal Property, insured with the kinds and amounts of
insurance described below or with such other insurance as may be reasonably
requested by Landlord (taking into consideration any insurance requirements
relating to Landlord's Debt).
(a) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall keep all of the Leased Property insured and
obtain and maintain policies of insurance insuring against loss or damage
by standard perils included within the classification "All Risks of
Physical Loss", which policy or policies shall cover (by endorsement or
otherwise) warehouse legal liability. Such insurance (i) shall be in an
aggregate amount equal to the then full replacement cost of the Leased
Property and the Equipment (without deduction for physical depreciation)
and (ii) shall have deductibles no greater than $100,000 (as escalated by
the CPI Increase) (with such higher deductibles for wind and earthquake
coverage as the applicable issuer may require). The policies of insurance
carried in accordance with this paragraph shall be paid in accordance with
the agreed upon payment schedule incorporated into such policies and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation.
(b) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall also obtain and maintain the following policies
of insurance:
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(i) Flood insurance with respect a Leased Property, if any
part of such Leased Property is located in an area identified by the
Federal Emergency Management Agency as an area federally designated
a "100 year flood plain" and (A) flood insurance is generally
available at reasonable premiums and in such amount as generally
required by institutional lenders for similar properties or (B) if
not so available from a private carrier, from the federal government
at commercially reasonable premiums to the extent available. In
either case, the flood insurance shall be in an amount at least
equal to the Termination Amount with respect to such Leased Property
or the maximum limit of coverage available with respect to such
Leased Property under said program, whichever is less;
(ii) Commercial general liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing
minimum limits per occurrence of $1,000,000 for any policy year. In
addition, at least $25,000,000 excess and/or umbrella liability
insurance shall be obtained, and at all times at least $10,000,000
excess and/or umbrella liability insurance shall be available (such
that, at all times, such coverage shall be maintained against which
no claim shall have been asserted) and maintained for any and all
claims, including legal liability imposed upon Tenant and related
court costs and attorneys' fees generally covered by such insurance
policies; provided that if there are one or more claims in
connection with a property other than the Leased Property that
results in the amount of excess and/or umbrella liability insurance
coverage to be less than $25,000,000, Tenant shall give notice to
Landlord that such coverage has so decreased and Tenant shall cause
such coverage to be increased to $25,000,000.
(iii) Rental loss and/or business interruption insurance in an
amount sufficient to avoid any co-insurance penalty and equal to the
greater of (A) the estimated Receipts from the operation of the
Leased Property (including (x) the total payable under the Subleases
and the Warehouse Agreements, and (y) the total amount of all other
amounts to be received by Tenant or third parties that are the legal
obligation of the Subtenants), less non-continuing Operating
Expenses (i.e., Operating Expenses which were incurred in connection
with the ownership, operation and/or maintenance of the Leased
Property prior to the insured event, but which are not incurred
during the period covered by the insurance required pursuant to this
Section 10.1(b)(iii)), for a period of up to the next succeeding
eighteen (18) months, or (B) the projected Operating Expenses
(including debt service) for the maintenance and operation of the
Leased Property for a period of up to the next succeeding
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eighteen (18) months as the same may be reduced or increased from
time to time due to changes in such Operating Expenses. The amount
of such insurance shall be increased from time to time as and when
the rents increase or the estimate of (or the actual) Receipts, as
may be applicable, increases or decreases to the extent rents or the
estimates of gross revenue decrease;
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter
installed in any of the Improvements (without exclusion for
explosions) and insurance against loss of occupancy or use arising
from any breakdown, in such amounts as are generally available at
reasonable premiums and are generally required by institutional
lenders for properties comparable to the Leased Property;
(v) Worker's compensation insurance with respect to all
employees of Tenant, as and to the extent required by any
Governmental Authority or Legal Requirement;
(vi) During any period of repair or restoration costing in
excess of $5,000,000, builder's "all risk" insurance in an amount
equal to not less than the full insurable value of the related
Leased Property against such risks (including fire and extended
coverage and collapse of the Improvements to agreed limits) as
Landlord may reasonably request, in form and substance reasonably
acceptable to Landlord;
(vii) Coverage to compensate for the cost of demolition and
the increased cost of construction for the Leased Property in an
amount satisfactory to Landlord, which amount shall not exceed
$10,000,000;
(viii) If any Leased Property is located in a federal
earthquake zone, earthquake insurance with respect to such Leased
Property in an amount equal to probable maximum loss with respect to
such Leased Property, with a maximum deductible of five percent (5%)
of the replacement cost of such Leased Property; and
(ix) Such other insurance as may from time to time be
reasonably required by Landlord in order to protect its interests,
provided such insurance is generally available at commercially
reasonable premiums.
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(c) All policies of insurance (the "Policies") required pursuant to
Section 10.1 with respect to any Leased Property shall be issued by companies
licensed to do business in the state where such Leased Property is located.
Further, unless otherwise approved by Landlord in writing, the issuer(s) of the
Policies required under Section 10.1(a) for all risk coverage shall have a
claims paying ability rating of "AA" or better by Standard & Poor's and Moody's
and "A-X" or better by Best's, and (b) Policies for all other coverage shall
have a claims paying ability rating of "A" or better by Standard & Poor's and
Moody's and "A-X" or better by Best's. The Policies (i) shall name Landlord and
Landlord's Lender (if any) and its successors and/or assigns, as their interest
may appear, as additional insureds or loss payees (except that in the case of
general liability insurance, Landlord and Landlord's Lender shall be named as
additional insureds and not a loss payee); (ii) shall contain, for the benefit
of Landlord's Lender, a Non-Contributory Standard Lender Clause and, except with
respect to general liability insurance, a Lender's Loss Payable Endorsement, or
their equivalents, naming Landlord's Lender as the person to which all payments
made by such insurance company shall be paid; (iii) shall include effective
waivers by the insurer of all claims for insurance premiums against all loss
payees, additional insureds and named insureds (other than Tenant) and all
rights of subrogation against any loss payee, additional insured or named
insured; (iv) if directed by Landlord, shall be assigned to Landlord's Lender;
(v) except as otherwise provided above, shall be subject to a deductible, if
any, not greater in any material respect, in proportion to the coverage
maintained, than the deductible for such coverage on the date hereof; (vi) shall
contain such provisions as Landlord deems reasonably necessary or desirable to
protect its interest (and that of Landlord's Lender, to the extent so requested
by Landlord on behalf of Landlord's Lender), including endorsements providing
that: none of Tenant, Landlord, Landlord's Lender or any other party shall be a
co-insurer under said Policies and that no modification that would result in
non-compliance with the provisions of this Section 10.1, cancellation,
termination or non-renewal of any of the Policies shall be effective until at
least thirty (30) days after receipt by each named insured, additional insured
and loss payee of written notice thereof or ten (10) days after receipt of such
notice with respect to nonpayment of premium; (vii) shall permit Landlord or
Landlord's Lender to pay the premiums and continue any insurance upon failure of
Tenant to pay premiums when due, upon the insolvency of Tenant or through
foreclosure or other transfer of title to the Leased Property (or any of them)
(it being understood that Tenant's rights to coverage under such policies may
not be assignable without the consent of the insurer); and (viii) shall provide
that the insurance shall not be impaired or invalidated by virtue of (A) any
act, failure to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by Tenant, Landlord, Landlord's Lender or
any other named insured, additional insured or loss payee, except for the
willful misconduct of Landlord or Landlord's Lender knowingly in violation of
the conditions of such policy, (B) the occupation, use, operation or maintenance
of the Leased Property for purposes more hazardous than permitted by the terms
of the Policy, (C) any foreclosure or other proceeding or notice of sale
relating to the Leased Property or (D) any change in the possession of the
Leased Property without a change in the identity
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of the holder of actual title thereto (provided that with respect to items (C)
and (D), any notice requirements of the applicable Policies are satisfied).
(d) Insurance Premiums; Certificates of Insurance.
(i) Tenant shall pay the premiums for such Policies (the "Insurance
Premiums") as the same become due and payable and shall furnish to
Landlord the receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Landlord (provided
Tenant is not required to furnish such evidence of payment if such
Insurance Premiums are to be paid pursuant to the Cash Management
Procedures). Within thirty (30) days after request by Landlord, Tenant
shall obtain such increases in the amounts of coverage required hereunder
as may be reasonably requested by Landlord, taking into consideration
changes in liability laws, changes in prudent customs and practices, and
the like. In the event Tenant satisfies the requirements under this
Section 10.1 through the use of a Policy covering properties in addition
to the Leased Property, then (unless such policy is provided in
substantially the same manner as it is as of the date hereof), Tenant
shall provide to Landlord evidence satisfactory to it that the Insurance
Premiums for the Leased Property are separately allocated under such
Policy to the Leased Property and that payment of such allocated amount
shall maintain the effectiveness of such Policy as to the Leased Property
notwithstanding the failure of payment of any other portion of premiums.
If such allocation is required by the immediately preceding sentence (i.e.
in the event that the Policy is not provided in substantially the same
manner as it is as of the date hereof), but such allocation is not
available, Landlord shall have the right to increase the Tax and Insurance
Escrow in an amount sufficient to purchase a non-blanket Policy covering
the Leased Property covered by such Policy from insurance companies which
qualify under this Lease.
(ii) Tenant shall deliver to Landlord on or prior to the Closing
Date certificates setting forth in reasonable detail the material terms
(including any applicable notice requirements) of all Policies from the
respective insurance companies (or their authorized agents) that issued
the Policies, including that such Policies may not be modified in a manner
that would result in such Policies not complying with the provisions of
this Section 10.1, canceled, terminated or not renewed without thirty (30)
days' prior notice to Landlord, or ten (10) days' notice with respect to
nonpayment of premium. Tenant shall deliver to Landlord, concurrently with
each material change in any Policy, a certificate with respect to such
changed Policy certified by the insurance company issuing that Policy, in
substantially the same form and containing substantially the same
information as the certificates required to be delivered by Tenant
pursuant to the first sentence of this clause (d)(ii) and stating that all
premiums then due thereon have been paid to the applicable insurers and
that the same are in full force and effect (or if such
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certificate and report shall not be obtainable by Tenant, Tenant may
deliver an Officer's Certificate to such effect in lieu thereof).
(e) Renewal and Replacement of Policies.
(i) Not less than four (4) Business Days prior to the expiration,
termination or cancellation of any Policy, Tenant shall renew such policy
or obtain a replacement policy or policies (or a binding commitment for
such replacement policy or policies), which shall be effective no later
than the date of the expiration, termination or cancellation of the
previous policy, and shall deliver to Landlord (and, if requested by
Landlord, to Landlord's Lender) a certificate in respect of such policy or
policies (A) containing the same information as the certificates required
to be delivered by Tenant pursuant to clause (d)(ii) above, or a copy of
the binding commitment for such policy or policies and (B) confirming that
such policy complies with all requirements hereof.
(ii) If Tenant does not furnish the certificates as required under
clause (e)(i), Landlord may procure, but shall not be obligated to
procure, such replacement policy or policies and pay the Insurance
Premiums therefor, and Tenant agrees to reimburse Landlord for the cost of
such Insurance Premiums promptly on demand.
(iii) Concurrently with the delivery of each replacement policy or a
binding commitment for the same pursuant to this clause (e), Tenant shall
deliver to Landlord a report from a reputable and experienced insurance
broker or from the insurer, setting forth the particulars as to all
insurance obtained by Tenant pursuant to this Section 10.1 and then in
effect and stating that all Insurance Premiums then due thereon have been
paid in full to the applicable insurers and that such insurance policies
are in full force and effect (or if such report shall not be available
after Tenant shall have used its reasonable efforts to provide the same,
Tenant will deliver to Landlord an Officer's Certificate containing the
information to be provided in such report) and Tenant shall deliver to
Landlord an Officer's Certificate stating that such insurance otherwise
complies in all material respects with the requirements of this Section
10.1.
(f) Separate Insurance. Tenant will not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 10.1 unless such insurance complies with
clause (c) above.
(g) Tenant shall name any Person holding, servicing or administering
Landlord's Debt and reasonably designated by Landlord (including any trustee,
servicer or special servicer) as a loss payee or additional insured with respect
to any Policy under which Landlord's Lender is to be so named hereunder.
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10.2 Casualty; Application of Proceeds.
(a) Right to Adjust.
(i) If any Leased Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Tenant shall give prompt
written notice thereof to Landlord generally describing the nature and
extent of such Casualty. Subject to Section 10.2(b), following the
occurrence of a Casualty, Tenant, regardless of whether proceeds are
available, shall in a reasonably prompt manner proceed to restore, repair,
replace or rebuild the affected Leased Property to the extent practicable
to be of at least equal value and of substantially the same character and
quality as prior to the Casualty, all in accordance with the terms hereof
applicable to Alterations.
(ii) Subject to clause (v) below, in the event of a Casualty that
does not exceed $1,000,000, Tenant may settle and adjust such claim;
provided that such adjustment is carried out in a competent and timely
manner. In such case, Tenant is hereby authorized to collect and receive
for Landlord any Proceeds.
(iii) Subject to clause (v) below, in the event a Casualty shall
exceed $1,000,000, Tenant may settle and adjust such claim only with the
consent of Landlord (and, if required under the terms of Landlord's Loan
Documents, Landlord's Lender), which consent shall not be unreasonably
withheld or delayed, and Landlord (and Landlord's Lender) shall have the
opportunity to participate, at Tenant's cost, in any such adjustments.
(iv) The proceeds of any Policy shall be due and payable solely to a
Depositary.
(v) Notwithstanding the terms of clauses (ii) and (iii) above,
Landlord shall have the sole discretion to adjust any claim with respect
to a Casualty and to collect all Proceeds if an Event of Default shall
have occurred and is continuing.
The provisions of this Section 10.2(a) are subject to the terms of any lease
that would be considered a "Superior Interest" (as defined herein) to the
contrary.
(b) Tenant's Right to Proceeds for Certain Casualty. In the event either
of (i) a Casualty that involves a loss of less than thirty percent (30%) of the
Termination Amount with respect to the affected Leased Property or (ii) a
Condemnation where the loss is in an aggregate amount less than twenty percent
(20%) of the Termination Amount with respect to the affected Leased Property,
Tenant be entitled to apply the Proceeds (after reimbursement of any expenses
incurred by Landlord and Landlord's Lender) to reimburse Tenant for the cost of
restoring, repairing, replacing or rebuilding the affected
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Leased Property (the "Restoration"), in the manner required hereby, provided and
on the condition that, no Event of Default shall have occurred and be then
continuing and, in the reasonable judgment of Landlord:
(i) the Restoration can be completed by the earliest to occur
of:
(A) the 365th day following the receipt of the
Proceeds, or, with Rating Confirmation, such longer period as may
reasonably be required,
(B) the scheduled maturity date of Landlord's Debt, and
(C) with respect to a Casualty, the expiration of the
payment period on the rental-loss insurance or business interruption
insurance coverage in respect of such Casualty, and
(ii) after receiving reasonably satisfactory evidence to such
effect, during the period of the Restoration, the sum of (A) income
derived from the Leased Properties (taken as a whole), plus (B) proceeds
of rental-loss insurance or business interruption insurance, if any,
payable together with such other monies as Tenant may irrevocably make
available for the Restoration, will equal or exceed the sum required for
Tenant to pay the Minimum Rent and the amounts required to be paid under
clauses (a), (c) and (d) of Section 2.4 of the Cash Management Procedures.
Notwithstanding the foregoing, if any of the conditions set forth in the proviso
in this clause (b) is not satisfied, then, notwithstanding anything herein to
the contrary, unless Landlord shall otherwise elect, at its sole option, (w) the
Proceeds shall be paid to Landlord up to the Termination Amount, and the balance
thereof, after payment of all Landlord's and Landlord's Lender's reasonable
expenses in connection therewith, shall be paid to Tenant, (x) this Lease shall
terminate in respect of the affected Leased Property (except for such terms as
are expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set forth on
Exhibit 3.1(a) shall be adjusted to reflect the portion of Minimum Rent
allocated to each Leased Property remaining subject to the terms of this Lease.
Notwithstanding any of the foregoing, in the event of a Casualty or Condemnation
where an Operating Agreement, a Warehouse Agreement with respect to all or
substantially all of a Leased Property, or a Sublease with a Major Subtenant
requires that Tenant restore the affected Leased Property or any affected
portion thereof, Landlord shall permit the application of the Proceeds (after
reimbursement of any expenses incurred by Landlord and Landlord's Lender) to
reimburse Tenant for the cost of Restoration provided no Event of Default shall
have occurred and then be continuing.
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(c) Termination of Lease in Certain Circumstances. In any case in which
Tenant is not entitled to the Proceeds pursuant to Section 10.2(b), then:
(i) if Landlord's Lender does not permit, pursuant to
Landlord's Loan Documents, the application of the Proceeds to the
Restoration (which Landlord's Lender shall notify Landlord and Tenant
within a reasonable time after the Casualty or Condemnation, and in no
event later than the 40th day after the receipt of Proceeds), then (x)
Landlord shall be entitled to the Proceeds up to the Termination Amount
(and Tenant shall be entitled to any balance, after payment of all
Landlord's and Landlord's Lender's reasonable expenses in connection
therewith), (y) this Lease shall terminate as to the affected Leased
Property (except with respect to those matters that are expressly intended
to survive the expiration or earlier termination of this Lease) and (z)
the Minimum Rent shall be reduced by the portion thereof allocable
thereto, as determined by reference to Exhibit 3.1(a), or
(ii) if Landlord's Lender is required or elects under the
terms of the Landlord's Loan Documents to permit the application of
Proceeds to Restoration, then the Proceeds shall be so applied provided
that Landlord is reasonably satisfied that, upon the completion of the
Restoration, Tenant shall be able to satisfy its obligations hereunder in
respect of the affected Leased Property (assuming for these purposes a pro
rata Minimum Rent obligation.
(d) Manner of Reimbursement of Restoration Expenses. If Tenant is entitled
pursuant to Section 10.2(b) or (c) hereof to reimbursement of Restoration costs
from Proceeds, such Proceeds shall be disbursed on a monthly basis upon the
Depositary being furnished with (i) such architect's certificates, Lien waivers,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as the
Depositary may reasonably require and approve, and (ii) all plans and
specifications for such Restoration, such plans and specifications to be
approved by Landlord prior to commencement of any work (such approval not to be
unreasonably withheld or delayed). In addition, no payment made prior to the
Final Completion of the Restoration shall exceed ninety-five percent (95%) of
the value of the work performed from time to time; funds other than Proceeds
shall be disbursed prior to disbursement of such Proceeds; and at all times, the
undisbursed balance of such Proceeds remaining in the hands of the Depositary,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Landlord by or on behalf of Tenant for that purpose, shall be at
least sufficient in the reasonable judgment of Landlord to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Prior to any disbursement, Landlord shall have received evidence reasonably
satisfactory to it of the estimated cost of completion of the Restoration (such
estimate to be made by Tenant's architect or contractor and approved by Landlord
in its reasonable discretion), and Tenant shall have deposited with the
Depositary Eligible Collateral in an
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amount equal to the excess (if any) of such estimated cost of completion over
the net Proceeds. Any surplus which may remain out of Proceeds received pursuant
to a Casualty shall be paid to Tenant after payment of such costs of
Restoration. Any surplus which may remain out of Proceeds received pursuant to a
Condemnation after payment of such costs of Restoration shall be paid over to
and belong to Landlord.
10.3 Condemnation.
(a) Tenant shall promptly give Landlord written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting any Leased Property (a "Condemnation") and shall deliver to Landlord
copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Tenant, regardless of whether
Proceeds are available, shall promptly proceed to restore, repair, replace or
rebuild the same to the extent practicable to be of at least equal value and of
substantially the same character as prior to such Condemnation, all to be
effected in accordance with the terms hereof applicable to Alterations.
(b) Landlord is hereby irrevocably appointed as Tenant's attorney-in-fact,
coupled with an interest, with exclusive power to collect, receive and retain
any Proceeds in respect of a Condemnation and to make any compromise or
settlement in connection with such Condemnation, subject to the provisions of
this Section, and such power shall include the power to substitute Landlord's
Lender in Landlord's discretion. Provided no Event of Default has occurred and
is continuing, (x) in the event of a Condemnation where the loss does not exceed
$1,000,000, Tenant may settle and compromise such Proceeds; provided that the
same is effected in a competent and timely manner, and (y) in the event a
Condemnation, where the loss exceeds $1,000,000, Tenant may settle and
compromise the Proceeds only with the consent of Landlord (and, if required
under the terms of Landlord's Loan Documents, Landlord's Lender), which consent
shall not be unreasonably withheld or delayed, and Landlord shall have the
opportunity to participate, at Tenant's cost, in any litigation and settlement
discussions in respect thereof. Tenant shall cause any Proceeds that are payable
to Tenant to be paid directly to a Depositary to be held and applied in
accordance with the terms hereof.
(c) The Rent shall be subject to adjustment in the manner provided for in
Section 4.2.
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ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures. (a) Tenant hereby agrees that for so long
as the Initial Landlord's Debt is outstanding and Landlord is the "Borrower"
thereunder, Tenant shall (i) comply with all of the obligations of the "Master
Lessee" under the Cash Management Procedures attached hereto as Exhibit 11.1
(the "Cash Management Procedures") as though the same were set forth herein and
(ii) take any and all other actions reasonably necessary to implement each of
the procedures set forth in the Cash Management Procedures. The costs of
establishing and maintaining the reserve accounts shall be allocated between
Landlord and Tenant in an equitable manner, taking into account that, regardless
of the Initial Landlord's Debt, Landlord would have required, and Tenant would
have agreed to establish, reserves comparable a Tax and Insurance Reserve and
Ongoing Maintenance Reserve.
(b) Tenant hereby agrees that in the event the Initial Landlord's Debt
shall no longer be outstanding or Landlord shall no longer be the "Borrower"
thereunder, to cooperate with Landlord and to execute any and all instruments
reasonably requested by Landlord (including, if necessary, the execution of an
amendment to this Lease), in the establishment and maintenance of new reserve
accounts and cash management procedures reasonably requested by a successor
Landlord's Lender in connection with Landlord's Loan Documents.
ARTICLE XII
12.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) if Tenant shall fail to pay the Minimum Rent when due and
payable hereunder, provided that so long as sufficient funds have been
deposited in the Cash Collateral Account pursuant to the Cash Management
Procedures to pay the Minimum Rent (taking into account the other reserve
funding requirements under the Cash Management Procedures), then Tenant
shall not be deemed to be in default under this paragraph (a), or
(b) if Tenant shall fail to pay when due any amount (other than
Minimum Rent) when due and payable and such default shall continue for ten
(10) days after notice thereof to Tenant, provided that so long as
sufficient funds to pay the amount in question shall have been deposited
by Tenant in the Cash Collateral Account pursuant to the Cash Management
Procedures (taking into account the
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other reserve funding requirements under the Cash Management Procedures),
then Tenant shall not be deemed to be in default under this paragraph (b),
or
(c) if Tenant shall fail to observe or perform any term, covenant or
condition of this Lease not specifically provided for in this Section 12.1
and such failure is not cured within a period of thirty (30) days after
receipt of notice from Landlord, unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
period of time shall be extended to such period of time (which, if such
default is materially adverse to the interests of Landlord hereunder,
shall not exceed an additional one hundred and twenty (120) days) as may
be necessary to cure such default with all due diligence, or
(d) if Tenant shall admit in writing its inability to pay its debts
generally as they become due; file a petition in bankruptcy or a petition
to take advantage of any insolvency act; make an assignment for the
benefit of its creditors; consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; or file a
petition or answer seeking reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any State thereof, or
(e) any petition shall be filed by or against Tenant or any
subsidiary of Tenant under Federal bankruptcy laws, or any other
proceeding shall be instituted by or against Tenant or such subsidiary
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for Tenant or such subsidiary, or for any substantial part of the property
of Tenant or such subsidiary, and such proceeding is not dismissed within
ninety (90) days after institution thereof, or Tenant or such subsidiary
shall take any action to authorize or effect any of the actions set forth
above in this paragraph (e), or
(f) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding any
the same shall not be vacated or discharged within the later of ninety
(90) days after commencement thereof or thirty (30) days after receipt by
Tenant of notice thereof from Landlord, (unless Tenant shall be contesting
such lien or attachment in good faith in accordance with the terms of this
Lease),
then, and in any such event, Landlord may terminate this Lease by giving not
less than ten (10) days' notice of such termination and upon the expiration of
the time fixed in such notice, if any, the Term shall terminate and all rights
of Tenant under this Lease shall
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cease. Landlord shall have all rights at law and in equity available to Landlord
as a result of Tenant's breach of this Lease.
Tenant shall, to the maximum extent permitted by law, pay as Additional Charges
all Litigation Costs as a result of any Event of Default hereunder.
12.2 Certain Remedies. Landlord shall have the right to terminate this
Lease, and otherwise exercise remedies, at any time and from time to time, with
respect to one or more, or all, of the Leased Properties, and the termination of
this Lease or other exercise of remedies with respect to one or more Leased
Properties shall in no way constitute a waiver on the part of Landlord to
terminate this Lease on account of such Event of Default, or otherwise exercise
remedies, at any time and from time to time, in one or more other instances,
with respect to the balance of the Leased Properties.
12.3 Damages. Neither (a) the termination of this Lease pursuant to
Section 12.1 with respect to any or all of the Leased Property, (b) the
repossession of the applicable Leased Property or any portion thereof, (c) the
failure of Landlord, notwithstanding reasonable good faith efforts to relet the
applicable Leased Property or any portion thereof, (d) the reletting of all or
any portion thereof, nor (e) the failure of Landlord to collect or receive any
rentals due upon any such reletting, shall relieve Tenant of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event of any such termination, Tenant shall
forthwith pay to Landlord all Rent due and payable with respect to the Leased
Property to and including the date of such termination. Thereafter, Tenant,
until the end of what would have been the Term in the absence of such
termination, and whether or not the applicable Leased Property or any portion
thereof shall have been re-let, shall be liable to Landlord for, and shall pay
to Landlord, as current damages, the Rent and other charges which would be
payable hereunder for the remainder of the Term had such termination not
occurred, less the net proceeds, if any, of any reletting of the applicable
Leased Property, after deducting all expenses in connection with such
re-letting, including all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, advertising costs, expenses of employees, alteration
costs and expenses of preparation for such reletting. Tenant shall pay such
current damages to Landlord monthly on the days on which the Minimum Rent would
have been payable hereunder if this Lease had not been terminated.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages and in lieu of
all such current damages beyond the date of such termination, at Landlord's
election, Tenant shall pay to Landlord either, at Landlord's election, (a) an
amount equal to the excess, if any, of the Rent and other charges which would be
payable hereunder from the date of such termination (assuming that, for the
purposes of this paragraph, annual payments by Tenant on account of Taxes and
Other Charges would be the same as payments required for the immediately
preceding twelve calendar months, or if less than twelve calendar
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months have expired since the Commencement Date, the payments required for such
lesser period projected to an annual amount) for what would be the then
unexpired term of this Lease if the same remained in effect (with respect to the
applicable Leased Property), over the Fair Market Rental for the same period, or
(b) an amount equal to the lesser of (i) the Rent and other charges that would
have been payable for the balance of the Term had it not been terminated, or
(ii) the aggregate of the Minimum Rent, Additional Charges and other charges
accrued in the twelve (12) months ended next prior to such termination (without
reduction for any free rent or other concession or abatement). In the event this
Lease is so terminated prior the expiration of the first full year of the Term,
the liquidated damages which Landlord may elect to recover pursuant to this
Section shall be calculated as if such termination had occurred on the first
anniversary of the Commencement Date. Nothing contained herein shall, however,
limit or prejudice the right of Landlord to prove and obtain in proceedings for
bankruptcy or insolvency an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater than,
equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet the applicable Leased
Property or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may, at Landlord's option, be equal to,
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant concessions or free rent to the extent that
Landlord considers advisable and necessary to relet the same, and (b) make such
alterations, repairs and decorations in the applicable Leased Property or any
portion thereof as Landlord, in its sole judgment, considers advisable and
necessary for the purpose of reletting the applicable Leased Property; and the
making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure to relet the
applicable Leased Property, or, in the event that the applicable Leased Property
is relet, for failure to collect the rent under such reletting. To the fullest
extent permitted by law, Tenant hereby expressly waives any and all rights of
redemption granted under any present or future laws in the event of Tenant's
being evicted or dispossessed, or in the event of Landlord's obtaining
possession of the applicable Leased Property, by reason of the violation by
Tenant of any of the covenants and conditions of this Lease.
12.4 Waiver. If this Lease is terminated pursuant to Section 12.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XII, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt (provided nothing
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herein shall be construed to limit Tenant's liability hereunder, which is
intended to be fully recourse to Tenant, to its interest in the Leased
Property).
12.5 Application of Funds. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State where the applicable Leased Property is located.
ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, without waiving or releasing
any obligation or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and at
the expense of Tenant, and may, to the extent permitted by law, enter upon the
applicable Leased Property or any portion thereof for such purpose and take all
such action thereon as, in Landlord's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
sums so paid by Landlord and all costs and expenses (including attorneys' fees
and expenses, in each a case, to the extent permitted by law) so incurred,
together with interest thereon (to the extent permitted by law) at the Overdue
Rate from the date on which such sums or expenses are paid or incurred by
Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XIV
14.1 Holding Over. If Tenant shall for any reason remain in possession of
the applicable Leased Property after the expiration of the Term or earlier
termination of the Term, such possession shall be as a month-to-month tenant
during which time Tenant shall pay as rental each month, one and one-half times
the aggregate of (i) one-twelfth of the aggregate Minimum Rent payable with
respect to the last Lease Year of the Term; (ii) all Additional Charges accruing
during the month and (iii) all other sums, if any, payable by Tenant pursuant to
the provisions of this Lease with respect to the applicable Leased Property.
During such period of month-to-month tenancy, Tenant shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to month-to-month tenancies to continue its occupancy and use of the
applicable Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Lease.
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ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance. This Lease and all rights of Tenant
hereunder are subject and subordinate to the Lien affecting the Leased
Properties created pursuant to Lender's Loan Documents, whether now or hereafter
existing, or the interest of any landlord under a lease senior in title to this
Lease, whether now or hereafter existing (all such Liens and interests,
collectively, the "Superior Interests"), and to all renewals, modifications,
consolidations, replacements and extensions of Superior Interests, provided that
the holder of such Superior Interest shall have executed and delivered to Tenant
a "non-disturbance" agreement in favor of Tenant substantially on the same terms
and conditions as are contained in the form attached hereto as Exhibit 15.1.
Subject to the foregoing proviso, this Section shall be self-operative and no
further instrument of subordination shall be required, but in confirmation of
such subordination, Tenant agrees to execute and deliver promptly any
commercially reasonable form of instrument (in recordable form, if requested)
that Landlord or the holder of any Superior Interest (each, a "Superior Party")
may request to evidence such subordination. Concurrently herewith, Tenant and
Landlord's Lender in respect of the Initial Landlord's Debt are executing and
delivering a non-disturbance, subordination and attornment agreement in the form
of said Exhibit 15.1.
15.2 Attornment. If the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of any such Superior Interest, then Tenant shall, at
the option of such purchaser, assignee or any Superior Party, as the case may
be, (x) attorn to such party and perform for its benefit all the terms,
covenants and conditions of this Lease on Tenant's part to be performed with the
same force and effect as if such party were the Landlord originally named in
this Lease, or (y) enter into a new lease with such party, as Landlord, for the
remaining Term and otherwise on the same terms and conditions of this Lease
except that such successor Landlord shall not be (i) liable for any previous
act, omission or negligence of Landlord under this Lease; (ii) subject to any
counterclaim, defense or offset which theretofore shall have accrued to Tenant
against Landlord; (iii) bound by any previous modification or amendment of this
Lease or by any previous prepayment of more than one month's rent in advance of
its due date, unless such modification, amendment or prepayment shall have been
approved in writing by the Superior Party through or by reason of which such
successor Landlord shall have succeeded to the rights of Landlord under this
Lease; or (iv) liable for any security (if any) deposited pursuant to this Lease
unless such security has actually been delivered to such successor Landlord or
deposited pursuant to the Cash Management Procedures. Nothing contained in this
Section shall be construed to impair any right otherwise exercisable by any such
owner, holder or Tenant.
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15.3 Notice of Default to Landlord's Lender. In the event of any act or
omission by Landlord which would give Tenant the right, either immediately or
after the lapse of a period of time, to terminate this Lease, or to claim a
partial or total eviction, Tenant will not exercise any such right (A) until it
has given written notice of such act or omission to Landlord's Lender, and (B)
until a reasonable period of time (not less than thirty (30) days) for remedying
such act or omission shall have elapsed following giving of such notice and
following the time when Lender shall have become entitled under the Landlord's
Loan Documents to remedy the same, provided Lender, with reasonable diligence,
shall (i) have pursued such remedies as are available to it under Landlord's
Loan Documents so as to be able to remedy the act or omission, and (ii)
thereafter shall have commenced and continued to remedy such act or omission or
cause the same to be remedied. Tenant's agreement herein shall not apply to
those situations specifically set forth herein wherein Tenant has an express
option to cancel and terminate this Lease.
15.4 Modifications to Secure Financing. If any Superior Party or
prospective Superior Party shall request modifications of this Lease as a
condition to the provision, continuance or renewal of any such financing, Tenant
will not unreasonably withhold, delay or defer its consent thereto, provided
that such modifications do not materially increase the obligations of Tenant
hereunder or materially adversely affect Tenant's rights under this Lease.
15.5 Delivery of Notices to Landlord's Lender. Subsequent to the receipt
by Tenant of Notice from Landlord as to the identity and address of any Superior
Party (which Notice shall be accompanied by a copy of the instrument creating
such Superior Interest), no Notice from Tenant to Landlord shall be effective
unless and until a duplicate original of such Notice shall be given to such
Superior Party at the address set forth in the above described Notice. The
curing of any of Landlord's defaults by such Superior Party shall be treated as
performance by Landlord. Tenant hereby acknowledges receipt of Notice as to the
identity and address of Landlord's Lender as of the date hereof as follows (as
well as a copy of all of the Landlord's Loan Documents in effect as of the date
hereof) and that, accordingly, the above provisions of this Section 15.5 shall
be effective as to Landlord's Lender as of the date hereof:
Goldman Sachs Mortgage Company
85 Broad Street
New York, New York 10004
Attention: Mr. Steven T. Mnuchin
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with a copy to:
On or before May 22, 1998
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Eugene A. Pinover, Esq.
After May 22, 1998
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Eugene A. Pinover, Esq.
15.6 Right of Landlord's Lender to Enforce Lease. To the extent permitted
under the Landlord's Loan Documents, Landlord's Lender may exercise the rights
of Landlord hereunder, including the right on the part of Landlord to obtain
insurance in the circumstances set forth in Section 10.1(e)(ii) hereof.
15.7 Exercise of Landlord's Discretion. In any instance hereunder in which
Landlord must be reasonable in making a request or granting or withholding an
approval or consent, Tenant acknowledges and agrees that Landlord may take into
account the reasonable objections of Landlord's Lender to the extent Landlord is
required to take such objections into account under Landlord's Loan Documents.
In any instance hereunder in which Landlord may make a request or grant or
withhold an approval in its discretion, Landlord may take into account the views
of Landlord's Lender to the extent Landlord is required to take such views into
account under Landlord's Loan Documents.
ARTICLE XVI
16.1 Indemnification. Notwithstanding the existence of any insurance
required to be provided hereunder, and without regard to the policy limits of
any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord and Landlord's Lender and their respective partners, shareholders,
officers, directors and employees (each, an "Indemnitee") from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and reasonable expenses (including Litigation Costs), to the maximum extent
permitted by law, imposed upon or incurred by or asserted against such
Indemnitee by reason of: (a) any accident, injury to or death of persons or loss
of or damage to property occurring on or about the Leased Property or adjoining
sidewalks, including any claims made by employees at the Leased Property, (b)
any use, misuse,
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non-use, condition, maintenance or repair by Tenant or anyone claiming by,
through or under Tenant, including agents, contractors, invitees or visitors of
the applicable Leased Property or Tenant's Personal Property, (c) any Taxes or
Other Charges, (d) any failure on the part of Tenant or anyone claiming by,
through or under Tenant to perform or comply with any of the terms of this
Lease, (e) any failure by Tenant to perform its obligations under any Sublease
or Warehouse Agreement and any claims made thereunder, (f) any contest of any
Legal Requirement or Insurance Requirement, regardless whether the same is
conducted in accordance with the terms hereof. Any amounts which become payable
by Tenant under this Section shall be paid within ten (10) days after liability
therefor on the part of Tenant is determined by litigation or otherwise, and if
not timely paid, shall bear interest (to the extent permitted by law) at the
Overdue Rate from the date of such determination to the date of payment. Tenant,
at its expense, shall contest, resist and defend any such claim, action or
proceeding asserted or instituted against Indemnitee or may compromise or
otherwise dispose of the same as Tenant sees fit. Nothing herein shall be
construed as indemnifying an Indemnitee against its own grossly negligent acts
or omissions or willful misconduct. If at any time an Indemnitee shall have
notice of a claim, such Indemnitee shall give reasonably prompt written notice
of such claim to Tenant; provided that (i) such Indemnitee shall have no
liability for a failure to give notice of any claim of which Tenant has
otherwise been notified or has knowledge and (ii) the failure of such Indemnitee
to give such a notice to Tenant shall not limit the rights of such Indemnitee or
the obligations of Tenant with respect to such claim except to the extent that
Tenant incurs actual expenses or suffers actual monetary loss as a result of
such failure. Tenant shall have the right to control the defense or settlement
of any Claim, provided that (A) Tenant shall first confirm in writing to such
Indemnitee that such claim is within the scope of this indemnity and that Tenant
shall pay any and all amounts required to be paid in respect of such claim and
(B) if the compromise or settlement of any such claim shall not result in the
complete release of such Indemnitee from the claim so compromised or settled,
the compromise or settlement shall require the prior written approval of such
Indemnitee. An Indemnitee shall have the right to approve counsel engaged to
defend such claim and, at its election and sole cost and expense, shall have the
right, but not the obligation, to participate in the defense of any claim.
Tenant's liability for a breach of the provisions of this Article arising during
the Term hereof shall survive any termination of this Lease.
ARTICLE XVII
17.1 No Waiver. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
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ARTICLE XVIII
18.1 Remedies Cumulative. Except as otherwise expressly provided herein,
to the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord or Tenant now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Landlord or Tenant or any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord or Tenant of any or all of such other rights, powers and remedies.
ARTICLE XIX
19.1 Acceptance of Surrender. No surrender to Landlord of this Lease or of
any Leased Property, or of any interest therein, shall be valid or effective
unless agreed to and accepted in writing by Landlord and no act by Landlord or
any representative or agent of Landlord, other than such a written acceptance by
Landlord, shall constitute an acceptance of any such surrender.
ARTICLE XX
20.1 No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same Person may
acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold
estate created thereby or any interest herein or in such leasehold estate and
(b) the fee estate in the applicable Leased Property.
ARTICLE XXI
21.1 Conveyance by Landlord. If Landlord or any successor owner of the
applicable Leased Property shall convey such Leased Property in accordance with
the terms hereof other than as security for a debt, and the grantee or
transferee of the Leased Property shall expressly assume all obligations of
Landlord hereunder arising or accruing from and after the date of such
conveyance or transfer, Landlord or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and obligations of
Landlord under this Lease arising or accruing from and after the date of such
conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
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ARTICLE XXII
22.1 Quiet Enjoyment. So long as Tenant shall pay all Rent as the same
becomes due and no Event of Default shall have occurred and be continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Landlord or anyone
claiming by, through or under Landlord, but subject to all liens and
encumbrances of record as of the date hereof or otherwise permitted to be
created by Landlord hereunder, liens as to the obligations of Landlord that are
either not yet due or which are being contested in good faith and by proper
proceedings, and liens hereafter consented to by Tenant. No failure by Landlord
to comply with the foregoing covenant shall give Tenant any right to cancel or
terminate this Lease or abate, reduce or make a deduction from or offset against
the Rent or any other sum payable under this Lease, or to fail to perform any
other obligation of Tenant hereunder or thereunder. Notwithstanding the
foregoing, Tenant shall have the right, by separate and independent action to
pursue any claim it may have against Landlord as a result of a breach by
Landlord of the covenant of quiet enjoyment contained in this Section.
ARTICLE XXIII
23.1 Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
URS Logistics, Inc.
One Concourse Parkway, Suite 450
Atlanta, Georgia 30328
Attention: Chief Executive Officer
with a copy to:
Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Jonathan Eady, Esq.
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(b) if to Landlord:
URS Real Estate, L.P.
c/o Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
Attention: Chief Financial Officer
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Arthur S. Adler, Esq.
(c) if required pursuant to Section 15.5 hereof, to Landlord's
Lender, in accordance with the terms of said Section.
or to such other address as either party may hereunder designate, and shall be
effective upon receipt.
ARTICLE XXIV
24.1 Appraisers. In the event that it becomes necessary to determine the
Fair Market Value or Fair Market Rental of any property for any purpose of this
Lease, and the parties cannot agree amongst themselves on such value within
twenty (20) days after the first request made by one of the parties to do so,
then either party may notify the other of a person selected to act as appraiser
on its behalf. Within fifteen (15) days after receipt of any such notice, the
other party shall by notice to the first party appoint a second person as
appraiser on its behalf. The appraisers thus appointed, each of whom must be a
member of the American Institute of Real Estate Appraisers (or any successor
organization thereto), shall, within 45 days after the date of the notice
appointing the first appraiser, proceed to appraise the applicable Leased
Property to determine the Fair Market Value or Fair Market Rental thereof as of
the relevant date; provided that if one appraiser shall have been so appointed,
or if two appraisers shall have been so appointed but only one such appraiser
shall have made such determination within 50 days after the making of the
initial appointment, then the determination of such appraiser shall be final and
binding upon the parties. If two appraisers shall have been appointed and shall
have made their determinations within the respective requisite periods set forth
above and if the difference between the amounts so determined shall not exceed
ten percent (10%) of the lesser of such amounts, then the Fair Market Value or
Fair Market Rental shall be an amount equal to 50% of the sum of the amounts so
determined. If the difference between
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the amounts so determined shall exceed ten percent (10%) of the lesser of such
amounts, then such two appraisers shall have 20 days to appoint a third
appraiser, but if such appraisers fail to do so, then either party may request
the American Arbitration Association or any successor organization thereto to
appoint an appraiser within 20 days of such request, and both parties shall be
bound by any appointment so made within such 20 day period. If no such appraiser
shall have been appointed within such 20 days or within 90 days of the original
request for a determination of Fair Market Value or Fair Market Rental,
whichever is earlier, either Landlord or Tenant may apply to any court having
jurisdiction to have such appointment made by such court. Any appraiser
appointed by the original appraisers, by the American Arbitration Association or
by such court shall be instructed to determine the Fair Market Value or Fair
Market Rental within 30 days after appointment of such Appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determination of the other two appraisers shall be excluded, and 50% of the
sum of the remaining two determinations shall be final and binding upon Landlord
and Tenant as the Fair Market Value or Fair Market Rental for such interest.
This provision for determination by appraisal shall be specifically enforceable
to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties except as
otherwise provided by applicable law. Landlord and Tenant shall each pay the
fees and expenses of the appraiser appointed by it and their own legal fees, and
each shall pay one-half of the fees and expenses of the third appraiser and
one-half of all other cost and expenses incurred in connection with each
appraisal.
ARTICLE XXV
25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or an
Affiliate of Landlord may (in its sole discretion) elect to qualify as a real
estate investment trust ("REIT"). In the event that Landlord or an Affiliate of
Landlord intends to qualify as a REIT, the following requirements (the "REIT
Requirements") must be satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or
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a portion of the amounts paid by Tenant to Landlord hereunder to fail to
qualify as "rents from real property" within the meaning of Section 856(d)
of the Code.
(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and agrees
to use reasonable efforts to cause its Affiliates, to use their best efforts to
permit the REIT Requirements to be satisfied. Tenant agrees and agrees to use
reasonable efforts to cause its Affiliates, to cooperate in good faith with
Landlord or to ensure that the REIT Requirements are satisfied, including
providing Landlord with information about the ownership of Tenant, and its
Affiliates to the extent that such information is reasonably available. Tenant
agrees, and agrees to use reasonable efforts to cause its Affiliates, upon
request by Landlord to take reasonable action necessary to ensure compliance
with the REIT Requirements. Immediately after becoming aware that the REIT
Requirements are not, or will not be, satisfied, Tenant shall notify, or use
reasonable efforts to cause its Affiliates to notify Landlord of such
noncompliance.
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions. Tenant hereby agrees to hold
harmless Landlord and Landlord's Lender, any successors to their respective
interests in this Lease, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Landlord or
any other indemnitee or assessed against the Leased Property by virtue of any
claim or lien by any governmental or quasi-governmental unit, body, or agency,
or any third party, for cleanup costs or other costs pursuant to any
Environmental Laws. Tenant's indemnity shall survive the termination of this
Lease, provided, however, Tenant shall have no indemnity obligation with respect
to (i) Hazardous Substances first introduced to the Leased Property subsequent
to the date that Tenant's occupancy of the Leased Property shall have fully
terminated or (ii) Hazardous Substances introduced to the Leased Property by
Landlord, its successors and assigns. Notwithstanding the foregoing, with
respect to those environmental conditions identified on Exhibit 26.1, Landlord
shall make
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available to Tenant the funds reserved to cure such matters, on the same terms
as are described in the Lender's Loan Documents relating to the Initial
Landlord's Debt.
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination.
27.2 Severability. If any term or provision of this Lease or any
application thereof shall be invalid or unenforceable, the remainder of this
Lease and any other application of such term or provision shall not be affected
thereby.
27.3 Maximum Permissible Rate. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.
27.4 Headings. The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
27.5 Exculpation. Landlord's liability hereunder shall be limited solely
to its interest in the Leased Property, and no recourse under or in respect of
this Lease shall be had against any other assets of Landlord whatsoever.
Furthermore, except as otherwise expressly provided herein, in no event shall
Landlord (original or successor) ever be liable to Tenant for any indirect or
consequential damages suffered by Tenant from whatever cause.
27.6 Transfer of Licenses. Upon the expiration or earlier termination of
the Term, Tenant shall use its best efforts to transfer to Landlord or
Landlord's nominee or to cooperate with Landlord or Landlord's nominee in
connection with the processing by Landlord or Landlord's nominee of any
applications for all licenses, operating permits and other governmental
authorization and all contracts, including contracts with governmental or
quasi-governmental entities which may be necessary for the operation of the
Leased Property; provided that the costs and expenses of any such transfer or
the processing of any such application shall be paid by Landlord or Landlord's
nominee.
27.7 Exhibition of Leased Property. Landlord and Landlord's agent shall
have the right to enter the applicable Leased Property at all reasonable times
for the purpose of exhibiting the Leased Property to others.
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27.8 Entire Agreement. This Lease contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof.
27.9 Governing Law. This Lease shall be construed with respect to each
Leased Property under the substantive laws of the State of in which such Leased
Property is situated.
27.10 No Waiver. No waiver of any condition or covenant herein contained,
or of any breach of any such condition or covenant, shall be held or taken to be
a waiver of any subsequent breach of such covenant or condition, or to permit or
excuse its continuance or any future breach thereof or of any condition or
covenant herein construed as a waiver of such default, or of Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing default.
27.11 Successors and Assigns. This Lease shall be binding upon and shall
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
27.12 Modifications in Writing. This Lease may only be modified by a
writing signed by both Landlord and Tenant.
27.13 No Waiver. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
27.14 Claims Against Landlord. In the event that a claim or adjudication
is made that Landlord or its agents have acted unreasonably or unreasonably
delayed (or refrained from), acting in any case where by law or under this
Lease, Landlord or such agent, as the case may be, has an obligation to act
reasonably or promptly, Tenant agrees that neither Landlord nor its agents shall
be liable for any monetary damages, and Tenant's sole remedies shall be limited
to commencing an action seeking injunctive relief or declaratory judgment,
except in any instance in which it has been finally determined that Landlord's
action, delay or inaction has constituted gross negligence, fraud, willful
misconduct or an illegal act. The parties hereto agree that any action or
proceeding to determine whether Landlord has acted reasonably shall be
determined by an action seeking declaratory judgment.
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ARTICLE XXVIII
28.1 Memorandum of Lease. Landlord and Tenant shall, promptly upon the
request of either enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the state in which the applicable
Leased Property is located, in which reference to this Lease, and all options
contained therein, shall be made. Tenant shall pay all costs and expenses of
recording such Memorandum of Lease.
ARTICLE XXIX
29.1 Provisions Relating to Purchase of the Leased Personal Property. It
is the parties' intention and belief that the Leased Property in its entirety
consists of real property and little personalty. Nevertheless, to the extent
deemed necessary by Landlord, in its sole discretion, in connection with the
qualification of Landlord or its Affiliate as a REIT, upon thirty (30) days'
notice to Tenant, Tenant shall purchase from Landlord such portions of the
Leased Property as may be considered (in Landlord's sole discretion) as
personalty and as Landlord shall designate, at a purchase price equal to the
fair market value thereof (as mutually agreed upon by Landlord and Tenant or
failing such agreement, by arbitration in accordance with Article XXIV). Such
purchase price shall be payable in equal monthly installments over four years
(or if less, the remainder of the Term), together with annual interest thereon
at 8 percent, and shall be paid to Landlord on Rent Payment Dates in the same
manner as Minimum Rent. Each installment of Minimum Rent shall be decreased by
such purchase-price installment, exclusive of the interest.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
duly executed as of April 22, 1998.
URS REAL ESTATE, L.P., a Delaware limited partnership
By: URS Realty, Inc, a Delaware corporation, its
general partner
By: /s/ Irwin Goldberg
---------------------------------------
Name:
Title:
URS LOGISTICS, INC., a Delaware corporation
By: /s/ Frederick B. Beilstein III
---------------------------------------------
Name: Frederick B. Beilstein III
Title: Senior Vice President
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EXHIBIT A-1
Legal Description of the Land
[omitted: legal descriptions of parcels in Indianapolis, Indiana; Wichita,
Kansas; Murfreesboro, Tennessee; Byron, Wisconsin; Norfolk, Virginia; Columbia,
South Carolina; Ontelaunee Township, Pennsylvania; Oklahoma City, Oklahoma;
Tarboro, North Carolina; Charlotte, North Carolina; Syracuse, New York;
Marshall, Missouri; Westgate, Atlanta, Georgia; Montezuma, Georgia; Augusta,
Georgia; Turlock, California; West Memphis, Arkansas; Fort Smith, Arkansas;
Montgomery, Alabama; Birmingham, Alabama; Gadsden, Alabama; Albertville,
Alabama; Atlanta, Georgia; Memphis, Tennessee; and Portland, Maine]
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EXHIBIT 1.5(b)
List of Ground Leases and Expiration Dates
Tarboro, North Carolina
Lease Agreement, dated April 5, 1993 by and between Refrigerated Warehouse
Investments Holding Corporation, a Delaware corporation , as lessor, and United
Refrigerated Services, Inc., as lessee, a memorandum of which Lease Agreement
was recorded on April 6, 1993 in Book 1100, Page 223 of the Real Property
Records of Edgecomb County, North Carolina, as same has been and may hereafter
be modified or amended. Expires 4/5/2013.
Montgomery (New), Alabama
Lease Agreement, dated April 5, 1993 by and between Unifridge Holding
Corporation, a Delaware corporation , as lessor, and United Refrigerated
Services, Inc., as lessee, a memorandum of which Lease Agreement was recorded in
Book RLPY 1335, Page 664 of the Real Property Records of the Probate Office of
Montgomery County, Alabama, as same has been and may hereafter be modified or
amended. Expires 4/5/2013.
Gadsden, Alabama
Lease Agreement, dated April 16, 1998 by and between Vero Industries, L.P., a
Georgia limited partnership , as lessor, and United Refrigerated Services, Inc.,
as lessee, a memorandum of which Lease Agreement is to be recorded immediately
prior to the recordation of this Mortgage, as the same has been and may
hereafter be modified or amended. Expires 12/30/2010 with options to extend for
two consecutive terms of five-years each.
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Exhibit 2(a)
Loan Agreement, dated as of April 22, 1998, between URS Real Estate, L.P., as
Borrower, and Goldman Sachs Mortgage Company, as Lender.
[omitted]
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Exhibit 3.1(a)
Minimum Rent Allocation
URS Logistics Master Lease
<TABLE>
<CAPTION>
Property Percentage of Total
- -------- -------------------
<S> <C>
Albertville 3.06%
Augusta 0.97%
Birmingham 1.34%
Charlotte Central 0.73%
Charlotte North 4.36%
Columbia 1.12%
Ft. Smith 0.98%
Gadsden 3.34%
Gateway 15.02%
Indianapolis 8.51%
Chelsea Memphis 1.13%
Lakewood 1.04%
Leesport 6.67%
Marshall 4.02%
Memphis Parkway 2.74%
Montezuma 2.99%
Murfreesboro 3.40%
Montgomery (new) 0.59%
Norfolk 1.83%
Oklahoma (1) 0.73%
Oklahoma (2) 0.78%
Portland 1.06%
Syracuse 8.11%
Tarboro 2.66%
Tomah 5.35%
Turlock 1 3.43%
Westgate 7.86%
West Memphis 4.51%
Wichita 1.69%
100%
</TABLE>
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EXHIBIT 3.1(b)
Calculation of Percentage Rent
Percentage Rent, with respect to each Lease Year, shall be the product of (i)
29.75 percent times (ii) all Receipts for such Lease Year in excess of the
Breakpoint. The "Breakpoint", with respect to any Lease Year, shall be the
annual Minimum Rent for such Lease Year divided by 29.75 percent. Thus, for
example, assuming a payment of Minimum Rent in the first Lease Year of
$25,602,236.10 (taking into account the partial Fiscal Year), the Breakpoint for
the first Lease Year shall be $86,057,936.47.
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EXHIBIT 6.1(j)
Deferred Maintenance Conditions (excluding Environmental)
[omitted]
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EXHIBIT 8.2.8
Senior Leases
1. Lease Agreement, dated July 1, 1997, by and between Marcus Specialty
Foods, Inc. and Tenant (Birmingham, AL).
2. Lease Agreement, dated May 1, 1996, by and between River Valley Foods,
Inc. and Tenant (Syracuse, NY). [SNDA obtained]
3. Warehouse Lease, dated February 6, 1992, by and between Chef's Requested
Foods, Inc. and Tenant (Oklahoma City, OK), modified and extended
September 11, 1997.
4. Lease Agreement, dated January 15, 1991, by and between Fleming Companies,
Inc. and Tenant (Oklahoma City, OK), amended February 4, 1997. [SNDA
obtained for mortgagee only]
5. Sublease, dated May 1, 1981, by and between Poultry Foods Industries, Inc.
and Tenant (Fort Smith, AR). [SNDA obtained]
6. Warehouse Lease, dated October 1, 1996, by and between Tenant and J.R.
Simplot Company (West Memphis, AR).
7. Lease Agreement, dated October 1, 1995, by and between Tenant and Mahar
Business Forms, Inc. (Syracuse, NY). [SNDA obtained]
8. Lease, dated September 16, 1991, by and between Tenant and Electrical
Suppliers, Inc. (Norfolk, VA). [SNDA obtained]
9. Lease Agreement, dated October 1, 1991, by and between Tenant and Fast
Food Transport, Inc. (Syracuse, NY).
10. Lease Agreement, dated _____, 1996, by and between Tenant and Excel
Corporation, d/b/a Cargill Processed Meat Products (Fort Smith, AR).
11. Warehouse Lease, dated April 24, 1996, by and between Tenant and Thomas &
Co. (Memphis, TN).
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Exhibit 11.1
CASH MANAGEMENT PROCEDURES
Capitalized terms used but not defined in this Exhibit shall have the meanings
ascribed to them in the Loan Agreement and if not defined therein, in the Master
Lease. References to Sections shall mean the Sections of this Exhibit unless
otherwise stated.
1. Deposit to Local Accounts
1.1 Within one (1) Business Day after the Master Lessee's receipt of
the same, the Master Lessee shall deposit or cause the deposit of all Receipts
to one or more Local Accounts (as hereinafter defined) or, if the Master Lessee
(in its sole discretion) does not elect to use Local Accounts, to the Cash
Collateral Account (as hereinafter defined). All funds in the Local Accounts
shall be swept daily to the Cash Collateral Account.
1.2 A "Local Account" shall mean a segregated "sweep" bank account
in the name of Master Lessee (or the name under which a Mortgaged Property is
operated), which is not required to be an Eligible Account, at a financial
institution located in the vicinity of one or more of the Mortgaged Properties.
Each Local Account shall be maintained solely for the purpose of receiving
deposits in the ordinary course of business of Receipts from one or more
Mortgaged Properties. Funds on deposit in each any other properties (other than
one or more Mortgaged Properties) owned or managed by the Master Lessee or by
any other person, and may only be disbursed from such account for the purpose of
being swept into the Cash Collateral Account.
2. Establishment of Cash Collateral Account, Reserve Accounts and
Operating Account and Disbursements from Cash Collateral Account
2.1 Lender shall establish the Cash Collateral Account, the
Operating Account (as defined below) and each Reserve Account (as defined below)
with the same depositary institution not later than the Closing.
2.1.1 The "Cash Collateral Account" shall mean a segregated
lockbox account in the name of the Servicer on behalf of the Lender, to
which all Receipts will be deposited either from the Local Accounts or
directly upon receipt by the Master Lessee or Borrower.
2.1.2 The "Operating Account" shall mean a segregated account
in the name of the Servicer on behalf of the Lender, to which
disbursements from the Cash Collateral Account shall be made, and
withdrawals by the Master Lessee shall be permitted, in the manner
described below in this Section 2 and Section 3.
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2.1.3 The "Reserve Accounts" shall mean the various segregated
accounts described below in Section 2.4.1(a), (c), (d) and (e) and Section
2.4.2(a), (b), (d) and (e), as well as those accounts generally described
in Section 2.5, each in the name of the Servicer on behalf of the Lender.
2.2 The Cash Collateral Account and each Reserve Account shall be an
Eligible Account.
2.3 The Servicer on behalf of the Lender will have sole control over
the Cash Collateral Account and each Reserve Account, subject, nevertheless, to
the Servicer's obligations under this Exhibit and the other provisions of the
Loan Documents to disburse funds therefrom to or on behalf of the Master Lessee
or the Borrower.
2.4 During each period commencing on the day immediately following a
Payment Date and ending on the following Payment Date (each such period, a
"Collection Period"), provided that no Event of Default has occurred and is
continuing (but subject to Sections 4 and 7.6 hereof), Lender shall transfer
from the Cash Collateral Account (or authorize such transfer) to the extent
available therein, disbursements to the accounts, and in the amounts and in the
priority set forth in Section 2.4.1 or 2.4.2, as applicable. Such disbursements
from the Cash Collateral Account shall be made not less frequently than once
every two (2) Business Days and, in any event, on each and every Payment Date.
2.4.1 Prior to the Anticipated Repayment Date:
a. to the Tax and Insurance Reserve Account, up to the amount
required by Section 9.3.1 of the Loan Agreement;
b. to an account designated by the Servicer, up to an amount
equal to the scheduled payment of principal due under the Note and
the interest payable on the outstanding principal balance of the
Loan at the Initial Interest Rate on the Payment Date coinciding
with the end of such Collection Period (collectively, the "Monthly
Debt Service"), to be applied on such Payment Date to the payment of
such principal and interest;
c. to the Ongoing Maintenance Reserve Account, up to the
amount required to be deposited thereto pursuant to Section 9.2.1(b)
of the Loan Agreement, as such amount may be adjusted pursuant to
the terms of the Loan Agreement;
d. to the Building Improvements Reserve Account, up to the
amount required to be deposited thereto pursuant to Section 9.2.1(c)
of the Loan Agreement, as such amount may be adjusted pursuant to
the terms of the Loan
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Agreement;
e. (i) if the Master Lease or a replacement Master Lease shall
be in effect,
(A) if a Low Debt Service Reserve Trigger Event shall
have occurred and a corresponding Low Debt Service Reserve
Return Event shall have not occurred:
(w) to the Operating Account, an amount equal to
the budgeted Operating Expenses (as defined below) with
respect to the calendar month ending within the
Collection Period in question, as set forth in the
Annual Budget approved by Borrower under the Master
Lease and (if required under the Loan Agreement) by
Servicer, subject to the terms of Section 3.4.1,
(x) to Servicer, for payment of any Default
Interest due and owing, up to an amount equal to the sum
of the installments of Minimum Rent (as defined in the
Master Lease), Percentage Rent (as defined in the Master
Lease), if any, and purchase price (if any) payable
pursuant to Section 29.1 of the Master Lease due in each
case on the Rent Payment Date coinciding with the end of
such Collection Period (collectively, the "Master Lease
Installment"), less the sum of the Monthly Debt Service
disbursed pursuant to Section 2.4.1(b) and the amounts
disbursed pursuant to Section 2.4.1(d),
(y) to the Low Debt Service Reserve Account, in an
amount up to the Master Lease Installment, less the sum
of the Monthly Debt Service disbursed pursuant to
Section 2.4.1(b), the amount disbursed pursuant to
Section 2.4.1(d), and the amount disbursed pursuant to
Section 2.4.1(e)(i)(A)(x), and
(z) to the Master Lessee, the balance.
(B) if a Low Debt Service Reserve Trigger Event shall
have not occurred, or if a Low Debt Service Reserve Trigger
Event and a corresponding Low Debt Service Reserve Return
Event shall have occurred,
(w) to the Operating Account, an amount equal to
the budgeted Operating Expenses with respect to the
calendar month ending within the Collection Period in
question, as set forth in the Annual Budget approved by
Borrower under the Master Lease and
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(if required under the Loan Agreement) by Servicer,
subject to the terms of Section 3.4.1,
(x) to Servicer, for payment of Default Interest
then due and owing, up to an amount no greater than the
excess of the Master Lease Installment over the sum of
the Monthly Debt Service disbursed pursuant to Section
2.4.1(b) and the amount disbursed pursuant to Section
2.4.1(d),
(y) to an account designated by the Borrower, up
to an amount equal to the excess of the Master Lease
Installment over the sum of the Monthly Debt Service,
the amount required to be disbursed on account of the
Building Improvements Reserve and the amount required to
be disbursed on account of Default Interest (such
excess, if any, the "Master Lease Installment Balance"),
which shall be applied to the payment of the Master
Lease Installment on the Rent Payment Date (as defined
in the Master Lease) coinciding with the end of such
Collection Period, and
(z) to the Master Lessee, the balance.
(ii) if the Master Lease or a replacement Master Lease shall
not be in effect,
(A) if a Low Debt Service Reserve Trigger Event shall
have occurred and a corresponding Low Debt Service Reserve
Return Event shall have not occurred:
(x) to the Operating Account, an amount equal to
the budgeted Operating Expenses with respect to the
calendar month ending within the Collection Period in
question, as set forth in the Annual Budget approved by
Servicer (if such approval is required under the Loan
Agreement), subject to the terms of Section 3.4.1,
(y) to Servicer, for payment of any Default
Interest due and owing, and
(z) to the Low Debt Service Reserve Account, the
balance.
(B) if a Low Debt Service Reserve Trigger Event shall
have not occurred, or if a Low Debt Service Reserve Trigger
Event and a corresponding Low Debt Service Reserve Return
Event shall have occurred,
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(x) to the Operating Account, an amount equal to
the budgeted Operating Expenses with respect to the
calendar month ending within the Collection Period in
question, as set forth in the Annual Budget approved by
Servicer (if such approval is required under the Loan
Agreement), subject to the terms of Section 3.4.1,
(y) to Servicer, for payment of any Default
Interest due and owing, and
(z) to an account designated by the Borrower, the
balance.
2.4.2 On and subsequent to the Anticipated Repayment Date:
a. to the Tax and Insurance Reserve Account, up to the amount
required by Section 9.3.1 of the Loan Agreement;
b. to the Operating Account, up to an amount equal to the
budgeted Operating Expenses with respect to the calendar month
ending within the Collection Period in question, as set forth in the
Annual Budget approved by Borrower under the Master Lease and (if
required under the Loan Agreement) by Servicer, subject to the terms
of Section 3.4.1;
c. to an account designated by the Servicer, up to an amount
equal to the Monthly Debt Service, to be applied on the Payment Date
coinciding with the end of such Collection Period to the payment of
Monthly Debt Service;
d. to the Ongoing Maintenance Reserve Account, up to the
amount required to be deposited thereto pursuant to Section 9.2.1(b)
of the Loan Agreement, as such amount may be adjusted pursuant to
the terms of the Loan Agreement;
e. to the Building Improvements Reserve Account, up to the
amount required to be deposited thereto pursuant to Section 9.2.1(c)
of the Loan Agreement, as such amount may be adjusted pursuant to
the terms of the Loan Agreement;
f. if the Master Lease or a replacement Master Lease shall
then be in effect, to an account designated by the Servicer, up to
an amount equal to the Master Lease Installment Balance, to be
applied (i) first, to repayment of the principal amount of the Note,
until the principal of the Note has been paid in full, (ii) next, to
the payment of Default Interest due and owing; and (iii) next, to
the payment of the Additional Interest accrued and unpaid on the
Note; and
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g. to the Master Lessee; provided that if the Master Lease or
a replacement Master Lease shall not be in effect, to an account
designated by the Servicer, to be applied first, to repayment of the
principal amount of the Note, until the principal of the Note has
been paid in full; next, to the payment of any Default Interest due
and owing; next, to the payment of Additional Interest accrued and
unpaid on the Note; and thereafter, to Borrower.
2.4.3 Amounts disbursed pursuant to Sections 2.4.1(b) and 2.4.1(d);
clauses (x) and (y) of Sections 2.4.1(e)(i)(A) and 2.4.1(e)(i)(B); and
Sections 2.4.2(c), 2.4.2(e) and 2.4.2(f) shall be deemed, as between Borrower
and Master Lessee, to have been paid on account of the Master Lease
Installment due on the Rent Payment Date coinciding with the end of the
Collection Period in question and in no event shall exceed in the aggregate
the amount of such Master Lease Installment.
2.4.4 As used herein, the term "Operating Expenses" shall have the
meaning given such term in the Loan Agreement, but shall exclude any expenses
that are to be paid from other Reserve Accounts established hereunder, such
as, without limitation, the Tax and Insurance Reserve Account, the Ongoing
Maintenance Reserve Account and the Building Improvements Reserve Account.
2.5 In addition to the Reserve Accounts to be established under Section
2.4, the Servicer will establish a separate Reserve Account for each cash
security required to be delivered pursuant to a specific provision of the Loan
Agreement and not otherwise described above in Section 2.4, including (i)
Proceeds held by the Servicer in accordance with Section 8.1.2 of the Loan
Agreement (a "Casualty/Condemnation Proceeds Reserve Account"), (ii) amounts to
be delivered under Section 5.1(b)(ii)(E) of the Loan Agreement (a "Contest
Reserve Account"), (iii) amounts to be delivered into the "Lease Payment
Account" under Section 7.2(c) of the Loan Agreement (a "Lease Termination
Reserve Account"), and (iv) a Deferred Maintenance Reserve Account required by
Section 9.2.1(a) of the Loan Agreement. Any cash or other security described in
this Section 2.5 shall be deposited to the applicable Reserve Account in the
manner provided for in this Section 2.5, without regard to whether the Reserve
Accounts contemplated by Section 2.4 have been fully funded.
3. Disbursements from Reserve Accounts
3.1 Disbursements shall be made from the Reserve Accounts by the Servicer
in the manner described in the Loan Documents and, with respect to the Tax and
Insurance Reserve Account, as described in Sections 3.2 and 3.3.
3.2 In determining the amount of insurance premiums to be paid and the
amounts to be disbursed from the Tax and Insurance Reserve Account in accordance
with the terms of Section 9.3. of the Loan Agreement, if any insurance is
obtained for one or more of the Mortgaged Properties under a blanket insurance
program of the Master Lessee or its Affiliates,
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then the insurance premiums for the relevant Mortgaged Properties shall be such
properties' allocable share of the blanket insurance premiums (as reasonably
determined by Master Lessee) and Master Lessee shall be entitled to
reimbursement for such premiums at the same time and in the same manner that
Borrower would be entitled thereto under the terms of the Loan Agreement
directly from the Tax and Insurance Reserve Account.
3.3 Provided that the necessary invoices or bills have been provided to
the Servicer by the Master Lessee or Borrower, the Servicer shall pay directly
from the Tax and Insurance Reserve Account all real estate taxes and insurance
premiums (determined in accordance with the last sentence of Section 3.2 to the
extent said sentence is applicable), or, if such amounts are insufficient, from
amounts in the Cash Collateral Account and distributable to the Master Lessee or
from additional funds provided by Borrower or Master Lessee, and the Borrower
and Master Lessee (to the extent such funds are sufficient to make such payments
and the necessary invoices or bills are timely provided as hereinbelow provided)
will be relieved of the obligation to make such payments under the Loan
Documents and Master Lease, respectively. Borrower and/or the Master Lessee
shall promptly send all such invoices or bills to the Servicer. Such payments
shall be made before any fine, penalty, interest or cost may be added for
non-payment, provided that the necessary invoices or bills shall have been
provided to Servicer at least ten (10) days prior to the due date therefor and
sufficient funds are available from the applicable Reserve Account and/or
additional funds provided by the Master Lessee or the Borrower.
3.4 Operating Expenses. From and after the Anticipated Repayment Date,
Master Lessee shall pay Operating Expenses from the Operating Account in
accordance with the terms of the Master Lease, provided that there shall be
added or deducted to such transfers to the Operating Account in accordance with
Section 3.4.1.
3.4.1 Adjustments to Subsequent Disbursements to the Operating
Account. From and after the Anticipated Repayment Date, on or before the 21st
day after each month, Master Lessee will provide Servicer with a statement
showing the difference between Operating Expenses for such month and amounts
disbursed to the Operating Account from the Cash Collateral Account with
respect to such month in accordance with the foregoing, and
(i) to the extent that such Operating Expenses exceed the
amounts so disbursed, then such excess shall be added to the amount next
to be disbursed to the Operating Account in accordance with Section 3.4
hereof; and
(ii) to the extent that amounts so disbursed to the Operating
Account exceeded such Operating Expenses, then such excess shall be
deducted from the amount next to be disbursed to the Operating Account in
accordance with Section 3.4 hereof.
3.5 Ongoing Maintenance Reserve Account Disbursements. Master Lessee shall
have the right to obtain disbursements from the Ongoing Maintenance Reserve
Account for capital improvements, maintenance, replacements and repairs and
personalty repairs and replacement
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made by Master Lessee at, or with respect to, any Mortgaged Property (but
excluding any items to be paid from the Building Improvements Reserve Account),
on the following terms and conditions:
(a) disbursements shall be made only to pay or to reimburse Master
Lessee in respect of actual costs of the work, which costs were approved by
Servicer (such approval not to be unreasonably withheld or delayed) or incurred
for Alterations made in accordance with the terms of the Master Lease (or if no
Master Lease shall be in effect, in accordance with the terms of the Loan
Agreement);
(b) each request for disbursement from any Reserve Account shall be
substantially in a form attached to the Deposit Account Agreement, shall specify
the work for which the disbursement is requested and shall include an Officer's
Certificate certifying that such funds will be applied to pay or reimburse for
materials or work permitted hereunder and done in accordance herewith (which, in
each case, have not been previously paid or reimbursed from funds in any Reserve
Account, but regardless whether such costs were paid or incurred during the
month in respect of which such request is submitted to the Servicer), and copies
of invoices for all items or materials purchased and all contracted labor or
services provided. Master Lessee will not be required to obtain approval of the
Servicer or any other Person for individual expenditures from said Reserve
Account, except as otherwise required by the Master Lease.
(c) Servicer shall have received from Master Lessee evidence
reasonably satisfactory to Servicer that Master Lessee has incurred such
expenses and that the materials for which the request is made are on site at the
applicable Mortgaged Property and are properly secured or have been installed in
such Mortgaged Property;
(d) Servicer shall authorize the disbursement from the applicable
Reserve Account in question, within five (5) Business Days after the receipt of
Master Lessee's request for such disbursement and the satisfaction of the other
conditions set forth above in this Section, but in no event more often than once
in any 15-day period, the amount requested by Master Lessee for such expenses.
3.6 Lease Termination Reserve Account. Disbursements shall be made
from the Lease Termination Reserve Account in the manner provided for in Section
7.2(c) of the Loan Agreement.
4. Security for Loan; Master Lessee's Rights
Borrower's right, title and interest in the funds in the Local
Accounts, Operating Account, the Cash Collateral Account and each Reserve
Account thereof, and all Permitted Investments thereof, are pledged to the
Lender as further security for the Loan pursuant to the Loan Agreement and the
Deposit Account Agreement, which pledge is subject to the interests of the
Master Lessee in the manner described in Section 7.6 hereof. The authority of
the Master
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Lessee to pay Operating Expenses in the manner set forth in this Exhibit shall
not be terminated, unless the Master Lease shall have been terminated in
accordance with its terms and until all Operating Expenses incurred or
contracted for prior to or as a result of such termination have been paid or an
amount sufficient to pay such expenses is set aside in a reserve. Unless and
until the Master Lease is terminated in accordance with its terms, and all
expenses to be paid for with, or reimbursed from, funds in a Reserve Account
that were incurred prior to the termination shall have been paid in full (or an
amount sufficient to pay such expenses has been set aside as a reserve), (i) the
Servicer shall not freeze or otherwise restrict the ability of the Master Lessee
to obtain disbursements of funds from such Reserve Account in accordance with
the terms hereof and shall not apply funds on deposit in such Reserve Account to
the repayment of the Note, (ii) the right of the Master Lessee to direct the
expenditure of funds in any Reserve Account in accordance with the terms hereof
shall not be terminated unless otherwise agreed to by the Servicer, the Borrower
and the Master Lessee, and (iii) Servicer shall continue to pay, or reimburse
the Master Lessee for, real estate taxes and insurance premiums from the Tax and
Insurance Reserve Account.
5. Investment of Funds in Accounts
5.1 Borrower shall have the right to instruct the Servicer (or the
"Deposit Bank" as defined in the Deposit Account Agreement) to invest funds in
the Deferred Maintenance Reserve Account, the Building Improvements Reserve
Account and the Low Debt Service Coverage Reserve Account, at the risk of and
for the benefit of Borrower, in Permitted Investments.
5.2 Master Lessee (absent an "Event of Default" as defined in the
Master Lease) and Borrower (if no Master Lease or replacement Master Lease is in
effect or if there is continuing an Event of Default under the Master Lease)
shall have the right to instruct the Servicer (or the Deposit Bank) to invest
funds in the Cash Collateral Account, Tax and Insurance Reserve Account, the
Ongoing Maintenance Reserve Account and the Operating Account, as well as any
other Reserve Account described in Section 2.5 hereof and funded by the Master
Lessee, as well as any Casualty/Condemnation Proceeds Reserve Account, in each
case at the risk of and for the benefit of Master Lessee or Borrower, as
applicable, in Permitted Investments.
5.3 Upon the occurrence of an Event of Default under the Loan
Agreement, Servicer shall have the right to issue investment instructions that
Borrower may otherwise issue pursuant to the above terms of this Section 5.
6. Notice of New Accounts
Master Lessee and Borrower, as applicable, shall notify the Servicer
in writing of the account name and account number of any Local Account and of
each supplemental or replacement account established by the Master Lessee or
Borrower, as applicable, from time to
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time in connection with the Mortgaged Property, and the institution in which
each such account is maintained. The Master Lessee shall not change any Local
Account without obtaining the consent of the Servicer, which shall not be
unreasonably withheld or delayed. If any Local Account shall be changed, or any
new Local Account shall be opened, by the Master Lessee or Borrower, such Local
Account shall comply with all of the requirements set forth above in Section 1
hereof, and the Master Lessee or Borrower, as the case may be, shall send a
notice to the Servicer, specifying the new or changed Local Account and the
Local Account replaced thereby.
Master Lessee or Borrower shall have the right to request that the
Servicer change the depositary bank for the Cash Collateral Account, the Reserve
Accounts and the Operating Account, provided that the account shall satisfy the
requirements of an Eligible Account.
7. General
7.1 The Servicer shall permit the Master Lessee and Borrower
to have electronic access (via standard telephone lines) to information each
Business Day, and shall provide to the Master Lessee and Borrower such
information as the Master Lessee or Borrower may reasonably request, regarding
activity (including disbursements) and balances and source of receipts in the
Cash Collateral Account, the Reserve Accounts, the Operating Account and any
other accounts maintained by Servicer pursuant to this Exhibit.
7.2 Unless the context specifies otherwise, transfers of funds
held in any account that are required by this Exhibit shall require only the
transfer of available funds.
7.3 The Servicer may rely conclusively on written instructions
(which may be sent by facsimile) that the Master Lessee shall provide as to the
amounts to be disbursed from the Cash Collateral Account to the Operating
Account and from the Ongoing Maintenance Reserve Account to Master Lessee, and
such disbursements shall be effected pursuant to instructions given to Servicer
(with a copy to Borrower) prior to 11:00 a.m. (New York time) at least two (2)
Business Day prior to disbursement. The Servicer shall have no duty to
recompute, recalculate, or verify the data contained in such instructions or
information and shall incur no liability to the Master Lessee if the Servicer
acts in accordance therewith.
7.4 All transfers required to be made hereunder shall be
effected by federal wire, automated clearing house funds, or other transfer of
next-day available funds, provided that any such transfer required to be made
within five days prior to a Payment Date shall be made by federal wire of
immediately available funds.
7.5 If, on any Payment Date, the amount in the Cash Collateral
Account shall be sufficient to make the transfer described in clause (b) of
Section 2.4, Borrower shall be deemed to have paid the Monthly Debt Service
unless Servicer is legally constrained from effecting such transfer in
accordance with said Section, including by reason of any
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bankruptcy or insolvency related to Borrower (but excluding any legal constraint
applicable to Lender or Servicer but not related to Borrower).
7.6 It is acknowledged by Lender, Servicer and Borrower that
(i) the funds in the Local Accounts, Cash Collateral Account, Ongoing
Maintenance Reserve Account, the Building Improvements Reserve Account (in
certain cases) and Operating Account belong in part to the Master Lessee, (ii)
Master Lessee has agreed to these Cash Management Procedures to secure Master
Lessee's obligations under the Master Lease, and (iii) Master Lessee is not
guaranteeing the performance of Borrower under the Loan Documents and Master
Lessee is not hereby, or in any other agreement or instrument, pledging its
right, title or interest in or to the Local Accounts, Cash Collateral Account,
Ongoing Maintenance Account, Building Improvements Reserve Account or Operating
Account, or the funds therein, the earnings, income or interest thereon, or the
proceeds thereof, for the performance of or compliance with Borrower's
obligations and covenants under the Loan Documents (except insofar as Master
Lessee has expressly obligated itself for such performance or compliance under
the terms of the Master Lease). Accordingly, any foreclosure by Lender on the
interests of Borrower in any of the Local Accounts, Cash Collateral Account,
Ongoing Maintenance Account, Building Improvements Reserve Account or Operating
Account shall be subject to the right, title and interest of Master Lessee in
and to such accounts, the funds therein, all earnings, income and interest
thereon or the proceeds thereof. In light of and without limiting the foregoing,
upon acceleration of the maturity of the Note following an Event of Default, if
the Master Lease shall be in effect (subject to Section 7.8 below), the Lender
shall be entitled to apply all of the funds held in such Reserve Accounts solely
for the purposes for which each such Reserve Account was established, subject to
the rights of the Master Lessee under the Master Lease, and any right of the
Lender under any Loan Document that purports to permit the Lender or Servicer to
withdraw or utilize funds from the Cash Collateral Account or any other Reserve
Account upon a default or other occurrence with respect to Borrower shall not be
exercised in contravention of the rights of the Master Lessee under the Master
Lease.
7.7 During the period during which an "Event of Default" (as
defined in the Master Lease or any replacement Master Lease) shall have occurred
and be continuing, no disbursements hereunder shall be made to the Master Lessee
except with the approval of Borrower and Servicer, each acting reasonably,
provided that to the extent Borrower or (in accordance with the Loan Documents)
Servicer has incurred or paid a cost or expense for which a Reserve Account was
established (e.g., Borrower or Servicer shall have performed a capital repair to
be funded from the Ongoing Maintenance Reserve Account, completed an item of
"Deferred Maintenance" or paid real estate taxes), then the amount of such cost
and expense shall be disbursed to Borrower or Servicer, as applicable, from the
applicable Reserve Account.
7.8 At any time as the Master Lease (or any replacement Master
Lease permitted under the Loan Agreement) shall not be in effect, all references
herein to the Master Lessee shall be deemed to refer to the Borrower.
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7.9 Nothing herein shall be deemed to affect in any respect
the rights and remedies of Borrower as against the Master Lessee upon its
default under the Master Lease.
7.10 Lender, Servicer and Borrower each agrees that it shall
give instructions to the Deposit Bank, as defined in the Deposit Account
Agreement, so as to give effect to and implement the terms hereof. In the event
of any conflict between the terms of this Exhibit and the Deposit Account
Agreement, or between the terms of this Exhibit and the other portions of the
Loan Agreement, in each case with respect to the rights and obligations as
between or among Lender (or Servicer), Borrower and/or Master Lessee, the terms
of this Exhibit shall control. Master Lessee agrees that it shall give
instructions to the banks maintaining the Local Accounts so as to give effect to
and implement the terms hereof.
7.11 Lender and Servicer each agrees that in the event any
funds from properties or other assets that are not part of the Mortgaged
Properties are inadvertently deposited to any of the Local Accounts or the Cash
Collateral Account, Lender or Servicer shall promptly instruct the Deposit Bank
or any other relevant depositary institution to redeliver such funds as promptly
as practicable, and no security interest in favor of the Lender shall attach to
such funds, provided that nothing herein shall be deemed to modify Borrower's
representations, warranties and covenants set forth in Schedule 4B to the Loan
Agreement.
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EXHIBIT 15.1
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT is made by and among URS Real Estate, L.P., a Delaware
limited partnership ("Lessor"), URS Logistics, Inc., a Delaware corporation
("Tenant"), and Goldman Sachs Mortgage Company, a New York limited partnership
(together with its successors and assigns "Lender") pursuant to that certain
Loan Agreement (the "Loan Agreement") , dated as of April 22, 1998, by and
between Lender and Landlord.
W I T N E S S E T H
WHEREAS, under a certain master lease dated April 22, 1998 (hereinafter
referred to as the "Lease"), Landlord did lease, let and demise the property
(hereinafter called the "Leased Property"), as described in the Lease to Tenant
for the period of time and upon the covenants, terms and conditions therein
stated; and
WHEREAS, the Lease has not been further amended or modified; and
WHEREAS, by making a mortgage loan, Lender became the owner of an
indebtedness and holder of a certain Note or Notes, secured by first priority
mortgages, deeds of trust and deeds to secure debt (collectively, the
"Mortgages"), which shall constitute liens upon the property described in said
Mortgages and as described in Exhibit A attached hereto (the "Mortgaged
Premises"), and is secured by an assignment of Landlord's interest in the Lease
as more particularly set forth in the Mortgage; and
WHEREAS, Landlord and Tenant acknowledge and agree to the aforesaid
assignment of Landlord's interest in the Lease; and
WHEREAS, Lender desires the Lease and all rights of the Tenant thereunder
to be subordinate to the Mortgage and all rights of Lender thereunder, and the
Tenant desires Lender's assurance not to disturb Tenant's rights of possession
of the Leased Property under the Lease in the event that Lender exercises its
remedies as a Lender under the Mortgages;
NOW THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
Section 1.
The Lease, as the same may heretofore and hereafter be modified, amended
or extended, is and shall be subject and subordinate to Mortgages on the
Mortgaged Premises, to each and every advance made or hereafter made under the
Loan Agreement, and
<PAGE> 104
to all renewals, modifications, consolidations, replacements and extensions of
the Mortgages.
Lender agrees that it shall make available to Tenant the insurance policy
proceeds and condemnation awards (or payments made in anticipation thereof or in
connection therewith) in accordance with the terms of Section 10.2(b) and
10.2(d) of the Lease.
Section 2.
So long as no default by Tenant has occurred and has continued to exist
for such period of time (after notice, if any, required by the Lease) as would
entitle Landlord to terminate the Lease (hereinafter called an "Event of
Default"), (A) Lender shall not, in any foreclosure action or proceeding which
may be instituted or taken by Lender under any Mortgage by reason of any default
thereunder, evict Tenant from the Leased Premises by the Lease, or terminate or
disturb Tenant's leasehold estate under the Lease, and (B) none of Tenant's
rights under the Lease shall be disturbed by reason of any default under any of
the Mortgages.
Section 3.
Tenant shall give Lender copies of all notices and other communications
given by Tenant to the Landlord under the Lease relating to defaults on the part
of the Landlord under the Lease.
Section 4.
In the event of any act or omission by Landlord which would give Tenant
the right, either immediately or after the lapse of a period of time, to
terminate the Lease, or to claim a partial or total eviction, Tenant will not
exercise any such right (A) until it has given written notice of such act or
omission to Lender by delivering such notice of such act or omission by
certified mail, return receipt requested, addressed to Lender at the address
specified under Section 7 hereof, and (B) until a reasonable period of time (not
less than thirty (30) days) for remedying such act or omission shall have
elapsed following giving of such notice and following the time when Lender shall
have become entitled under the Mortgages or any additional mortgage to remedy
the same, provided Lender, with reasonable diligence, shall (i) have pursued
such remedies as are available to it under the Mortgages so as to be able to
remedy the act or omission, and (ii) thereafter shall have commenced and
continued to remedy such act or omission or cause the same to be remedied.
Section 5.
Without limitation of any of the provisions of the Lease, in the event
that, by reason of any default on the part of the Landlord, Lender or its
assigns shall succeed to the interest of
<PAGE> 105
Landlord or any successor to Landlord, then subject to the provisions of this
Agreement the Lease shall nevertheless continue in full force and effect and
Tenant shall attorn to Lender or its assigns and shall recognize Lender or its
assigns as its landlord. Upon request of Lender, Tenant shall execute and
deliver to Lender or its assigns an agreement of attornment. If Lender or its
assigns shall succeed to the interest of Landlord or any successor to Landlord,
in no event shall Lender be obligated to remedy and default, nor shall Lender or
its assigns have any liability under the Lease prior to the date Lender or its
assigns shall succeed to the rights of Landlord or any successor to Landlord
under the Lease, nor any liability for offsets or defenses which Tenant might
have had against Landlord or any successor to Landlord. Lender and its assigns
shall have no personal liability as successor to Landlord, and Tenant shall look
only to the estate and property of Lender or its assigns (as applicable) in the
Mortgaged Premises or the proceeds thereof for the satisfaction of Tenant's
remedies for the collection of a judgment (or other judicial process) requiring
the payment of money in the event of any default by Lender and its assigns as
Landlord under the Lease. No other property or assets of Lender or its assigns
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to the Lease, the
relationship of Landlord and Tenant thereunder or Tenant's use or occupancy of
the Leased Property.
Section 6.
Tenant has not subordinated the Lease or any of its rights under the Lease
to any lien or mortgage other than the Mortgage prior to the date hereof, and it
will not subordinate the Lease or the rights of the Tenant thereunder to any
lien or mortgage other than the Mortgage without the prior written consent of
Lender, unless otherwise permitted under the Lease. If Tenant at any time
acquires the interest of the Landlord under the Lease, the Lease will remain in
full force and effect and the interests of the Tenant and the Landlord under the
Lease will not merge.
Section 7.
All notices, demands, requests, consents, approvals and other
communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to
respective parties, as follows:
(a) if to Tenant:
URS Logistics, Inc.
One Concourse Parkway, Suite 450
Atlanta, Georgia 30328
Attention: Chief Executive Officer
<PAGE> 106
with a copy to:
Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Jonathan Eady, Esq.
(b) if to Lender:
Goldman Sachs Mortgage Company
85 Broad Street
New York, New York 10004
Attn: Steven T. Mnuchin
with a simultaneous copy, under separate cover, to:
GMAC Commercial Mortgage Servicing Acquisitions
Department
650 Dresher Road
Horsham, Pennsylvania 19044
Attention: Ingrid Olson
or as to each party, to such other address as the party may designate by a
notice given in accordance with the requirements contained in this Section 7.
Section 8.
No prepayment of rent or additional rent due under the Lease of more than
one month in advance, and no amendment, modification, surrender or cancellation
of the Lease, shall be binding upon Lender, as holder of the Mortgages or as
Landlord under the Lease if it succeeds to that position, unless consented to in
writing by Lender. In addition, Lender as holder of the Mortgages or as Landlord
under the Lease if it succeeds to that position shall in no event have any
liability for the performance or completion of any work to make improvements to
the Mortgaged Premises.
Section 9.
If at any time Lender shall notify Tenant that an Event of Default has
occurred under the Mortgage and shall demand that any then unpaid rent or
additional rent and any rent or additional rent thereafter payable under the
Lease be paid directly to Lender, then Tenant shall thenceforth and until
notified by Lender that the matter in default has been paid or remedied pay such
rent or additional rent to Lender as the same becomes due under the Lease,
without the necessity for further notice and without obligation on the part of
Tenant to inquire whether
<PAGE> 107
or not default under the Mortgage occurred or has been remedied. Any such
payment made by the Tenant to Lender shall discharge in full Tenant's obligation
to make that payment to Landlord.
Section 10.
This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall apply to, bind and inure to the benefit of the parties hereto
and their respective successors and assigns. As used herein "Lender" shall
include any subsequent holder of the Mortgage. This Agreement shall supersede
and replace any agreement entered into prior to the date hereof by Tenant (or
any predecessor in interest of Tenant under the Lease) with any previous holder
of a mortgage covering the Mortgaged premises, which has been assigned to
Lender.
Section 11.
This Agreement shall be construed in accordance with the laws of the State
in which the Leased Property is situate.
[remainder of page intentionally left blank]
<PAGE> 108
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed, sealed and delivered in their respective names and in their behalf;
and if a corporation, by its officers duly authorized, as of this 22nd day of
April, 1998.
Landlord:
URS REAL ESTATE, L.P., a Delaware limited
partnership
By: URS Realty, Inc., its general partner
By:
-----------------------------------------
Tenant:
URS LOGISTICS, INC., a Delaware corporation
By:
---------------------------------------------
Lender:
GOLDMAN SACHS MORTGAGE COMPANY, a
New York limited partnership
By: Goldman Sachs Real Estate Funding Corp., its
general partner
By:
----------------------------------------
J. Theodore
Authorized Signatory
<PAGE> 109
STATE OF )
) SS.:
COUNTY OF )
On this day of , 1998, before me personally came to me
known, who being by me duly sworn, did depose and say that he resides at
, that he is the of
, the trust described in and which executed the foregoing as
authorized signatory and on behalf of ; that he knows the seal of said trust,
that the seal affixed to said instrument is such trust seal, that it was so
affixed by order of the board of trustees of said trust, and that he signed his
name thereto by like order. In witness whereof I hereunto set my hand and
official seal.
-----------------------
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this ________ day of ______________, 1998, before me personally came
______________ to me known, who by me being duly sworn, did depose and say that
he resides at ________________________, that he is the ________________________
of Goldman Sachs Real Estate Funding Corp., the general partner of Goldman Sachs
Mortgage Company, the limited partnership described in and which executed the
foregoing instrument; that it was executed by authority of the board of
directors of said corporation and that he signed his name thereto by like
authority; and he acknowledged to me that said instrument was executed by said
corporation for and on behalf of said limited partnership for the purposes
therein mentioned.
-----------------------
Notary Public
(Notarial Seal)
<PAGE> 110
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this _________ day of ___________, 1998, before me personally came to
me known, who being by me duly sworn, did depose and say that he resides at
_________________________, that he is the _____________________ of
_______________________, the corporation described in and which executed the
foregoing instrument; that he knows the seal of said corporation, that such
corporate seal was affixed to the foregoing instrument; that it was so affixed
by order of the Board of Directors of said Corporation, and who thereupon signed
his name thereto by like order. In witness whereof I hereunto set my hand and
official seal.
-----------------------
Notary Public
(Notarial Seal)
<PAGE> 111
Exhibit 26.1
Deferred Maintenance Conditions (Environmental)
[omitted]
<PAGE> 1
Exhibit 10.3
FIRST AMENDMENT TO MASTER LEASE AGREEMENT, dated as of March 10,
1999 (this "Amendment"), between URS REAL ESTATE, L.P., a Delaware limited
partnership, and URS LOGISTICS, INC., a Delaware corporation.
W I T N E S E T H:
WHEREAS, the parties hereinabove named are parties to a certain
Master Lease Agreement (the "Lease"), dated as of April 22, 1998 (all
capitalized terms used but not defined herein shall have the meaning given such
terms in the Lease); and
WHEREAS, the parties wish to amend the Lease to better express in
certain respects their agreement with respect to the Lease.
NOW, THEREFORE, for TEN DOLLARS and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Section 1.4 of the Lease is hereby amended and restated
in its entirety to read as follows:
"1.4. Initial Term. The initial term of this Lease (the "Initial
Term") shall commence on the Commencement Date and shall expire on
February 28, 2014, unless otherwise terminated as provided herein."
Section 2. Section 1.5(a) of the Lease is hereby amended and rested
in its entirety to read as follows:
"1.5 Renewal Terms. Provided (i) no Event of Default shall have
occurred and be continuing hereunder or under the Other Leases and (ii)
the tenant under each of the Other Leases shall have exercised its
respective renewal option under the applicable Other Lease to the extent
the same is available, Tenant shall have the right to renew this Lease (as
to all, but not less than all, the Leased Property subject to this Lease
at such time) for two (2) successive five (5) year terms ("Extended
Terms") upon giving written notice to Landlord of each such renewal at
least eighteen (18) months prior to the termination of the then current
Term. During each such Extended Term, all of the terms and conditions of
this Lease shall continue in full force and effect, except that the
Minimum Rent for and during each Extended Term shall be the greater of (i)
the then current fair market rental ("Fair Market Rental"), which unless
otherwise mutually agreed to by Landlord and Tenant shall be determined by
the appraisal procedure set forth in Article XXIV and (ii) the Minimum
Rent for the Lease Year immediately preceding the Extended Term plus five
percent (5%). Tenant's failure to exercise its renewal option as to the
first Extended Term shall
<PAGE> 2
result in the loss of its renewal option as to the second Extended Term.
As used herein, the term "Other Leases" shall refer to, collectively, (i)
that certain Master Lease Agreement, dated as of February 28, 1999,
between Americold Corporation, as landlord, and AmeriCold Logistics, LLC,
as tenant, as amended, (ii) that certain Master Lease Agreement, dated as
of April 22, 1998, between Americold Real Estate, L.P., as landlord, and
Americold Corporation, as tenant, as amended, and (iii) such other Master
Lease Agreements as may be entered into from time to time between Landlord
or its Affiliates and Tenant or its Affiliates."
Section 3. The definition of "Pre-Approved Party" is hereby amended
and restated in its entirety to read as follows:
""Pre-Approved Party" shall mean (i) URS Logistics, Inc., a
Delaware corporation; (ii) Americold Corporation, an Oregon
corporation; (iii) any Person with or into which URS Logistics, Inc.
and/or Americold Corporation is merged on consolidated or to which
URS Logistics, Inc. and/or Americold Corporation transfer all or
substantially all of its or their assets or which succeeds to all or
substantially all of the business of URS Logistics, Inc. and/or
Americold Corporation; (iv) any Person fifty-one percent (51%) or
more owned, directly or indirectly, and controlled by one or more or
more of the Persons identified in clauses (i) - (iii) above; (v) any
Person in which one or more Persons described in clauses (i) - (iv)
above are sole operating partners or managing members; (vi) any
other Person as to which Tenant shall have obtained a Rating
Confirmation; and (vii) any Landlord's Lender that acquires Tenant's
interest in this Lease by foreclosure or any action in lieu
thereof."
Section 4. The definition of the term "Vornado Operating" is hereby
amended and restated in its entirety to read as follows:
""Vornado Operating" shall mean Vornado Operating Company, a
Delaware corporation formerly known as Vornado Operating, Inc."
Section 5. Section 3.1(a) and Section 3.1 (b) of the Lease is hereby
amended and restated in its entirety to read as follows:
"3.1 Rent. Tenant will pay to Landlord, in lawful money of the
United States of America which shall be legal tender for the payment
of public and private debts, at Landlord's address set forth above
or at such other place or to such other person, firms or
corporations as Landlord may designate in writing from time to time,
(i) Minimum Rent (as defined below), and (ii) Percentage Rent;
provided that so long as the Initial Landlord's Debt is outstanding
and Landlord is the "Borrower" thereunder, Minimum Rent and
-2-
<PAGE> 3
Percentage Rent shall be paid in accordance with the Cash Management
Procedures. In addition, Tenant will pay to Landlord or the Person
otherwise entitled thereto all Additional Charges during the Term on
or before the same are delinquent.
(a) Minimum Rent:
(i) For the period commencing on the Commencement Date through
December 31, 2003, the sum of THIRTY SEVEN MILLION SEVEN HUNDRED
TWENTY-FIVE THOUSAND AND 00/100 DOLLARS ($37,725,000.00) per annum.
(ii) For the period commencing on January 1, 2004 through
December 31, 2008, the sum of THIRTY NINE MILLION ONE HUNDRED
EIGHTY-ONE THOUSAND AND 00/100 DOLLARS ($39,181,000.00) per annum.
(iii) For the period commencing on January 1, 2009 through
February 28, 2014, the greater of (x) FORTY ONE MILLION ONE HUNDRED
FORTY THOUSAND AND 00/100 DOLLARS ($41,140,000.00) per annum and (y)
the Fair Market Rental of the Leased Property, which unless
otherwise mutually agreed to by Landlord and Tenant shall be
determined by the appraisal procedure set forth in Article XXIV.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable from the Commencement
Date through (and including) the Rent Payment Date in arrears in twelve (12)
equal installments on the eleventh (11th) day of each calendar month of the
Initial Term and each Extended Term (the "Rent Payment Date"); provided that if
such 11th day is not a Business Day, then the Rent Payment Date shall be the
next preceding Business Day. Minimum Rent shall be paid for the period of the
eleventh (11th) of each month (or, if applicable, the Commencement Date) through
the tenth (10th) of the next month (or, if applicable, the expiration of the
Term) (each, a "Rental Period"), provided that the first and last payments of
Minimum Rent shall be prorated as to any partial Rental Period, based on the
number of days within the Term during such Rental Period and the number of days
in such Rental Period. The first installment payment of Minimum Rent shall be
payable on May 11, 1998, for the Rental Period beginning with the Commencement
Date and ending May 10, 1998.
Notwithstanding the foregoing, for the period commencing with the
date hereof and expiring on the third (3rd) anniversary of the date hereof, to
the extent that Available Cash is less than the amount of Fixed Rent and
Percentage Rent, as certified by Tenant (together with reasonable documentation
thereof) and agreed to by Landlord, the Fixed Rent and Percentage Rent shall
accrue, and the payment thereof (together with interest at the Interest Rate)
-3-
<PAGE> 4
shall be deferred to, the earlier of (A) the third (3rd) anniversary of the
date hereof and (B) such date as Available Cash shall be available, to the
extent of such Available Cash (and Available Cash shall be applied first to
interest and then to the accrued Fixed Rent), provided that the maximum amount
of Fixed Rent that may be deferred under this paragraph shall be twenty percent
(20%) of the stated Fixed Rent obligation. As used herein, "Available Cash"
shall be Receipts less Operating Expenses. In no event, however, shall the rent
deferral permitted hereunder be such that Landlord will have insufficient cash
flow to service Landlord's Debt.
(b) Percentage Rent:
(i) Generally; Payment in Installments. In addition to the Minimum
Rent payable with respect to the Leased Property, Tenant shall pay
Percentage Rent for each Lease Year. Percentage Rent shall be payable
quarterly in arrears in four (4) installments, on the Rent Payment Date
occurring in April, July, August and January of each Lease Year, in
respect of the quarter ending in the prior month, commencing in April,
1999. Each quarterly installment shall be based on, and accompanied by, an
Officer's Certificate setting forth Tenant's current estimated Receipts
for the Leased Property (on a Leased Property-by-Leased Property basis) on
a cumulative basis for the period commencing with the Lease Year through
the end of the quarter in question, and shall take into account previous
installments paid in respect of such Lease Year.
(ii) Presentation of Certificate and Audit. Not later than the
120th day following the end of each Lease Year, Tenant shall deliver to
Landlord an Officer's Certificate setting forth the Receipts for the
Leased Property (on a Leased Property-by-Leased Property basis) (a) for
the such Lease Year and (b) for each individual calendar quarter during
such Lease Year, together with an audit of such Receipts conducted by a
"Big Six" firm of independent certified public accountants proposed by
Tenant and approved by Landlord (which approval shall not be unreasonably
withheld or delayed). Tenant shall utilize, or cause to be utilized, an
accounting system for the Leased Property in accordance with its usual and
customary practices and in accordance with GAAP, which will accurately
record Receipts for the Leased Property. Tenant shall retain such records,
for at least three (3) years after the expiration of each Lease Year.
(iii) Confirmation of Percentage Rent. Landlord, at its own expense,
except as provided herein below, shall have the right, exercisable by
Notice to Tenant within two (2) years after receipt of the applicable
Officer's Certificate referred to in clause (ii) above, by its accountants
or representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns).
-4-
<PAGE> 5
(iv) Adjustments of Percentage Rent. If the certificate or audit
described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a deficiency in the payment of Percentage Rent and
any differences between the parties are resolved (which, absent the
parties' agreement shall be determined pursuant to arbitration in
accordance with Schedule 15.4), Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as determined or
agreed upon or compromised as aforesaid, is more than four percent (4%) of
the Receipts reported by Tenant for such Lease Year and, as a result,
Landlord did not receive at least ninety-five percent (95%) of the
Percentage Rent payable with respect to such Lease Year, Tenant shall pay
the reasonable cost of such audit and examination. If the certificate or
audit described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a overpayment of Percentage Rent and any
differences between the parties are resolved (which, absent the parties'
agreement shall be determined pursuant to arbitration in accordance with
Schedule 15.4), then (provided no Event of Default has occurred and is
continuing) Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at the
Interest Rate accruing from the date of payment by Tenant until the date
such credit is applied. If such credit cannot be made because the Term has
expired prior to application in full thereof, then (provided no Event of
Default has occurred and is continuing and provided Tenant has paid all
amounts required under this Lease), Landlord shall repay the unapplied
balance of such credit to Tenant.
(v) Maximum Adjustments of Percentage Rent. Notwithstanding the
foregoing, in no event shall Tenant be permitted under Section
3.1(b)(iv) a credit or refund in respect of Percentage Rent in excess of
20 percent of the aggregate installments of Percentage Rent paid in
respect of any Lease Year pursuant to Section 3.1(b)(i).
(vi) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public information, (2) disclosed to the extent that Landlord is
advised by counsel that Landlord is required to disclose such information
by subpoena, court order, securities laws and regulations, any other laws
or regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to any Landlord's Debt, provided that,
with respect to the disclosures permitted under clause (4),
-5-
<PAGE> 6
Landlord shall obtain the agreement of the Persons to whom disclosure is
made to maintain such information as confidential in accordance with terms
of this Subsection (iv) and in no event shall public or Rule 144A holders
of Landlord's Debt be permitted to receive such information on an
individual Leased Property basis.
(vii) Survival. The obligations of Tenant and Landlord contained in
this Section 3.1 shall survive the expiration or earlier termination of
this Lease."
Section 6. Section 8.1(i) of the Lease is hereby amended and
restated in its entirety to read as follows:
"(i) "For any Material Alteration (other than a Material
Alteration the cost of which one or more Subtenants are obligated to
pay for or reimburse to Tenant and which Tenant reasonably believes
will be so paid or reimbursed in a timely manner), Tenant shall be
obligated to deliver to a Depositary Eligible Collateral in an
amount that, when taken together with any amount then in any reserve
account funded pursuant to the Cash Management Procedures and
permitted to be used in connection with such Material Alteration,
shall be sufficient to pay all of the costs of the Material
Alteration in excess of the Threshold Amount, which Eligible
Collateral shall be held by the Depositary and released to Tenant as
such work progresses in accordance with Section 8.1(j). In addition,
if all Material Alterations (other than a Material Alteration the
cost of which one or more Subtenants are obligated to pay for or
reimburse to Tenant and which Tenant reasonably believes will be so
paid or reimbursed in a timely manner) then being performed exceeds
$15,000,000 (the "Aggregate Threshold Amount"), Tenant shall be
obligated to deliver to the Depositary Eligible Collateral in amount
that, when taken together with (x) any Eligible Collateral
previously delivered under this subsection (i) and (y) any amounts
then in any reserve funded pursuant to the Cash Management
Procedures and permitted to be used in connection with such Material
Alteration, shall be sufficient to pay all of the costs of the
Material Alteration in excess of the Aggregate Threshold Amount,
which Eligible Collateral shall be held by the Depositary and
released to Tenant at such time as the remaining costs of the
Material Alteration are less than the Aggregate Threshold Amount."
Section 7. Section 9.1(b) of the Lease is hereby amended and
restated in its entirety to read as follows:
"(b) Notwithstanding anything herein to the contrary, Landlord
shall promptly make all necessary and appropriate repairs and
replacements to the Leased Property (other than those repairs and
replacements (i) caused by the negligence or wilfull misconduct of
Tenant or any Person claiming by,
-6-
<PAGE> 7
through or under Tenant or (ii) required as a result of Casualty or
Condemnation to the Leased Property) the costs of which are required
to be depreciated under the Internal Revenue Code on a 39-year basis
(or any successor period of depreciation for buildings), provided
that Tenant shall make such repairs or pay such expenditures (as
applicable) to the extent the same exceed, on a cumulative basis,
$1,000,000 per annum, increased 5 percent as of January 1, 2003 and
January 1, 2008. Landlord's obligation pursuant to the prior
sentence, however, shall be subject to prior reasonable notice from
Tenant as to the need to make such repair and replacement. Further,
Landlord may elect that Tenant perform such repair and replacement,
in which event, Landlord shall reimburse or pay to Tenant, within
fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in
making such repairs and replacements. Further, Tenant agrees that
(A) it shall expend annually for the repair and replacement of
39-Year Property not less than $4,722,540 for the period from the
Commencement Date through December 31, 1999, increasing by 5%
annually for each succeeding Fiscal Year (such amount, the "Minimum
Tenant's Responsibility"), provided that Tenant shall not be deemed
to have expended any amounts in satisfaction of the Minimum Tenant's
Responsibility until such time as Tenant shall have expended all
amounts required to be spent by Tenant under Section 2.3 of the
Asset Purchase Agreement in connection with which this Lease is
being assigned, dated as of the date hereof, to which Tenant (or its
assignee) is party, (B) to the extent Tenant shall have spent less
than the specified amount in any Lease Year, such unspent amount
shall cumulate and Tenant shall be required to expend the unspent
portion in subsequent Lease Years, and (C) if at the end of the
Term, there shall be any cumulative unspent amounts, Tenant shall
pay such amount to Landlord not later than the end of the Term."
Section 8. Section 15.4 of the Lease is hereby amended and restated
in its entirety to read as follows:
"15.4 Modifications to Secure Financing. If any Superior Party
or prospective Superior Party shall request modifications of this
Lease as a condition to the provision, continuance or renewal of any
such financing, Tenant will not unreasonably withhold, delay or
defer its consent thereto, provided that (i) either such
modifications do not materially increase the obligations of Tenant
hereunder or materially adversely affect Tenant's rights under this
Lease or (ii) if such modifications would materially increase the
obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, then Landlord shall compensate
Tenant for the same. Disputes as between Landlord and Tenant
regarding whether a proposed modification would materially increase
the obligations of Tenant hereunder or
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<PAGE> 8
materially adversely affect Tenant's rights under this Lease, and
the compensation that would be payable to Tenant as a result thereof
shall be determined by arbitration in accordance with the terms of
Schedule 15.4 hereto."
Section 9. Section 25.1 of the Lease is hereby amended and restated
in its entirety to read as follows:
"25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or
an Affiliate of Landlord intends to elect to qualify as a real estate
investment trust ("REIT"). Accordingly, unless otherwise notified by
Landlord, the following requirements (the "REIT Requirements") must be
satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or a portion of the amounts paid by Tenant to Landlord
hereunder to fail to qualify as "rents from real property" within the
meaning of Section 856(d) of the Code.
(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and
agrees to use reasonable efforts to cause its Affiliates, to use their
best efforts to permit the REIT Requirements to be satisfied. Tenant
agrees, and agrees to use reasonable efforts to cause its Affiliates, to
cooperate in good faith with Landlord or to ensure that the REIT
Requirements are satisfied, including providing Landlord with information
about the ownership of Tenant, and its Affiliates to the extent that such
information is reasonably available. In addition, Tenant agrees, and
agrees to cause its Affiliates, to cooperate with Landlord in connection
with any additional requirements relating to Landlord's qualification as a
REIT arising from and after the
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<PAGE> 9
date hereof. Immediately after becoming aware that the REIT Requirements
are not, or will not be, satisfied, Tenant shall notify Landlord of such
noncompliance.
Section 10. Section 29.1 of the Lease is hereby amended and restated
in its entirety to read as follows:
"29.1 Landlord's Option to Purchase Tenant's Personal Property.
Tenant hereby grants Landlord the option to purchase all of the equipment
and personal property (tangible and intangible) that is employed by Tenant
in connection with the use and operation of each of the Properties, and
the business conducted thereat, including any interest of Tenant in the
warehousing and customer contracts (to the extent the same is assignable)
and the interest of Tenant in any equipment leases and the like. Such
option shall be exercisable by Landlord at any time prior to the date of
expiration or earlier termination of this Lease in respect of a Property
and the conveyance in respect thereof shall be consummated (and the
payment of the purchase price therefor made) concurrently with such
expiration or earlier termination. The purchase price payable for Tenant's
Personalty shall be the Fair Market Value thereof, determined in
accordance with the terms of Article XXIV hereof (as adjusted to the
extent required to reflect that the subject of the appraisal is Tenant's
Personalty rather than a Leased Property). Tenant agrees to cooperate with
Landlord in effecting the smooth and orderly transfer of Tenant's
Personalty in the event of Landlord's exercise of the Purchase Option.
Tenant's Personalty shall be conveyed free and clear of all liens,
encumbrances or rights of other parties, except as may have been disclosed
to the appraisers in the process of establishing the Fair Market Value
thereof."
Section 11. Exhibit 3.1(b) "Calculation of Percentage Rent" is
hereby amended and restated in its entirety to read as follows:
"Percentage Rent, with respect to each Lease Year, shall be
calculated annually as follows:
(i) for the period from the Commencement Date through December 31,
2003, the product of (a) 31% times (ii) all Receipts for the
applicable Lease Year in excess of the Breakpoint;
(ii) for the period from January 1, 2004 through December 31, 2008,
the product of (a) 33.15% times (ii) all Receipts for the
applicable Lease Year in excess of $Breakpoint; and
(iii) for the period from January 1, 2009 through February 28, 2014,
the product of (a) 34.25% times (ii) all Receipts for the
applicable Lease Year in excess of the Breakpoint.
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<PAGE> 10
As used herein, the "Breakpoint" with respect to any Lease Year shall be
$121,694,000. The Breakpoint shall be adjusted to account for the termination of
this Lease with respect to any one or more of the Leased Properties in
accordance with the terms of this Lease on a pro rata basis among each Leased
Property based on the percentages set forth next to each Leased Property in
Exhibit 3.1(a) attached to this Lease.
Section 12. The Lease is hereby amended by adding the following
Schedule 15.4 thereto:
"Schedule 15.4
Arbitration Procedures
Arbitration shall be held in the city of Atlanta, Georgia in accordance with the
rules of the American Arbitration Association then in effect. There shall be one
arbitrator appointed in accordance with those rules. As part of the award, the
arbitrator shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. The arbitration
shall commence within thirty (30) days after demand for arbitration is made by a
party hereto. The arbitrator shall render his/her award within thirty (30) days
after the completion of the arbitration and the arbitration shall be held on
consecutive Business Days. Failure by either party to submit to arbitration as
required under this Lease shall result in the arbitrator ruling in favor of the
other party is such other party has submitted to arbitration under this Lease.
Judgement may be entered on the arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction of the
Georgia courts for that purpose. The arbitrator may grant injunctive or other
equitable relief."
Section 13. Each party hereto represents and warrants that this
Amendment has been duly authorized, executed and delivered on behalf of such
party.
Section 14. The Lease is in full force and effect and, except as set
forth herein, is unmodified.
Section 15. This Amendment may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
[remainder of page intentionally left blank]
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized representatives on this 10th day of
March 1999, effective as of the day and year first above written.
URS REAL ESTATE, L.P.
By: URS Realty, Inc., its general
partner
By: /s/ Irwin Goldberg
--------------------------------
Name: Irwin Goldberg
Title: Vice President and Chief
Financial Officer
URS LOGISTICS, INC.
By: /s/ Frederick B. Beilstein III
------------------------------------
Name: Frederick B. Beilstein III
Title: Senior Vice President
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<PAGE> 1
Exhibit 10.4
ASSIGNMENT AND ASSUMPTION OF MASTER LEASE
THIS ASSIGNMENT AND ASSUMPTION OF MASTER LEASE ("Assignment") is made and
entered into as of this 11th day of March, 1999, by and between URS Logistics,
Inc., a Delaware corporation ("Assignor") and AmeriCold Logistics II, LLC, a
Delaware limited liability company ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor is in the business of providing refrigerated, frozen and
dry warehouse storage services, logistics, distribution and transportation
services and other services (the "Business") on a contract basis for its
customers; and
WHEREAS, Assignor and Vornado Crescent Logistics Operating Partnership, a
Delaware general partnership ("Vornado"), have entered into that certain Asset
Purchase Agreement, dated as of March 9, 1999 (the "Purchase Agreement"),
pursuant to which Vornado has agreed to purchase from Assignor, and Assignor has
agreed to sell to Vornado, substantially all of the tangible and intangible
personal property assets of Assignor used or held for use in Assignor's
Business, as described in the Purchase Agreement; and
WHEREAS, Assignor is a party to that certain Master Lease Agreement, dated
April 22, 1998, by and between URS Real Estate, L.P., as landlord, and Assignor,
as tenant (the "Master Lease") relating to certain real property and/or
refrigerated warehouse facilities which Assignor uses in its operation of the
Business; and
WHEREAS, in conjunction with the transaction contemplated by the Purchase
Agreement, Vornado has required that Assignor transfer and assign to Assignee
all of the right, title and interest of Assignor in, to and under the Master
Lease (as such may have been amended, extended, renewed or supplemented from
time to time), and Assignor desires and intends by this instrument to assign to
Assignee all of Assignor's right, title and interest in, to and under the Master
Lease.
NOW, THEREFORE, in consideration of the forgoing premises, the
consideration set forth in the Purchase Agreement, the covenants hereafter
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby covenant and agree
as follows:
1. Assignment by Assignor. Assignor hereby assigns, transfers, sets over,
grants and conveys to Assignee, its successors and assigns, all of the right,
title, and interest of Assignor in and to the Master Lease, as such may have
been amended, extended, renewed or supplemented from time to time.
2. Assumption by Assignee. Assignee hereby accepts this Assignment and as
a part of the consideration therefor assumes all of the responsibilities and
obligations of Assignor arising and to be
<PAGE> 2
performed after the date hereof relating to the Master Lease.
3. Further Assurances. Assignor and Assignee shall execute such other
documents or instruments and/or take such other actions and make such other
deliveries as may be necessary to assign the Master Lease to Assignee or to
otherwise effect the transactions contemplated by this Assignment. Assignor
covenants and agrees that in the event that (i) any rights, title or interest in
and to the Master Lease covered in this Assignment cannot be transferred or
assigned by Assignor without the consent of or notice to a third party and in
respect of which any necessary consent or notice has not as of the date hereof
been given or obtained or (ii) any rights, title or interest in and to the
Master Lease are non-assignable by their nature and will not pass by this
Assignment, the beneficial interest in and to the same will in any event pass to
Assignee, and Assignor covenants and agrees (a) to hold, and hereby declares
that Assignor holds such rights, title or interest in trust for, and for the
benefit of, Assignee, (b) to use all reasonable means to obtain and to secure
such consents and give such notice as may be required to effect a valid transfer
or transfers of rights, title or interest in and to the Master Lease and (c) to
make or complete such transfer or transfers of title as soon as reasonably
possible.
4. Environmental Indemnity Provisions.
Assignor hereby agrees to hold harmless Assignee and/or any
successors in interest, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Assignee or
any other indemnitee or assessed against the property covered by the Master
Lease by virtue of any claim or lien by any governmental or quasi-governmental
unit, body or agency, or any third party, for cleanup costs or other costs
pursuant to any environmental laws, but only to the extent that the same relate
to the period prior to the date hereof.
5. Miscellaneous Provisions.
(a) Non-Waiver; Modification. Except as expressly provided for
herein, Assignor and Assignee each hereby agree that nothing contained in this
Assignment shall be deemed or construed to waive or to modify the terms of the
Master Lease.
(b) Reliance. Any individual, partnership, corporation or other
entity may rely, without further inquiry, upon the powers and rights herein
granted to Assignee and upon any notarization, certification, verification or
affidavit by any notary public of any state relating to the authorization,
execution and delivery of this Assignment or to the authenticity of any copy,
conformed or otherwise, hereof.
(c) Assignment and Binding Agreement. This Assignment shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, personal representatives, successors and assigns.
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<PAGE> 3
(d) Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Governing Law and Submission to Jurisdiction. Except as
otherwise expressly provided herein, this Assignment shall be governed by and
construed under the laws of the State of Delaware without giving effect to
otherwise applicable principles of conflicts of laws.
(f) Pronouns; Captions. All personal pronouns in this Assignment,
whether used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular. All captions in this Assignment are intended solely for the
convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused the execution and
sealing of this Assignment as of the day and year first written above.
ASSIGNOR:
URS LOGISTICS, INC.
By: /s/ Daniel F. McNamara
-------------------------------------
Name: Daniel F. McNamara
Its: President
[CORPORATE SEAL]
ASSIGNEE:
AMERICOLD LOGISTICS II, LLC
By: /s/ Frederick B. Beilstein III (SEAL)
-------------------------------------
Name: Frederick B. Beilstein III
Its: Senior Vice President
<PAGE> 1
Exhibit 10.5
================================================================================
MASTER LEASE AGREEMENT
Dated as of April 22, 1998
Between
AMERICOLD REAL ESTATE, L.P.,
as Landlord,
and
AMERICOLD CORPORATION,
as Tenant
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
1.1 Leased Property..........................................................1
1.2 Release of Unimproved Parcels. .........................................2
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.........3
1.4 Initial Term.............................................................4
1.5 Renewal Terms............................................................4
1.6 Condition of the Leased Property.........................................5
ARTICLE II
2.1 Definitions..............................................................6
ARTICLE III
3.1 Rent....................................................................21
3.2 Net Lease...............................................................25
ARTICLE IV
4.1 No Termination, Abatement, etc..........................................26
4.2 Abatement Procedures....................................................26
ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property........................................27
5.2 Tenant's Personal Property..............................................27
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<PAGE> 3
Page
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ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants........................................................28
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants.............................................33
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations.............................................................34
8.2 Subletting and Assignment; Warehouse Agreements.........................38
8.2.1 Generally.........................................................38
8.2.2 Certain Sublettings and Assignments...............................39
8.2.3 Landlord's Right to Collect from Assignees and Subtenants.........39
8.2.4 No Release........................................................39
8.2.5 Required Assignment and Subletting Provisions.....................39
8.2.6 Reimbursement of Landlord's Costs.................................40
8.2.7 Warehouse Agreements..............................................40
8.2.8 Certain Leases Senior. ..........................................40
8.3 Sublease and Warehouse Agreement Limitation.............................41
8.4 Collateral Assignment of Subleases and Warehouse Agreements to
Landlord................................................................41
8.5 Leasehold Mortgages.....................................................41
8.5.1 Landlord's Estate................................................41
8.5.2 Certain Leasehold Mortgage Requirements..........................41
8.5.3 Leasehold Mortgagee Provisions...................................42
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease......44
8.5.5 Notice of Arbitration. ..........................................45
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<PAGE> 4
Page
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ARTICLE IX
9.1 Maintenance and Repair..................................................46
9.2 Encroachments, Restrictions, etc........................................47
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance...............................................................48
10.2 Casualty; Application of Proceeds.......................................54
10.3 Condemnation............................................................57
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures..............................................58
ARTICLE XII
12.1 Events of Default.......................................................58
12.2 Certain Remedies........................................................60
12.3 Damages.................................................................60
12.4 Waiver..................................................................61
12.5 Application of Funds....................................................62
ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default...............................62
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<PAGE> 5
Page
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ARTICLE XIV
14.1 Holding Over............................................................62
ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance........................................63
15.2 Attornment..............................................................63
15.3 Notice of Default to Landlord's Lender..................................64
15.4 Modifications to Secure Financing.......................................64
15.5 Delivery of Notices to Landlord's Lender................................64
15.6 Right of Landlord's Lender to Enforce Lease.............................65
15.7 Exercise of Landlord's Discretion.......................................65
ARTICLE XVI
16.1 Indemnification.........................................................65
ARTICLE XVII
17.1 No Waiver...............................................................66
ARTICLE XVIII
18.1 Remedies Cumulative.....................................................67
ARTICLE XIX
19.1 Acceptance of Surrender.................................................67
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<PAGE> 6
Page
----
ARTICLE XX
20.1 No Merger of Title...................................................67
ARTICLE XXI
21.1 Conveyance by Landlord...............................................67
ARTICLE XXII
22.1 Quiet Enjoyment......................................................68
ARTICLE XXIII
23.1 Notices..............................................................68
ARTICLE XXIV
24.1 Appraisers...........................................................69
ARTICLE XXV
25.1 General REIT Provisions..............................................70
25.1.1 REIT Requirements.............................................70
25.1.2 Satisfaction of REIT Requirements.............................71
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
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<PAGE> 7
Page
----
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims......................................................72
27.2 Severability............................................................72
27.3 Maximum Permissible Rate................................................72
27.4 Headings................................................................72
27.5 Exculpation.............................................................72
27.7 Exhibition of Leased Property...........................................72
27.8 Entire Agreement........................................................73
27.9 Governing Law...........................................................73
27.10 No Waiver...............................................................73
27.11 Successors and Assigns..................................................73
27.12 Modifications in Writing................................................73
ARTICLE XXVIII
28.1 Memorandum of Lease.....................................................74
ARTICLE XXIX
29.1 Provisions Relating to Purchase of the Leased Personal Property..........74
LIST OF EXHIBITS
Exhibit A1 - Legal Description of the Lands
Exhibit 1.5(b) - List of Ground Leases and Expiration Dates
Exhibit 2(a) - GSMC Loan Agreement
Exhibit 3.1(a) - Minimum Rent Allocations
Exhibit 3.1(b) - Calculation of Percentage Rent
Exhibit 6.1(j) - Deferred Maintenance Conditions (excluding environmental)
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<PAGE> 8
Exhibit 8.2.8 - Senior Leases
Exhibit 11.1 - Cash Management Procedures
Exhibit 15.1- Form of Non-Disturbance Agreement
Exhibit 26.1 - Deferred Maintenance Conditions -- Environmental
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<PAGE> 9
MASTER LEASE AGREEMENT (this "Lease"), dated as of the 22nd day of April,
1998, between AMERICOLD REAL ESTATE, L.P. ("Landlord"), a Delaware limited
partnership, having its principal office c/o Vornado Realty L.P., Park 80 West,
Plaza II, Saddle Brook, New Jersey 07663, Attention: Chief Executive Officer,
and AMERICOLD CORPORATION ("Tenant"), an Oregon corporation, having its
principal offices at One Concourse Parkway, Suite 150, Atlanta, Georgia 30328,
Attention: Chief Executive Officer.
RECITALS
WHEREAS, Landlord has agreed to let to Tenant, and Tenant has agreed to
lease from Landlord, certain parcels of real property and improvements each for
use and operation as dry and cold warehousing facilities and related uses,
defined hereinbelow as the "Leased Property" (all capitalized terms used but not
elsewhere defined herein shall have the meaning provided therefor in Article II
hereof).
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE I
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following
(collectively, the "Leased Property"):
(i) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibits A-1 attached hereto and made a part
hereof (collectively, the "Land");
(ii) all buildings, structures, Fixtures and other improvements of
every kind, including alleyways and connecting tunnels, sidewalks, utility
pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased
Improvements");
(iii) all easements, rights and appurtenances relating to the Land
and the Leased Improvements; and
<PAGE> 10
(iv) all permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components
thereof, now and hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air- and
water-pollution-control, waste-disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire- and theft-protection
equipment, and built-in oxygen and vacuum systems, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto
to constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but excluding all items included within
Tenant's Personal Property (collectively the "Fixtures").
1.2 Release of Unimproved Parcels. Notwithstanding anything herein to the
contrary, Landlord shall have the right from time to time to terminate this
Lease, with respect to any Unimproved Parcels located at the Leased Property as
well as grant in connection therewith in respect of the Leased Property
remaining subject to this Lease reasonable easements, restrictions, covenants,
reservations and rights of way for, among other things, traffic circulation,
ingress, egress, parking, access, water and sewer lines, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes at no
cost to Landlord and with no adjustment in Rent; provided, in each such case,
(x) such Unimproved Parcel shall be used either for the purpose of erecting,
maintaining and operating cold or dry storage structures or other structures and
improvements not inconsistent with the use of the related Leased Property, and
(y) such termination will not materially adversely affect either the value of
the remaining portion of the related Leased Property (as distinguished from the
value of the entire Leased Property) or the net operating income of the
remaining portion of the Leased Property (taking into account, to the extent
applicable, any potential loss of revenue resulting if the transfer and
development of the Unimproved Parcel by Landlord were not to occur), as
supported by the Officer's Certificate of Landlord described below. As used
herein, "Unimproved Parcel" shall mean, with respect to a Leased Property, one
or more land areas comprising such Leased Property on which no improvements
generating Receipts are situate, and not materially required for the generation
of Receipts. In connection with any termination permitted pursuant to this
Section, Tenant agrees to execute and deliver any instrument reasonably
necessary or appropriate to facilitate said action, subject to Tenant's receipt
of:
1. a plot plan identifying the location of the applicable Unimproved
Parcel;
2. a metes and bounds description of the portion of such Unimproved
Parcel; and
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<PAGE> 11
3. an amendment to the legal description attached as an exhibit to this
Lease implementing the proposed release, including a metes and
bounds description of the portion of the Land at the relevant Leased
Property that will continue to be subject to this Lease after the
proposed termination.
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.
(a) Subject to the terms of this Section, if, at any time during the Term,
in the good faith judgment of Tenant (as evidenced by an Officer's Certificate
on behalf of Tenant which describes the basis for such judgment), (x) any Leased
Property becomes or imminently will become uneconomic or unsuitable for its
Primary Intended Use, and will remain uneconomic or unsuitable for such use for
the foreseeable future, and Tenant undertakes to cease its operation of such
Leased Property for its Primary Intended Use as soon as is reasonably
practicable or (y) a Default hereunder relating to a particular Leased Property
has occurred and is continuing and Tenant, notwithstanding the exercise of
reasonable diligence, is unable to cure such Event of Default other than by
terminating this Lease with respect to the Leased Property in question (in each
case, any such Leased Property, an "Uneconomic Property"), then Tenant shall
have the right, so long as (i) no Event of Default shall have occurred and be
continuing (other than one arising from the Default described in clause (y)
above), and (ii) any other requirements relating to the substitution of such
Uneconomic Property under the GSMC Loan Agreement have been satisfied, to
purchase such Uneconomic Property described in clause (x) above in accordance
with the terms of this Section; provided that in no event shall Tenant be
permitted to purchase more than six (6) Leased Properties during the Term
pursuant to the terms of this Section. Tenant shall signify its election to
exercise such purchase option by giving notice of the election to Landlord,
accompanied by the Officer's Certificate described in the immediately preceding
sentence. Tenant's restoration of the operations at any Uneconomic Property as a
result of events which are not within the control of Tenant and were not
foreseeable by Tenant at the time such Officer's Certificate was delivered shall
not be deemed to evidence Tenant's bad faith in making the determination which
is the subject of such Officer's Certificate.
(b) In the event Tenant elects to exercise its right to purchase a Leased
Property pursuant to this Section, Tenant shall described in clause (x) above,
offer to Landlord a property owned by Tenant of like kind and quality to the
Leased Property proposed to be purchased by Tenant (each a "New Leased
Property"), which New Leased Property, if accepted by Landlord (in Landlord's
reasonable discretion), would serve as consideration for Tenant's purchase of
the Leased Property in question. Upon any purchase of an Uneconomic Property
pursuant to this Section, such New Leased Property shall be a Leased Property
hereunder. As a condition to any such purchase, Tenant shall deliver to Landlord
(i) a deed evidencing the transfer of the fee interest in the New Leased
Property to Landlord, (ii) a Title Policy with respect to the New Leased
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<PAGE> 12
Property, (iii) a survey of the New Leased Property, (iv) environmental reports
relating to the New Leased Property, (iv) an amendment to this Lease (x)
terminating this Lease with respect to the Uneconomic Property and (y) causing
the New Leased Property to become a Leased Property hereunder and (v) any and
all other documents, reports, legal opinions or other items reasonably requested
by Landlord. Upon any such purchase, the Uneconomic Property removed will no
longer be a Leased Property hereunder and this Lease, as such related to the
Uneconomic Property in question will be terminated. The Release Amount assigned
to the Uneconomic Property shall be assigned to the New Leased Property.
(c) Tenant hereby covenants and agrees that any purchase of an Uneconomic
Property pursuant to this Section shall not in any way impair the obligations of
Tenant to make payments of Rent hereunder.
(d) Tenant hereby agrees to pay all expenses in connection with any
actions taken pursuant to this Section, including all out-of-pocket expenses and
costs incurred by Landlord or Landlord's Lender (or any of their respective
affiliates), regardless whether a substitution is ultimately effected, including
fees and costs of: audits; travel; accounting services; environmental and
engineering reports; credit reports; appraisals; property evaluations;
preparation, negotiation, execution and delivery of any amendments of or
documents supplemental to this Lease or Landlord's Loan Documents; attorneys'
fees and expenses of Landlord and Landlord's Lender; transfer, transfer gains,
intangibles, deed and mortgage recording taxes; title insurance; survey; and
document recordings and filings.
1.4 Initial Term. The initial term of this Lease (the "Initial Term")
shall commence on the Commencement Date and shall expire on April 30, 2013,
unless otherwise terminated as provided herein.
1.5 Renewal Terms. (a) If no Event of Default shall have occurred and be
continuing, Tenant shall have the right to renew this Lease (as to all, but not
less than all, the Leased Property subject to this Lease at such time) for two
(2) successive five (5) year terms ("Extended Terms") upon giving written notice
to Landlord of each such renewal at least eighteen (18) months prior to the
termination of the then current Term. During each such Extended Term, all of the
terms and conditions of this Lease shall continue in full force and effect,
except that the Minimum Rent for and during each Extended Term shall be the
greater of (i) the then current fair market rental ("Fair Market Rental"), which
unless otherwise mutually agreed to by Landlord and Tenant shall be determined
by the appraisal procedure set forth in Article XXIV and (ii) the Minimum Rent
for the Lease Year immediately preceding the Extended Term plus five percent
(5%). Tenant's failure
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to exercise its renewal option as to the first Extended Term shall result in the
loss of its renewal option as to the second Extended Term.
(b) Notwithstanding the terms of Section 1.5(a) to the contrary, with
respect to each of those certain Ground Leases identified on Exhibit 1.5(b)
hereto, the Tenant's right to an Extended Term shall be limited such that the
same shall expire (regardless of the length of any Extended Term that would
otherwise be applicable pursuant to the above provisions of this Section 1.5(a))
on the date that is five (5) years prior to the last expiration date of such
Ground Lease, taking into account any renewal terms in respect of such Ground
Lease.
(c) Landlord shall exercise renewal rights (if any) that are available
under each Ground Lease so as to provide Tenant, to the greatest extent
possible, with an Extended Term described in Section 1.5(a), provided that
Landlord shall not be required to exercise any renewal option in respect of any
Ground Lease unless prior to such time Tenant shall have duly exercised its
renewal option hereunder and, failing such renewal by Landlord, Tenant would not
have the full Extended Term available to it by reason of Section 1.5(b).
(d) If Landlord or any Affiliate of Landlord shall purchase any fee or
other interest in a Leased Property that is superior to the interest of
Landlord, such as the ground lessor's interest in a Ground Leased Property, then
the estate of Landlord and such superior interest shall not merge and, without
limiting the foregoing, Tenant shall continue to be liable hereunder to pay any
ground rent and perform any other obligations of the lessee under such Ground
Lease. Further, in the event Landlord or any Affiliate of Landlord acquires a
ground lessor's interest in a Ground Leased Property and the term of the related
Ground Lease shall have expired, then Landlord or such Affiliate shall have the
right to enter into a new Ground Lease and receive from Tenant reimbursement (or
payment) of ground rent in an amount equal to the same ground rent as was
payable under the expired Ground Lease, increased by 5 percent, and increased
again by 5 percent every fifth anniversary of the commencement of the new Ground
Lease.
1.6 Condition of the Leased Property. Tenant acknowledges (a) receipt and
delivery of possession of the Leased Property, (b) that Tenant has inspected and
otherwise has knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease and (c) that Tenant has found the same to
be in good order and repair and satisfactory for its purposes hereunder. Tenant
is leasing the Leased Property "AS IS" in its present condition. Tenant waives
any claim or action against Landlord in respect of the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, AS TO ACCESS TO THE LEASED
PROPERTY OR AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE OR OTHERWISE, OR
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AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, OR AS TO THE ABSENCE OF
ANY DEFECT, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE
BORNE BY TENANT.
ARTICLE II
2.1 Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, (iv) the words "herein," hereof" and "hereunder" and other words of
similar import refer to this Lease as a whole and not to any particular Article,
Section or other subdivision, (v) the term "including" and words of similar
import shall be deemed to be followed by the phrase "without limitation," (vi)
the term "attorneys' fees" and "attorneys' fees and expenses" and words of
similar import shall be deemed preceded with the word "reasonable," and (vii)
the phrase "Leased Property" shall be deemed to mean a specific Leased Property
or all of the Leased Property, as the context may require, and shall be deemed
to be followed by the phrase "or any portion thereof".
Additional Charges: As defined in Article III.
Affiliate: A Person or Persons directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with the
Person or Persons in question. The term "control", as used in the immediately
preceding sentence, shall mean, with respect to a Person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting
rights attributable to the shares of the controlled corporation and, with
respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled Person.
Aggregate Threshold Amount: As defined in Article VIII.
Alteration: As defined in Section 8.1.
Annual Budget: Tenant's annual budget setting forth, in reasonable detail,
Tenant's good faith estimates of the anticipated results of operations of the
Leased Property (taken as a whole), including Receipts, all Operating Expenses,
management
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fees and capital expenditures, approved by Landlord in accordance with Section
6.1(h)(4) hereof.
Atlanta Parent, Inc.: Atlanta Parent, Inc., a Delaware corporation.
Business Day: Any day other than a Saturday, Sunday or any other day on
which national banks in New York, New York are not open for business.
Cash: Coin or currency of the United States of America or immediately
available federal funds, including such funds delivered by wire transfer.
Cash Management Procedures: As defined in Section 11.1.
Casualty: As defined in Section 10.2.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: The date of this Lease.
Condemnation: As defined in Section 10.3.
CPI Increase: When used to qualify a fixed dollar amount set forth herein
at the date in question, such fixed dollar amount, as increased by the
percentage by which the Consumer Price Index for All Items, Urban Consumers
published by the United States Department of Labor, applicable to the United
States (all items) (base year 1982-84 = 100) (the "Consumer Price Index"), or
any successor index thereof as such successor index may be appropriately
adjusted to establish substantial equivalence with the Consumer Price Index,
shall have increased over such Consumer Price Index (or successor, equivalent or
comparable index, as applicable) for the month in 1998 in which the Commencement
Date occurs. If the Consumer Price Index is converted to a different standard
reference base or otherwise revised, then whenever the determination of a CPI
Increase figure is called for herein, the Consumer Price Index shall be
converted in accordance with the conversion factors published by the United
States Department of Labor, Bureau of Labor Statistics, or, if said Bureau shall
not publish the same, as the same may be published by Prentice-Hall, Inc. or any
other nationally recognized publisher of similar statistical information
selected by Landlord. If the Consumer Price Index ceases to be published and
there is no successor thereto, such other index as Landlord shall reasonably
select shall be substituted for the Consumer Price Index.
Credit Facility: Shall mean a clean, irrevocable, unconditional
transferable letter of credit, payable on sight draft only, which shall not be
secured by any Leased Property, for the benefit of Landlord (or, at Landlord's
option, Landlord's Lender) and entitling
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such beneficiary to draw thereon in New York, New York or in such other city as
Landlord's office may be located (or, at Landlord's option, the corporate trust
office of Landlord's Lender) may be located at the time of the issuance of such
letter of credit, issued by a domestic bank or the U.S. agency or branch of a
foreign bank the long-term unsecured debt rating of which at the time such
letter of credit is delivered and throughout the term of such letter of credit
is not less than the then Required Rating, or, if the Required Rating is "AAA"
and there are no domestic banks or U.S. agencies or branches of a foreign bank
having such long-term unsecured debt rating then issuing letters of credit, then
such letter of credit may be issued by a domestic bank the long-term unsecured
debt rating of which is not lower than "AA" by the Rating Agencies. Such Credit
Facility shall provide that (i) it will automatically renew unless the issuer of
such Credit Facility delivers written notice to the beneficiary (and to
Landlord, if Landlord is not the beneficiary) at least thirty (30) days prior to
its expiration that such Credit Facility will not be renewed and (ii) if not so
renewed, the beneficiary shall be entitled to draw upon the full amount thereof.
Without in any way limiting the generality of the foregoing, if any Credit
Facility is not renewed or replaced with another Credit Facility prior to the
date that is thirty (30) days prior to its expiration, the beneficiary shall be
entitled to draw upon the full amount thereof.
Crescent Operating: Crescent Operating, Inc., a Delaware corporation.
Crescent Realty: Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership.
Crescent Trust: Crescent Real Estate Equities Company, a Texas real estate
investment trust.
Default: The occurrence of any event hereunder which, but for the giving
of notice or passage of time, or both, would be an Event of Default hereunder.
Depositary: Landlord or, at Landlord's election, Landlord's Lender or a
depositary selected by Landlord, it being agreed that different Persons may
serve as Depositary at any one time and from time to time.
Eligible Collateral: U.S. Government Securities, Debt Securities, a Credit
Facility, Cash and Cash Equivalents, and a guaranty of payment and performance
(in form and substance reasonably satisfactory to Landlord) by Vornado Trust or
Vornado Realty (provided Vornado Trust or Vornado Realty, as applicable, has a
long-term unsecured debt rating at least equal to the Investment Grade rating)
and/or Crescent Trust or Crescent Realty (provided Crescent Trust or Crescent
Realty, as applicable, has a long-term unsecured debt rating at least equal to
the Investment Grade rating), or any combination of the foregoing.
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Environmental Laws: Any and all of the following as applicable to Tenant
and/or the Leased Property: present and future federal, state and local laws
(whether under common law, statute, ordinance, rule, regulation or otherwise),
court or administrative orders or decrees, requirements of permits issued with
respect thereto, and other requirements of governmental authorities relating to
any Hazardous Substances or Hazardous Substances Activity (including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss.ss.9601, et seq.) as heretofore or hereafter amended from time to
time).
Event of Default: As defined in Article XII.
Extended Term: As defined in Article I.
Fair Market Rental: With respect to a particular Leased Property, the
rental that a willing tenant not compelled to rent would pay a willing landlord
not compelled to let for such Leased Property, excluding all capital
improvements (as distinguished from necessary repairs and replacements) paid for
by Tenant, determined in accordance with the appraisal procedures set forth in
Article XXIV or in such other manner as shall be mutually acceptable to Landlord
and Tenant.
Fair Market Value: With respect to a particular Leased Property, the price
that a willing buyer not compelled to buy would pay a willing seller not
compelled to sell for such Leased Property, excluding all capital improvements
(as distinguished from necessary repairs and replacements) paid for by Tenant,
and (a) assuming the same is unencumbered by this Lease, (b) determined in
accordance with the appraisal procedures set forth in Article XXIV or in such
other manner as shall be mutually acceptable to Landlord and Tenant, and (c) not
taking into account any reduction in value resulting from any indebtedness to
which such Leased Property is subject except as expressly provided hereinbelow.
In determining such Fair Market Value, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions of
any encumbrance which is not removed at or prior to the closing of the
transaction as to which such Fair Market Value determination is being made shall
be taken into account.
Fiscal Year: Each twelve (12) month period from January 1 to December 31.
Fixtures: As defined in Article I.
Governmental Authority: Any court, board, agency, commission, office or
authority of any nature whatsoever of or for any governmental unit (federal,
state, county, district, municipal, city or otherwise), whether now or hereafter
in existence.
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Ground Lease: Each of the ground leases identified on Exhibit 1.5(b)
hereto.
Ground Leased Property: Collectively, the Leased Property identified on
Exhibit 1.5(b) hereto.
GSMC Loan Agreement: That certain loan agreement, dated as of the date
hereof, relating to the Initial Landlord's Debt, a copy of which is attached
hereto for convenience of reference as Exhibit 2. Nothing herein shall be
construed to make Tenant a party to such loan agreement.
Hazardous Substances: Any of the following: (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance", "hazardous material", "hazardous waste", "extremely hazardous
waste", "infectious waste", "toxic substance", "toxic pollutant" or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity" and (ii) any
petroleum, natural gas, natural gas liquid, liquefied natural gas, synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas), ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters, and other wastes associated with
the exploration, development or reduction of crude oil, natural gas, or
geothermal resources. Without limiting the foregoing, Hazardous Substances shall
also include asbestos and asbestos-containing materials and polychlorinated
biphenyls.
Initial Term: As defined in Article I.
Institutional Lender: Any one or more of the following: a bank, investment
bank, trust company, broker-dealer, insurance company, separate account, pension
fund, retirement plan, governmental agency, real estate investment trust,
investment company, investment company adviser or pension fund adviser, or any
Affiliate of any of the foregoing, in each case, whether acting for its own
account or as a trustee, fiduciary or agent of others.
Insurance Premiums: As defined in Section 10.1(d).
Interest Rate: 6.99 percent per annum.
Insurance Requirements: All terms of any insurance policy required
hereunder covering or applicable to the Leased Property, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of
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Fire Underwriters (or any other body exercising similar functions) applicable to
or affecting the Leased Property or any use of the Leased Property.
Land: As defined in Article I with respect to the Leased Property.
Landlord: Americold Real Estate, L.P., a Delaware limited partnership, and
its successors and assigns.
Landlord Liens: Liens on or against the Leased Property or this Lease or
any payment of Rent (i) in favor of any taxing authority by reason of any tax
excluded from the definition of "Taxes" hereunder owed by Landlord or (ii)
securing Landlord's Debt.
Landlord's Debt: The outstanding principal amount borrowed by Landlord
from time to time, together with all interest accrued and unpaid thereon, and
all other sums due in connection therewith, including any yield-maintenance
payments or other prepayment premium or penalty, the payment of which may be
secured by Landlord's interest in the Leased Property and the Rent and other
amounts payable hereunder. As of the date hereof, "Landlord's Debt" means that
certain loan in the aggregate principal amount of $297,000,000 made by Goldman
Sachs Mortgage Company, which is secured by mortgages on the Leased Properties
(which mortgages include an assignment of Landlord's interest in this Lease),
and such Landlord's Debt is sometimes referred to herein as the "Initial
Landlord's Debt."
Landlord's Lender: The holder of Landlord's Debt from time to time,
provided that if Landlord's Debt shall be held legally or beneficially by more
than one Person, then Landlord's Lender shall be deemed to refer to only one
such Person as selected by Landlord in a notice to Tenant or, failing such
selection, as selected by Tenant.
Landlord's Loan Documents: The instrument(s) and agreement(s) evidencing,
establishing and securing Landlord's Debt, including (to the extent applicable)
a promissory note, loan agreement, a mortgage, deed of trust or deed to secure
debt and assignment of leases and rents.
Lease Year: Any Fiscal Year or portion thereof during the Term, commencing
with the 1998 Fiscal Year.
Leased Improvements; Leased Property: Each as defined in Article I.
Leasehold Mortgage: Any mortgage, deed of trust or other security interest
encumbering Tenant's leasehold estate hereunder, or direct or indirect ownership
interests in Tenant, which has been granted to secure repayment of debt of
Tenant or the holders of such ownership interests.
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Leasehold Mortgagee: The holder of a Leasehold Mortgage from time to time.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Landlord, Tenant
or the Leased Property, or the construction, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Tenant, at any time in force affecting the Leased Property
(other than any subleases, this Lease, and service contracts and other similar
agreements now in effect or hereafter entered into in the ordinary course of
Tenant's business), including any which may (i) require repairs, modifications
or alterations in or to the Leased Property, or (ii) in any way limit the use
and enjoyment thereof.
Litigation Costs: All costs reasonably incurred by Landlord in connection
with the enforcement of any provision of this Lease, including attorneys' fees
and expenses, court costs and reasonable consultants' fees and expenses.
Lien: Any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting the Leased Property or Tenant, or any interest therein,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, the
filing of any financing statement, notice or other instrument and mechanics',
materialmen's and other similar liens and encumbrances.
Major Subtenant: A tenant under a Sublease for all or substantially all of
a Leased Property.
Material Agreement: Operating Agreements and agreements (i) requiring
payment by Tenant of more than $2,000,000 per annum and not cancellable without
a penalty of $500,000 or more, or (ii) pursuant to which Tenant is entitled to
receive more than $2,000,000 per year, relating, in each case, to the ownership,
development, use, operation, leasing, maintenance or repair of the Leased
Property, provided "Material Agreements" shall not include agreements pursuant
to which either party thereto may discontinue the provision of, or request for,
services, or the delivery of goods to Tenant for storage, without payment of any
penalty or without notice to the other party (regardless whether the agreement
is formally terminated) .
Material Alteration: Any Alteration to be performed by or on behalf of
Tenant at a Leased Property (other than an Alteration the cost of which a
Subtenant is obligated to reimburse to Tenant and which Tenant reasonably
believes will be so reimbursed), the
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cost of which as reasonably estimated by a Qualified Architect or Engineer
exceeds the Threshold Amount.
Material Casualty: As defined in Section 10.2.
Material Condemnation: As defined in Section 10.2.
Minimum Rent: As defined in Article III.
Net Operating Income: Operating Income less Operating Expenses.
New Leased Property: As defined in Article I.
Notice: As defined in Article XXIII (regardless whether the same is
capitalized herein).
Officer's Certificate: A certificate made by an individual authorized to
act on behalf of Tenant and, to the extent applicable, any constituent Person
with respect to Tenant. Without limiting the foregoing, if the individual
signing the certificate is doing so on behalf of a corporation, then such
individual shall hold the office of President, Vice President or Chief Financial
Officer (or the equivalent) with respect to such corporation.
Operating Agreements: Reciprocal easement and/or operating agreements;
covenants, conditions and restrictions; and similar agreements affecting any
Leased Property and binding upon and/or benefitting Landlord or Tenant and other
third parties. Without limiting the foregoing, "Operating Agreements" shall not
include any Warehouse Agreements.
Operating Expenses: For any specified period, on an accrual basis, all
expenses paid (or due and payable, except to the extent that the same constitute
Trade Payables that are not more than 60 days outstanding) by Tenant during such
period in connection with the operation of the Leased Property, as well as
bookkeeping, accounting, insurance costs, wages and other costs and expenses
incurred for the Leased Property and legal expenses incurred in connection with
the operation of the Leased Property, determined, in each case, consistently
with GAAP. "Operating Expenses" shall not include (1) depreciation or
amortization or other noncash items (other than expenses that are due and
payable but not yet paid), (2) the principal of and interest on any indebtedness
(except
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for any payments required under any Permitted Equipment Leases), (3) income
taxes or other taxes in the nature of income taxes, (4) any expenses (including
legal, accounting and other professional fees, expenses and disbursements)
incurred in connection with and allocable to any indebtedness (except for any of
the same in connection with any Permitted Equipment Leases), (5) the cost of any
capital expenditures (except for any payments required under any Permitted
Equipment Leases), (6) distributions to the shareholders, members or partners in
Tenant or any asset management fees or similar compensation payable to any
Affiliate of Tenant, and (7) any item of expense which otherwise would be
considered within Operating Expenses but is paid directly by any Subtenant.
Expenses that are accrued as Operating Expenses during any period shall not be
included in Operating Expenses when paid during any subsequent period.
Operating Income: For any specified period, on an accrual basis, all
income received or accrued by Tenant during such period in connection with the
operation of the Leased Property, determined consistent with GAAP, including the
following, but without duplication:
(i) all rents, rent equivalents, moneys payable as damages pursuant
to a Lease or in lieu of rent or rent equivalents, royalties (including
all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and
other deposits), accounts, cash, issues, profits, charges for services
rendered, and other consideration of whatever form or nature received by
or paid to or for the account of or benefit of Tenant or its agents or
employees from any and all sources arising from or attributable to the
Leased Property, including any obligations now existing or hereafter
arising or created out of the lease, sublease, license, concession or
other grant of the right of the use and occupancy of property or rendering
of services by Tenant;
(ii) charges received by Tenant for electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any other energy,
telecommunications, telephone, utility or similar items, including
overtime usage, HVAC equipment charges, sprinkler charges, escalation
charges, license fees, maintenance fees, charges for improvements, Taxes
and other amounts payable to Tenant, under any Lease or other agreement
relating to the Leased Property pursuant to which any portion of the
Leased Property, utilities, facilities, equipment, parking facilities or
other services are furnished by Tenant, but excluding any security
deposits received;
(iii) condemnation awards to the extent that such awards are
compensation for lost rent;
(iv) business interruption and loss of "rental value" insurance
proceeds;
(v) income from cash holdings and interest from notes in lieu of
rent; and
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(vi) all other amounts received by Tenant during such period in
respect of items which in accordance with GAAP would be included in
Tenant's annual financial statements for such period or any other period
as operating income of the Leased Property and which are reasonably
expected to recur during the next two (2) years following the date on
which Net Cash Flow or Net Operating Income is being calculated.
Notwithstanding the foregoing clauses (i) through (vi), Operating Income shall
not include (A) any condemnation or insurance proceeds (other than of the types
described in clauses (i), (ii) and (iii) above), (B) any proceeds resulting from
the sale, exchange, transfer, financing or refinancing of all or any part of the
Tenant's interest in the Leased Property or any interest therein (other than of
the types described in clause (iii) above), (C) any repayments received from
Subtenants of principal loaned or advanced to Subtenants by Tenant, or (D) any
type of income that would otherwise be considered Operating Income pursuant to
the provisions above but is paid directly by any Subtenant to a Person other
than Tenant or its agent.
Other Charges: All ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including vault charges and license fees for
the use of vaults, chutes and similar areas adjoining a Leased Property, now or
hereafter levied or assessed or imposed against any Leased Property or any part
thereof (subject to the same exclusion set forth in the proviso in the
definition of "Taxes").
Overdue Rate: On any date, a rate equal to the greater of (i) the Interest
Rate and (ii) 2% above the Prime Rate, but in no event greater than the maximum
rate then permitted under applicable law.
Percentage Rent: As set forth in Exhibit 3.1(b) attached hereto.
Permitted Encumbrances: Collectively, (a) all Liens disclosed in the Title
Policy, (b) Liens, if any, for Taxes or Other Charges not yet payable or
delinquent or which are being diligently contested in good faith in accordance
with this Lease, (c) Liens in respect of property or assets imposed by law which
were incurred in the ordinary course of business, such as carriers',
warehousemen's, landlord's, mechanics', materialmen's, repairmen's and other
similar Liens arising in the ordinary course of business, and Liens for workers'
compensation, unemployment insurance and similar programs, in each case arising
in the ordinary course of business which are being diligently contested in good
faith in accordance with the terms hereof, (d) Subleases, (e) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances (including any of such matters incurred or
entered into by Tenant in the ordinary course of business) which in each case do
not diminish in any material respect the value of the affected Leased Property
or affect in any material respect the validity,
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enforceability or priority of this Lease or the Liens created by Landlord's Loan
Documents, and (f) such other title and survey exceptions as Landlord has
approved or may approve in writing. In addition, "Permitted Encumbrances" shall
include any Landlord Liens.
Permitted Equipment Leases means capital and/or operating lease
obligations in respect of equipment used at the Leased Property with an annual
rent obligation not greater than $2,250,000 (as escalated by the CPI Increase).
Permitted Investments: The following, subject to qualifications
hereinafter set forth:
1. Obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or instrumentality
thereof, when such obligations are backed by the full faith and
credit of the U.S. These obligations include, but are not limited
to:
o U.S. Treasury obligations All direct or fully
guaranteed obligations
o Farmers Home Administration Certificates of
beneficial ownership
o General Services Administration Participation
certificates
o U.S. Maritime Administration Guaranteed Title XI
financing
o Small Business Administration Guaranteed
participation certificates Guaranteed pool
certificates
o U.S. Department of Housing and Urban Development
Local authority bonds
o Washington Metropolitan Area Transit Authority
Guaranteed transit bonds
2. Federal Housing Administration debentures.
3. Obligations of government-sponsored agencies that are not backed by
the full faith and credit of the U.S., where the obligation is
limited to those instruments that have a predetermined fixed dollar
amount of principal due at maturity that cannot vary or change.
These obligations are limited to:
o Federal Home Loan Mortgage Corp. (FHLMC) Debt
obligations
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o Farm Credit System (formerly: Federal land Banks,
Federal Intermediate Credit Banks, and Banks for
Cooperatives) Consolidated systemwide bonds and
notes
o Federal Home Loan Banks (FHL Banks) Consolidated
debt obligations
o Federal National Mortgage Association (FNMA) Debt
obligations
o Student Loan Marketing Association (SLMA) Debt
obligations
o Financing Corp. (FICO) Debt obligations
o Resolution Funding Corp. (REFCORP) Debt
obligations.
4. Federal funds, unsecured certificates of deposit, time deposits,
banker's acceptances, and repurchase agreements having maturities of
not more than 365 days of any bank, the short-term debt obligations
of which are rated "A-1+" (or the equivalent) by the Rating Agencies
or secured by U.S. Treasury obligations (as described in Paragraph 1
above).
5. Deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC).
6. Debt obligations maturing in 365 days or less that are rated AAA or
higher (or the equivalent) by the Rating Agencies.
7. Commercial paper rated "A-1+" (or the equivalent) by the Rating
Agencies and maturing in 365 days or less.
8. Investments in certain short-term debt of issuers rated "A-1" (or
the equivalent) by the Rating Agencies may be permitted with certain
restrictions. The total amount of debt from "A-1" issuers must be
limited to the investment of an amount equal to Monthly Debt Service
Payment Amount. The total amount of "A-1" investments should not
represent more than 20% of the rated issue's outstanding principal
amount and each investment should not mature beyond 30 days.
Investment in "A-1" (or the equivalent) rated securities are not
eligible for reserve accounts, cash collateral accounts, or other
forms of credit enhancement. Short-term debt for purposes of this
definition includes: commercial paper, federal funds, repurchase
agreements, unsecured certificates of deposit, time deposits, and
banker's acceptances.
9. Investment in money market funds rated "AAAm" or "AAm-G" (or the
equivalent) by the Rating Agencies.
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10. Such other investments as shall be approved in writing by Landlord.
Notwithstanding the foregoing, "Permitted Investments": (i) shall exclude any
security with the Standard & Poor's "r" symbol (or any other Rating Agency's
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
"strips"; (ii) shall not have maturities in excess of one year; (iii) as to the
investments described in (1), (3), (4), (5), (6), (7) and (8): the obligations
shall be limited to those instruments that have a predetermined fixed dollar of
principal due at maturity that cannot vary or change; interest may either be
fixed or variable; and any variable interest should be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index; and (iv) shall exclude any investment where the right to receive
principal and interest derived from the underlying investment provide a yield to
maturity in excess of 120 percent of the yield to maturity at par of such
underlying investment. No investment shall be made which requires a payment
above par for an obligation if the obligation may be prepaid at the option of
the issuer thereof prior to its maturity. All investments shall mature or be
redeemable upon the option of the holder thereof on or prior to the earlier of
(x) three (3) months from the date of their purchase or (y) the Business Day
preceding the day before the date such amounts are required to be applied
hereunder.
Person: Any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.
Policies: As defined in Section 10.1.
Pre-Approved Party: Shall mean any one or more of the following:
1. Vornado Trust,
2. Vornado Realty,
3. Vornado Operating,
4. Any one or more of the current common shareholders of Atlanta
Parent, Inc., provided that such shareholder is an officer,
director and/or trustee of Vornado Trust, Vornado Realty
and/or Vornado Operating,
5. Atlanta Parent, Inc.
6. Crescent Trust,
7. Crescent Realty,
8. Crescent Operating,
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9. Any one or more of the current common shareholders of Crescent
CS Holdings Corp. or Crescent CS Holdings II Corp., provided
that such shareholder is an officer, director and/or trustee
of Crescent Trust, Crescent Realty and/or Crescent Operating,
10. Crescent CS Holdings Corp. or Crescent CS Holdings II Corp.,
11. Americold Corporation,
12. URS Logistics, Inc.,
13. any Person with or into which any one or more other
Pre-Approved Parties is merged or consolidated or to which any
one or more of such Persons transfer all or substantially all
of its or their assets,
14. any Person 51 percent or more owned, directly or indirectly,
and controlled by one or more other Pre-Approved Parties, and
15. any Person in which one or more Persons described in 1-14
above are operating partners or managing members.
Primary Intended Use: As defined in Section 6.1.
Qualified Architect or Engineer: Any experienced architect, engineer or
construction manager licensed or registered in the jurisdiction where the
applicable Leased Property is located, if required by the laws of such
jurisdiction.
Rating Agencies: Any one or more of the following designated by Landlord:
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA or any
other nationally- recognized statistical rating agency selected by Landlord.
Receipts: The items described in Operating Income, determined, however, on
a cash basis.
REIT: As defined in Article XXV.
REIT Requirements: As defined in Article XXV.
Release Amount: With respect to each Leased Property, shall refer to the
applicable "Release Amount" as set forth in the GSMC Loan Agreement. Landlord
and Tenant hereby agree that, at such time as the Initial Landlord's Debt shall
no longer be outstanding, Landlord and Tenant shall establish new mutually
agreed upon Release Amounts with respect to each Leased Property (taking into
account the requirements of any new Landlord's Debt) and to make any amendments
to this Lease as may be necessary to effect the establishment of the same.
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Rent: Collectively, (i) the Minimum Rent, (ii) Percentage Rent and (iii)
Additional Charges.
Rental Period. As defined in Article III.
Rent Payment Date. As defined in Article III.
Restoration: As defined in Section 10.2.
State: The State or Commonwealth in which the particular Leased Property
in located.
Sublease. Any lease, sublease, license agreement or occupancy agreement
entered into by Tenant affecting all or any portion of the Leased Property,
provided that Warehouse Agreements shall not be included within the definition
of Subleases.
Subtenant: A subtenant, licensee, occupant or other party to any Sublease.
Superior Interests: As defined in Article XV.
Superior Party: As defined in Article XV.
Taxes: All real estate and personal property taxes, assessments, fees,
taxes on rents or rentals, water rates or sewer rents and other governmental
charges now or hereafter levied or assessed or imposed against Landlord, Tenant
or the Leased Property or rents therefrom or which may become Liens, provided
that Taxes shall not include any income, franchise, estate, inheritance or gift
taxes, or any other tax imposed on or measured by the net income of Landlord,
except to the extent that the same is in direct substitution for a tax that
would otherwise be included within the definition of "Taxes" hereunder.
Tenant's Personal Property: All motor vehicles, machinery, equipment,
furniture, furnishings, movable walls or partitions, computers or trade fixtures
or all other personal property, and consumable inventory and supplies, now owned
or hereafter acquired by Tenant and located on the applicable Leased Property or
used or useful in Tenant's business on such Leased Property, including all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, except items, if any, included within the
definition of Fixtures.
Term: Collectively, the Fixed Term and any Extended Terms, to the extent
properly exercised by Tenant pursuant to the provisions of Article I, unless
earlier terminated pursuant to the provisions of this Lease.
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Termination Amount: With respect to a specified Leased Property, the
greater of the Fair Market Value thereof and the Release Amount therefor.
Threshold Amount: Two million dollars ($2,000,000).
Title Policy: The ALTA (or equivalent) title insurance policy acquired by
Landlord (i) naming Landlord as the insured and (ii) insuring Landlord's
ownership of the Leased Property subject to the exceptions and exclusions set
forth therein.
Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto to perform any obligations of such party under this Lease.
Uneconomic Property. As defined in Article I.
Unimproved Parcel. As defined in Article I.
Unsuitable for Its Primary Intended Use: A state or condition at a Leased
Property such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Tenant, reasonably exercised, the
Leased Property cannot by operated on a commercially practicable basis for its
Primary Intended Use.
Vornado Operating: Vornado Operating, Inc., a Delaware corporation.
Vornado Realty: Vornado Realty L.P., a Delaware limited partnership.
Vornado Trust: Vornado Realty Trust, a Maryland real estate investment
trust.
Warehouse Agreements: Warehousing agreements, logistics and services
agreements, distribution agreements, handling agreements and other similar
agreements in connection with the Primary Intended Use to the extent (but only
to the extent) the same are for goods stored or services rendered at any Leased
Property, in such forms and on such terms as are customarily entered into by
Tenant, together with any amendments and modifications to such agreements.
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ARTICLE III
3.1 Rent. Tenant will pay to Landlord, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, at Landlord's address set forth above or at such other place or
to such other person, firms or corporations as Landlord may designate in writing
from time to time, (i) Minimum Rent (as defined below), and (ii) Percentage
Rent; provided that so long as the Initial Landlord's Debt is outstanding and
Landlord is the "Borrower" thereunder, Minimum Rent and Percentage Rent shall be
paid in accordance with the Cash Management Procedures. In addition, Tenant will
pay to Landlord or the Person otherwise entitled thereto all Additional Charges
during the Term on or before the same are delinquent.
(a) Minimum Rent:
(i) For the period commencing on the Commencement Date through
December 31, 2002, the sum of FORTY EIGHT MILLION ONE HUNDRED SIXTY
FOUR THOUSAND AND 00/100 DOLLARS ($48,164,000.00) per annum.
(ii) For the period commencing on January 1, 2003 through
December 31, 2007, the sum of FIFTY MILLION FIVE HUNDRED SEVENTY TWO
THOUSAND TWO HUNDRED AND 00/100 DOLLARS ($50,572,200.00) per annum.
(iii) For the period commencing on January 1, 2008 through
April 30, 2013, the greater of (x) FIFTY THREE MILLION ONE HUNDRED
THOUSAND EIGHT HUNDRED TEN AND 00/100 DOLLARS ($53,100,810.00) per
annum and (y) the Fair Market Rental of the Leased Property, which
unless otherwise mutually agreed to by Landlord and Tenant shall be
determined by the appraisal procedure set forth in Article XXIV.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable in arrears in twelve
(12) equal installments on the eleventh (11th) day of each calendar month of the
Fixed Term and each Extended Term (the "Rent Payment Date"); provided that if
such 11th day is not a Business Day, then the Rent Payment Date shall be the
next preceding Business Day. Minimum Rent shall be paid for the period of
eleventh (11th) of each month (or, if applicable, the Commencement Date) through
the tenth (10th) of the next month (or, if applicable, the expiration of the
Term) (each, a "Rental Period"), provided that the first and last payments of
Minimum Rent shall be prorated as to any partial Rental Period, based on the
number of days within
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the Term during such Rental Period and the number of days in such Rental Period.
The first installment payment of Minimum Rent shall be payable on May 11, 1998,
for the Rental Period beginning with the Commencement Date and ending May 10,
1998.
(b) Percentage Rent:
(i) Generally. In addition to the Minimum Rent payable with respect
to the Leased Property, Tenant shall pay Percentage Rent for each Lease
Year, annually in arrears in one (1) installment, on the Rent Payment Date
occurring in May of the following Lease Year, commencing in 1999.
(ii) Presentation of Certificate and Audit. Together with the
payment to be made under clause (i) above, Tenant shall deliver to
Landlord an Officer's Certificate setting forth the Receipts for the
Leased Property (on a Leased Property-by-Leased Property basis) (a) for
the preceding Lease Year and (b) for each individual calendar quarter
during the preceding Lease Year, together with an audit of such Receipts
conducted by a "Big Six" firm of independent certified public accountants
proposed by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed).
(iii) Confirmation of Percentage Rent. Tenant shall utilize, or
cause to be utilized, an accounting system for the Leased Property in
accordance with its usual and customary practices and in accordance with
GAAP, which will accurately record Receipts for the Leased Property.
Tenant shall retain such records, for at least three (3) years after the
expiration of each Lease Year. Landlord, at its own expense, except as
provided herein below, shall have the right, exercisable by Notice to
Tenant within two (2) year after receipt of the applicable Officer's
Certificate referred to in clause (ii) above, by its accountants or
representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns). If any such audit discloses a deficiency in the
payment of Percentage Rent and either Tenant agrees with the result of
such audit or the matter is otherwise compromised with Landlord, Tenant
shall forthwith pay to Landlord the amount of the deficiency, as finally
agreed or determined, together with interest at the Interest Rate, from
the date such payment should have been made to the date of payment
thereof. If such deficiency, as determined or agreed upon or compromised
as aforesaid, is more than four percent (4%) of the Receipts reported by
Tenant for such Lease Year and, as a result, Landlord did not receive at
least ninety-five percent (95%) of the Percentage Rent payable with
respect to such Lease Year, Tenant shall pay the reasonable cost of such
audit and examination. If any such audit discloses that Tenant paid more
Percentage Rent for any Lease
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Year than was due hereunder, and either Landlord agrees with the result of
such audit or the matter is otherwise determined or compromised, then
(provided no Event of Default has occurred and is continuing) Landlord
shall grant Tenant a credit equal to the amount of such overpayment
against the Rent next coming due in the amount of such difference, as
finally agreed or determined, together with interest at the Interest Rate
accruing from the date of payment by Tenant until the date such credit is
applied. If such credit cannot be made because the Term has expired prior
to application in full thereof, then (provided no Event of Default has
occurred and is continuing and provided Tenant has paid all amounts
required under this Lease), Landlord shall repay the unapplied balance of
such credit to Tenant.
(iv) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public information, (2) disclosed to the extent that Landlord is
advised by counsel that Landlord is required to disclose such information
by subpoena, court order, securities laws and regulations, any other laws
or regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to the Initial Landlord's Debt,
provided that, with respect to the disclosures permitted under clauses
(4), Landlord shall obtain the agreement of the Persons to whom disclosure
is made to maintain such information as confidential in accordance with
terms of this Subsection (iv) and in no event shall public or Rule 144A
holders of Landlord's Debt be permitted to receive such information on an
individual Leased Property basis.
(v) Survival. The obligations of Tenant and Landlord contained in
this Section 3.4 shall survive the expiration or earlier termination of
this Lease.
(c) Additional Charges. In addition to the Minimum Rent and Percentage
Rent payable with respect to the Leased Property, Tenant shall pay and discharge
as and when due and payable the following (collectively, "Additional Charges"):
(1) Taxes and Other Charges. Tenant shall pay all Taxes and Other
Charges as set forth in Section 6.1(b) herein.
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(2) Utility Charges. Tenant shall pay all charges for electricity,
power, gas, oil, water, sanitary and storm sewer, refuse collection and
other utilities used or consumed in connection with the applicable Leased
Property during the Term.
(3) Insurance Premiums. Tenant shall pay, as Additional Charges, all
premiums for the insurance coverage required to be maintained pursuant to
Article VIII hereof.
(4) Other Charges. Tenant shall pay, as Additional Charges, all
other amounts, liabilities and obligations that Tenant assumes or agrees
to pay under this Lease, including all of its indemnification obligations
set forth herein.
(5) Late Payment of Rent. If any installment of Minimum Rent,
Percentage Rent or Additional Charges (but only as to those Additional
Charges which are payable directly to Landlord, if any) shall not be paid
within five (5) Business Days after its due date, Tenant will pay to
Landlord on demand, as Additional Charges, a late charge (to the extent
permitted by law) computed at the Overdue Rate (or at the maximum rate
permitted by law, whichever is the lesser) on the amount of such
installment, from the due date of such installment to the date of payment
thereof. To the extent that Tenant timely pays any Additional Charges to
Landlord pursuant to any requirement of this Lease, Tenant shall be
relieved of its obligation to pay such Additional Charges to the entity to
which they would otherwise be due. If Landlord's Loan Documents shall so
require, or if any Additional Charges shall not be paid to a third party
payee within five (5) Business Days after its due date, Landlord may at
any time thereafter, at Landlord's option, require Tenant to deposit into
an escrow account under the sole dominion and control of Landlord (or the
applicable Landlord's Lender), on the first day of each month (or such
other day(s) as Landlord shall reasonably specify), an amount which,
together with similar escrow deposits on succeeding deposit dates, is
sufficient to ensure that such escrow account shall contain an amount
sufficient to make such payment on its next due date, in which event
Landlord shall make all future payments for such expense from the escrow
account. In the event of any failure by Tenant to pay any Additional
Charges when due, Tenant shall promptly pay and discharge, as Additional
Charges, every fine, penalty, interest and cost that may be added for
non-payment or late payment of such items. Landlord shall have all legal,
equitable and contractual rights, powers and remedies provided either in
this Lease or by statute or otherwise in the case of non-payment of the
Rent. Landlord shall have the right to have such escrows held with a
Depositary.
(d) Funding Required into Cash Collateral Account. To the extent that, on
the third (3rd) Business Day prior to each Rent Payment Date, there are not
sufficient monies
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on deposit in the Cash Collateral Account (as defined in the Cash Management
Procedures) to fund the amounts required to be funded pursuant to clauses (a),
(c) and (d) of the Cash Management Procedures and pay the Minimum Rent due on
such Rent Payment Date, then Tenant shall be obligated to fund into the Cash
Collateral Account on such third (3rd) Business Day an amount equal to such
deficiency.
3.2 Net Lease. The Minimum Rent and Percentage Rent, as well as such
Additional Charges as are due and payable to Landlord, shall be paid absolutely
net to Landlord, so that this Lease shall throughout the Term yield to Landlord
the full amount of the installments of Minimum Rent and Percentage Rent, as well
as any payments of Additional Charges payable to Landlord, subject to any other
provisions of this Lease which expressly provide for adjustment or abatement of
Rent or other charges.
ARTICLE IV
4.1 No Termination, Abatement, etc. Except as otherwise specifically
provided herein, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any abatement, deduction, deferment or reduction of
Rent, or set-off against the Rent, nor shall the respective obligations of
Landlord and Tenant be otherwise affected by reason of (a) any damage to, or
destruction of, any Leased Property from whatever cause or any taking of the
Leased Property, (b) the interruption or discontinuance of any service or
utility servicing the applicable Leased Property, (c) the lawful or unlawful
prohibition of, or restriction upon, Tenant's use of the Leased Property, the
interference with such use by any person, corporation, partnership or other
entity, or by reason of eviction by paramount title, (d) any claim which Tenant
has or might have against Landlord or by reason of any default or breach of any
warranty by Landlord under this Lease or any other agreement between Landlord
and Tenant, or to which Landlord and Tenant are parties, (e) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Landlord or any assignee or transferee
of Landlord, or (f) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Tenant from any such obligations as a
matter of law. Tenant hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property, or (ii) entitle Tenant to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder, except as
otherwise specifically provided in this Lease. The obligations of Landlord and
Tenant hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be
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terminated pursuant to the express provisions this Lease. In any instance where,
after the occurrence of an Event of Default, Landlord retains funds which, but
for the occurrence of such Event of Default, would be payable to Tenant,
Landlord shall refund such funds to Tenant to the extent the amount thereof
exceeds the amount necessary to compensate Landlord for any cost, loss or damage
incurred in connection with such Event of Default.
4.2 Abatement Procedures. In the event of a partial taking or temporary
taking, which taking does not render the Leased Property Unsuitable for its
Primary Intended Use, this Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord. If Landlord and Tenant are unable to agree upon the amount
of such abatement within thirty (30) days after such taking, the matter may be
submitted by either party to a court of competent jurisdiction for resolution.
Pending such resolution, Tenant shall remain bound to pay Rent based upon the
amounts asserted by Landlord to be due and payable, provided Landlord shall
remain liable for the repayment to Tenant of amounts ultimately determined to be
overpaid to Landlord.
ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease, provided that, until the expiration or earlier
termination of this Lease, all capital improvements and additions made by
Tenant, at Tenant's expense, to any Leased Property shall be the property of
Tenant and, upon the expiration or earlier termination of this Lease, title to
such improvements, additions and replacements shall vest in Landlord.
5.2 Tenant's Personal Property. Tenant may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements any items of Tenant's Personal
Property, and Tenant may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Tenant shall
provide and maintain during the entire Lease Term all such Tenant's Personal
Property as shall be necessary to operate each Leased Property in compliance
with all applicable Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Primary Intended
Use. All of Tenant's Personal Property not removed by Tenant within thirty (30)
days following the expiration or earlier termination of this Lease with respect
to such Leased Property where such Tenant's Personal Property is located shall
be considered abandoned by Tenant and may be appropriated, sold, destroyed or
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otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account
therefor.
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants. Tenant hereby covenants and agrees with Landlord
that:
(a) Existence; Use of Leased Property; Legal Compliance; Insurance.
(i) Tenant shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with
all Legal Requirements applicable to it and the Leased Property. Tenant
shall at all times maintain and preserve the Leased Property and shall
keep the Leased Property in good working order and repair, reasonable wear
and tear excepted, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto; provided that Tenant shall, without the consent of
Landlord, make no Alteration to any Leased Property which constitutes
"Nonseverable Improvements" as such term is used in Section 4(4).03 of IRS
Revenue Procedure 75-21, as modified by IRS Revenue Procedure 79-48,
unless the conditions of Section 4(4).03(B) are satisfied and the
alteration is described in at least one of the subparagraphs of Section
4(4).03(C). Tenant will operate, maintain, repair and improve the Leased
Property in material compliance with all Legal Requirements, and will not
cause or allow the same to be misused or wasted or to deteriorate,
reasonable wear and tear excepted.
(ii) After the Commencement Date and throughout the entire Term,
Tenant shall use the applicable Leased Property and the Leased
Improvements thereof as a dry and cold storage warehousing facility and
for such other uses as may be necessary or incidental to such use,
including the provision of distribution services (such use, the "Primary
Intended Use") and, notwithstanding any restrictions on subletting
contained herein, Landlord hereby agrees that Tenant shall have the right
to enter into Warehouse Agreements. Tenant shall not use the applicable
Leased Property or any portion thereof for any other use without the prior
written consent of Landlord, which consent shall not be unreasonably
withheld or delayed (taking into account, among other things, the
provisions hereof relating to Percentage Rent). No use shall be made or
permitted to be made of an Leased Property, and no acts shall be done,
that will cause the cancellation
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of any insurance policy covering such Leased Property, nor shall Tenant
sell or otherwise provide, or permit to be kept, used or sold in or about
such Leased Property any article which may be prohibited by law or by
Insurance Requirements. Tenant shall, at its sole cost, comply with all of
the requirements pertaining to the Leased Property or other improvements
of any insurance board, association, organization or company necessary for
the maintenance of insurance, as herein provided, covering the Leased
Property and Tenant's Personal Property. Absent force majeure and any
other event beyond the reasonable control of Tenant, and except during a
period following a Casualty or Condemnation or in which an Alteration is
being performed, Tenant shall continuously operate the Leased Property for
its Primary Intended Use.
(b) Taxes and Other Charges; Contest for Taxes and Other Charges, Legal
Requirements and Liens.
(i) Subject to the provisions of Section 6.1(b)(ii), Tenant shall
pay all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Leased Property prior to the date on which such sums
become delinquent. Tenant will deliver to Landlord, upon request, receipts
for payment or other evidence satisfactory to Landlord that the Taxes and
Other Charges have been so paid (provided Tenant shall not be required to
furnish such receipts for payment of Taxes in the event such Taxes have
been (or were to have been) paid by Landlord's Lender pursuant to
Landlord's Loan Documents). Subject to the provisions of Section
6.1(b)(ii) and other than Permitted Encumbrances, Tenant shall not suffer
and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Leased
Property, and shall promptly pay for all utility services provided to the
Leased Property. Subject to Section 6.1(b)(ii), Tenant shall pay, bond or
otherwise discharge, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers and others that, if
unpaid, might result in, or permit the creation of, a lien or encumbrance
on any Leased Property, or on the rents arising therefrom.
(ii) After prior written notice to Landlord, Tenant, at its own
expense, may contest by appropriate legal, administrative or other
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges or Lien therefor or any Legal Requirement or
Insurance Requirement or the application of any instrument of record
affecting the Leased Property (other than this Lease or Landlord's Loan
Documents) or any claims or judgments of mechanics, materialmen,
suppliers, vendors or other Persons or any Lien therefor, and may withhold
payment of the same pending such proceedings if permitted by law;
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provided that (A) no Event of Default has occurred and remains uncured,
except for an Event of Default caused by the matter being contested, (B)
such proceeding shall suspend any collection of the contested Taxes, Other
Charges or Liens from the Leased Property, Tenant or Landlord, or adequate
time shall at all times remain prior to such collection, (C) such
proceeding shall be permitted under and be conducted in accordance with
the provisions of any other instrument to which Tenant is subject and
shall not constitute a default thereunder, (D) neither any Leased Property
nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, canceled or lost, (E) to the extent not already
reserved with Landlord (or Landlord's Lender) or bonded or otherwise
deposited or paid in connection with such proceedings, Tenant shall have
furnished Landlord with security (in an amount reasonably approved by
Landlord) to insure the payment of any such Taxes or Other Charges, or the
cost of the contested Legal Requirement or Insurance Requirement or the
removal of the Lien, in each case together with all reasonably anticipated
interest and penalties thereon, (F) in the case of an Insurance
Requirement, the failure of Tenant to comply therewith shall not impair
the validity of any insurance required to be maintained by Tenant
hereunder or the right to full payment of any claims thereunder, (G) in
the case of any essential or significant service with respect to any
Leased Property, any contest or failure to pay will not result in a
discontinuance of any such service, (H) in the case of any instrument of
record affecting any Leased Property or any part thereof, the contest or
failure to perform under any such instrument shall not result in the
placing of any Lien on any Leased Property or any part thereof (except if
such Lien would be removed upon completion of such proceedings and the
compliance by the parties with the terms of the resulting order, decision
or determination and the removal costs for such Lien have been escrowed
with Landlord or in the proceeding or bonded or otherwise deposited or
paid in connection with such proceedings), (I) except to the extent Tenant
has provided sufficient Eligible Collateral therefor or bonded or
otherwise deposited or paid in connection with such proceedings, neither
the failure to pay or perform any obligation which Tenant is permitted to
contest under this Section nor an adverse determination of any such
contest shall result in a material adverse effect on the utility, value or
operation of the applicable Leased Property, and (J) Tenant shall promptly
upon final determination thereof pay the amount of any such Taxes, Other
Charges or Liens, together with all costs, interest and penalties which
may be payable in connection therewith. Landlord may pay over any such
cash deposit or part thereof held by or on behalf of Landlord to the
claimant entitled thereto at any time when, in the judgment of Landlord,
the entitlement of such claimant is finally established, and Landlord
shall otherwise remit any remaining such amounts to Tenant. Landlord shall
give Tenant written notice of any such payments promptly following the
making thereof. Subject to the foregoing, at Tenant's timely request,
Landlord
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shall not pay and shall not cause to be paid from the Tax and Insurance
Escrow Account the contested Taxes or Other Charges being contested.
(c) Litigation. Tenant shall give prompt written notice to Landlord of any
litigation or governmental proceedings pending or threatened in writing against
Landlord, Tenant or against or affecting the Leased Property which, if
determined adversely to Landlord, Tenant or the Leased Property, might
reasonably be expected to materially adversely affect Landlord, or Tenant's
condition (financial or otherwise) or business or the operation or value of the
Leased Property.
(d) Inspection. Tenant shall permit agents, representatives and employees
of Landlord and/or Landlord's Lender (including any servicer or special servicer
on behalf of Landlord's Lender) to inspect the Leased Property on any Business
Day at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Tenant shall promptly advise Landlord of any
material adverse change in Tenant's condition (financial or otherwise) that
could reasonably be expected to materially impair the ability of Tenant to
comply with its obligations hereunder, or of the occurrence of any Default or
Event of Default under this Lease of which Tenant has knowledge.
(f) Cooperate in Legal Proceedings. Tenant shall cooperate fully with
Landlord (and with Landlord's Lender) with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the
rights of Landlord (or Landlord's Lender, as the case may be) hereunder or in
respect of the Leased Property and, in connection therewith, permit Landlord
(and Landlord's Lender, as applicable), at its election, to participate in any
such proceedings.
(g) Insurance Benefits. Tenant shall cooperate with Landlord (and
Landlord's Lender) in obtaining for Landlord (and Landlord's Lender, as
applicable) the benefits of any insurance proceeds lawfully or equitably payable
in connection with the Leased Property, and Landlord (and Landlord's Lender, as
applicable) shall be reimbursed for any out-of-pocket expenses reasonably
incurred in connection therewith (including attorneys' fees and disbursements,
and, if reasonably necessary to collect such proceeds, the expense of an
appraisal on behalf of Landlord in case of a fire or other casualty affecting
any Leased Property) out of such insurance proceeds.
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(h) Financial Reporting and Other Information.
1. Tenant will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis proper and accurate books, records and
accounts reflecting all of the financial affairs of Tenant and all items of
Operating Income, Operating Expenses and capital expenditures. Landlord and/or
Landlord's Lender shall have the right from time to time at all times during
normal business hours upon reason able notice to examine such books, records and
accounts at the office of Tenant set forth in Article XXIII or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof, at Landlord's expense, as Landlord and/or Landlord's Lender shall
desire, provided, after the occurrence of an Event of Default, Tenant shall pay
any reasonable out-of-pocket costs and expenses incurred by Landlord and/or
Landlord's Lender in any such examination and copying (or extraction).
2. Tenant agrees to furnish to Landlord, at such time as may be
required pursuant to any Landlord's Loan Documents or as may reasonably be
requested by Landlord, such financial reports (including annual and quarterly
financial statements and monthly operating statements, including a comparison of
the actual income, expense and Net Cash Flow to the Annual Budget), and other
information as may reasonably be requested by Landlord.
3. Tenant shall furnish to Landlord, promptly after receipt, a copy
of any notice received by or on behalf of Tenant from any Governmental Authority
having jurisdiction over any Leased Property with respect to any material
violation of Legal Requirements or any condition existing or alleged to exist or
emanate therefrom or thereat involving Hazardous Substances.
4. Tenant shall prepare and deliver to Landlord, for Landlord's
approval, which approval shall not be unreasonably withheld or delayed,
forty-five (45) days prior to the commencement of each year, a proposed Annual
Budget in respect of the Leased Property (and, to the extent otherwise prepared
by Tenant, each Leased Property individually) for the ensuing Fiscal Year.
(i) Business and Operations. Tenant will continue to engage in the
businesses currently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management, subleasing and operation of the
Leased Property. Tenant will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the conduct of its business (including the operation and management
of the Leased Property as refrigerated warehousing facilities and related uses).
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(j) Deferred Maintenance. Tenant shall, at Landlord's sole cost and
expense, cure or cause to be cured the conditions described on Exhibit 6.1(j) as
requiring remediation, correction, replacement or repair on an "immediate" basis
in a diligent manner and shall complete the same not later than the second
anniversary hereof. Landlord shall avail itself, and shall to the fullest extent
possible permit Tenant to avail itself, of the monies on deposit in the Deferred
Maintenance Reserve Account (as defined in the GSMC Loan Agreement) that are
available pursuant to the GSMC Loan Agreement for the payment of such cure.
(k) Intentionally Omitted.
(l) Material Agreements. Tenant shall:
(i) promptly perform and/or observe all of the material covenants
and agreements required to be performed and observed by it under any
Material Agreement, and do all things necessary to preserve and to keep
unimpaired its material rights thereunder;
(ii) promptly notify Landlord of the giving of any notice of any
material default by any party under any Material Agreement of which it is
aware; and
(iii) promptly enforce the performance and observance of all of the
material covenants and agreements required to be performed and/or observed
by the other party under each Material Agreement.
(m) Ground Leased Property. With respect to the Ground Leased Property,
Tenant shall observe and perform all of the obligations of Landlord under each
Ground Lease.
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants. Tenant covenants and agrees with Landlord
that it will not do, directly or indirectly, any of the following:
(a) Operation of Property. Tenant shall not, without Landlord's prior
consent, which consent shall not be unreasonably withheld or delayed (except as
elsewhere herein expressly provided): (i) surrender or terminate any Material
Agreement (unless the other party thereto is in material default and the
termination of such agreement would be
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commercially reasonable), (ii) increase or consent to the increase of the amount
of any charges payable by Tenant under any Material Agreement, except as
provided therein or on an arms'-length basis and commercially reasonable terms;
or (iii) otherwise modify, change, supplement, alter or amend, or waive or
release any of its rights and remedies under any Material Agreement in any
material respect that is materially adverse to the interests of Landlord, except
on an arms'-length basis and commercially reasonable terms.
(b) Liens. Subject to Section 6.1(b)(ii), Tenant shall not, without the
prior written consent of Landlord, create, incur, assume, permit or suffer to
exist any Lien on any portion of the Leased Property (or any of them), except
(i) Permitted Encumbrances, (ii) Liens created by or permitted pursuant to
Landlord's Loan Documents and (iii) Liens for Taxes or Other Charges not yet
delinquent.
(c) Affiliate Transactions. Tenant shall not enter into, or be a party to,
any transaction with an Affiliate of Tenant except in the ordinary course of
business and on terms which are fully disclosed to Landlord in advance and are
no less favorable to Tenant or such Affiliate than would be obtained in a
comparable arms'-length transaction with an unrelated third party.
(d) Zoning and Uses. Tenant shall not (i) initiate or support any limiting
change in the permitted uses of any Leased Property (or to the extent
applicable, limiting zoning reclassification of any Leased Property), (ii) seek
any variance under existing land use restrictions, laws, rules or regulations
(or, to the extent applicable, zoning ordinances) applicable to any Leased
Property or use or permit the use of any Leased Property in each case in a
manner that would result in the existing use becoming a non-conforming use under
applicable land-use restrictions (and, if any, zoning ordinances) with any
materially adverse effect on the value of the Leased Property or that would
violate the terms of any Lease, Operating Agreement, Legal Requirements or any
Permitted Encumbrance, (iii) modify, amend or supplement any of the terms of any
Permitted Encumbrance in a manner adverse in any material respect to the
interests of Landlord, (iv) impose or permit or suffer the imposition of any
restrictive covenants, easements or encumbrances upon the Leased Property in any
manner that adversely affects in any material respect the value or utility of
the Leased Property, (v) execute or file any subdivision plat affecting any
Leased Property, institute, or permit the institution of, proceedings to alter
any tax lot comprising any Leased Property or (vi) permit or suffer any Leased
Property to be used by the public or any Person in such manner as might make
possible a claim of adverse usage or possession or of any implied dedication or
easement.
(e) Nonexempt ERISA Transactions. Tenant shall not engage in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Tenant, or in any transaction that would cause
any obligation or action taken or to be taken hereunder (or the exercise by
Landlord's Lender of any of its
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rights under the Lender's Loan Documents) to be a non-exempt prohibited
transaction under ERISA.
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations. Tenant will not make any demolition, alteration,
installation, improvement, expansion, reduction or decoration (each, an
"Alteration") of or to any Leased Property or any part thereof, except in
accordance with the following terms and conditions:
(a) The Alteration shall be undertaken in accordance with the applicable
provisions of this Lease, Landlord's Loan Documents, the Operating Agreements,
the Leases and all Legal Requirements.
(b) No Event of Default shall have occurred and be continuing or shall
occur as a result of such action.
(c) The Alteration shall not materially adversely affect the (i) Primary
Intended Use or (ii) fair market value of the Leased Property in question.
(d) A Material Alteration shall be conducted under the supervision of a
Qualified Architect or Engineer and shall not be undertaken until ten (10)
Business Days after there shall have been delivered to Landlord, for information
purposes only and not for approval by Landlord, detailed plans and
specifications and cost estimates therefor, prepared and approved in writing by
such Qualified Architect or Engineer. Such plans and specifications may be
revised at any time and from time to time, provided that material revisions of
such plans and specifications shall be delivered to Landlord for information
purposes only.
(e) Other than in connection with any Restoration, the Alteration may not,
in and of itself, either during the Alteration or upon completion, materially
adversely affect the Receipts derived from the Leased Property in question,
taking into account the Percentage Rent requirements hereunder; provided that
if, as reasonably determined by Landlord, such Alteration would materially
adversely affect the Net Operating Income at such Leased Property (taking into
account any amount then in any reserve account funded pursuant to the Cash
Management Procedures and permitted to be used in connection with such Material
Alteration), then in order to proceed with the Alteration, Tenant shall deliver
to a Depositary Eligible Collateral in the total amount of the estimated
reduction in Net Operating Income resulting from the Alteration, which Eligible
Collateral shall be
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returned to Tenant after substantial completion of the Alteration if the
reduction in Net Operating Income has been restored and no Event of Default has
occurred and is continuing.
(f) All work done in connection with any Alteration shall be performed
with due diligence in a good and workmanlike manner, all materials used in
connection with any Alteration shall be not less than the standard of quality of
the materials generally used at the applicable Leased Property as of the date
hereof (or, if greater, the then-current customary quality in the submarket in
which such Leased Property is located) and all work shall be performed and all
materials used in accordance with all applicable Legal Requirements and
Insurance Requirements.
(g) The cost of any Alteration shall be promptly and fully paid for by
Tenant, subject to the next succeeding sentence. No payment made prior to the
Final Completion of an Alteration or Restoration to any contractor,
subcontractor, materialman, supplier, engineer, architect, project manager or
other Person who renders services or furnishes materials in connection with such
Alteration shall exceed ninety five percent (95%) of the value of the work
performed from time to time and materials furnished and incorporated into the
Improvements.
(h) All items (other than Eligible Collateral) to be delivered to the
Depositary hereunder shall also be delivered to Landlord (if Landlord is not the
Depositary), and, if required under Section 15.5, Landlord's Lender (if
Landlord's Lender is not the Depositary).
(i) For any Material Alteration (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner), Tenant shall be obligated to deliver to a Depositary Eligible
Collateral in an amount that, when taken together with any amount then in any
reserve account funded pursuant to the Cash Management Procedures and permitted
to be used in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant as such work progresses in accordance with Section 8.1(j). In
addition, if all Material Alterations (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner) then being performed exceeds $20,000,000 (the "Aggregate Threshold
Amount"), Landlord shall be obligated to deliver to the Depositary Eligible
Collateral in amount that, when taken together with (x) any Eligible Collateral
previously delivered under this subsection (i) and (y) any amounts then in any
reserve funded pursuant to the Cash Management Procedures and permitted to be
used in connection with such Material Alteration, shall be
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sufficient to pay all of the costs of the Material Alteration in excess of the
Aggregate Threshold Amount, which Eligible Collateral shall be held by the
Depositary and released to Tenant at such time as the remaining costs of the
Material Alteration are less than the Aggregate Threshold Amount.
(j) With respect to any Material Alteration as to which Tenant shall have
delivered Eligible Collateral in accordance with Section 8.1(i):
(i) Tenant shall deliver to the Depositary a schedule (which shall
be concurred in by the Qualified Architect or Engineer) setting forth the
projected stages of completion of such Alteration(s) and the corresponding
amounts expected to be due and payable by or on behalf of Tenant in
connection with such completion, such schedule to be updated quarterly by
Tenant (and concurred with by a Qualified Architect or Engineer) during
the performance of such Alteration(s).
(ii) Any Eligible Collateral that Tenant delivers to the Depositary
pursuant hereto (and the proceeds of any such Eligible Collateral) shall
be invested (to the extent such Eligible Collateral can be invested) by
the Depositary in Permitted Investments for a period of time consistent
with the date on which Tenant notifies the Depositary that Tenant expects
to request a release of such Eligible Collateral in accordance with the
next succeeding sentence. From time to time as the Alteration progresses,
the amount of any Eligible Collateral so furnished may, upon the written
request of Tenant to the Depositary, be withdrawn by Tenant and paid or
otherwise applied by or returned to Tenant in an amount equal to the
amount Tenant would be entitled to so withdraw if Section 10.2 (d) hereof
were applicable, and any Eligible Collateral so furnished which is a
Credit Facility may be reduced by Tenant in an amount equal to the amount
Tenant would be entitled to so reduce if Section 10.2(d) hereof were
applicable, subject, in each case, to the satisfaction of the conditions
precedent to withdrawal of funds or reduction of the Credit Facility set
forth in said Section 10.2(d). In connection with the above-described
quarterly update of the projected stages of completion of the Material
Alteration (as concurred with by an Qualified Architect or Engineer),
Tenant shall increase (or be permitted to decrease, as applicable) the
Eligible Collateral then deposited with the Depositary as necessary to
comply with Section 8.1(i) hereof.
(iii) At any time after final completion of such Alterations, the
whole balance of any Cash deposited with the Depositary pursuant to
Section 8.1(j) then remaining on deposit may be withdrawn by Tenant and
shall be paid by the Depositary to Tenant, and any Eligible Collateral so
deposited shall, to the extent it has not been called upon, reduced or
theretofore released, be released by the
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Depositary to Tenant, within ten (10) days after receipt by the Depositary
of an application for such withdrawal and/or release together with an
Officer's Certificate, and as to the following clauses (A) and (B) of this
clause also a certificate of the Qualified Architect or Engineer, setting
forth in substance as follows:
(A) that such Alteration(s) has been completed substantially
in accordance with any plans and specifications therefor previously
filed with Landlord under Section 8.1(d) hereof;
(B) that, to the knowledge of the certifying Person, (x) such
Alteration(s) has been completed in compliance, in all material
respects, with all Legal Requirements, and (y) to the extent
required for the legal use or occupancy of the portion of the Leased
Property affected by such Alteration(s), Tenant has obtained a
temporary or permanent certificate of occupancy (or similar
certificate) or, if no such certificate is required, a statement to
that effect;
(C) that to the knowledge of the certifying Person, all
amounts that Tenant is or may become liable to pay in respect of
such Alteration(s) through the date of the certification have been
paid in full or adequately provided for and, to the extent that such
are customary and reasonably obtainable by prudent property owners
in the area where the Leased Property is located, that Lien waivers
have been obtained from the general contractor and major
subcontractors performing such Alteration or, at its sole cost and
expense, Tenant shall cause a nationally recognized title insurance
company to deliver to Landlord either (x) an endorsement or other
affirmative coverage with respect to the then-current loan policy in
favor of Landlord's Lender, updating such policy and insuring over
such Liens without further exceptions to such policy other than
Permitted Encumbrances, or (y) owner's and loan title insurance
policies, in such form, in such amounts and with such endorsements
as shall be reasonably satisfactory to Landlord and Landlord's
Lender, which policies shall be dated the date of completion of the
Material Alteration and shall contain no exceptions other than
Permitted Encumbrances; and
(D) that to the knowledge of the certifying Person, no Event
of Default has occurred and is continuing.
provided that if, for any reason, Tenant is unable to deliver the
certification required by clause (C) above with respect to any costs or
expenses relating to the Alteration, then, assuming Tenant is able to
satisfy each of the other requirements
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set forth in clauses (A), (B), (C) and (D) above, Tenant shall be entitled
to the release of the difference between the whole balance of such
Eligible Collateral and the total of all costs and expenses to which
Tenant is unable to certify.
8.2 Subletting and Assignment; Warehouse Agreements.
8.2.1 Generally. Except as expressly provided herein, Tenant shall
not, without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion, assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer this Lease or sublease all or any part of the Leased Property
or suffer or permit this Lease or the leasehold estate created hereby or thereby
or any other rights arising under this Lease to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily or involuntarily or by operation of law, or permit the use or
occupancy of the applicable Leased Property to be offered or advertised for
assignment or subletting except as hereinafter provided. For purpose of this
Section 8.2, an assignment of this Lease shall be deemed to include any change
in control of Tenant, as if such change in control or transaction were an
assignment of this Lease.
8.2.2 Certain Sublettings and Assignments. Subject to the provisions
of Section 8.2.3 and any other express conditions or limitations set forth
herein,
(a) without the consent of Landlord, Tenant may assign this
Lease (in whole but not in part) to any Pre-Approved Party and sublet all
or any part of the Leased Property to any Pre-Approved Party; and
(b) without the consent of Landlord, Tenant may sublet all or
any part of any one or more Leased Property (i) in the normal course of
the Primary Intended Use and (ii) to concessionaires or other third party
users or operators of portions of the Leased Property in furtherance of
the Primary Intended Use.
8.2.3 Landlord's Right to Collect from Assignees and Subtenants. If this
Lease is assigned or if the applicable Leased Property or any part thereof is
sublet (or occupied by any entity other than Tenant and its employees),
Landlord, after an Event of Default occurs and so long as it is continuing, may
collect the rents from such assignee, Subtenant or occupant, as the case may be,
and apply the net amount collected to the Rent herein reserved, but no such
collection shall be deemed (i) a waiver of the provisions set forth in Section
8.2.1, (ii) the acceptance by Landlord of such assignee, Subtenant or occupant,
as the case may be, as a tenant or (iii) release of Tenant from the future
performance of its covenants, agreements or obligations contained in this Lease.
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8.2.4 No Release. No subletting or assignment shall in any way
impair the continuing primary liability hereunder of the Tenant named herein, as
well as of each subsequent Tenant, and no consent to any subletting or
assignment in any particular instance shall be deemed a waiver of the
prohibition set forth in this Section 8.2. No assignment, subletting or
occupancy shall affect the obligation to use the Leased Property in accordance
with Section 6.1(a)(ii). Any subletting, assignment or other transfer of
Tenant's interest in this Lease in contravention of this Section 8.2 shall be
void at Landlord's option.
8.2.5 Required Assignment and Subletting Provisions. Any assignment
and/or Sublease must provide that:
(a) it shall be subject and subordinate to all of the terms
and conditions of this Lease,
(b) the use of the applicable Leased Property shall be
restricted to the uses and purposes expressly permitted by this Lease and
shall not conflict with any Legal Requirement, Insurance Requirement or
any other provision of this Lease,
(c) no Subtenant or assignee shall be permitted to further
sublet all or any part of the applicable Leased Property or assign this
Lease or its sublease except as expressly provided in this Lease,
(d) in the event of cancellation or termination of this Lease
for any reason whatsoever or of the surrender of this Lease (whether
voluntary, involuntary or by operation of law) prior to the expiration
date of such Sublease, including extensions and renewals granted
thereunder, then, at Landlord's option, the Subtenant shall make full and
complete attornment to Landlord for the balance of the term of the
Sublease, which attornment shall be evidenced by an agreement in form and
substance satisfactory to Landlord and which the Subtenant shall execute
and deliver within five (5) days after request by Landlord and the
Subtenant shall waive the provisions of any law now or hereafter in effect
which may give the Subtenant any right of election to terminate the
Sublease or to surrender possession in the event any proceeding is brought
by Landlord to terminate this Lease, and
(e) in the event the Subtenant receives a written notice from
Landlord stating that Tenant is in Default under this Lease, the Subtenant
shall thereafter be obligated to pay all rentals accruing under said
sublease directly to Landlord or as such party may direct; all rentals
received from the Subtenant by Landlord shall be credited against the
amounts owing by Tenant under this Lease.
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8.2.6 Reimbursement of Landlord's Costs. Tenant shall pay to
Landlord, within ten (10) business days after request therefore, all costs and
expenses, including reasonable attorney's fees, incurred by Landlord (including,
to the extent Landlord is liable for the same, by Landlord's Lender) in
connection with any request made by Tenant to Landlord to assign this Lease or
sublet the applicable Leased Property.
8.2.7 Warehouse Agreements. The above provisions of this Section 8.2
shall not be applicable to Warehouse Agreements, provided that Tenant shall use
commercially reasonable efforts to include in any Warehouse Agreement entered
into from and after the date hereof that the other party thereto shall permit
the collateral assignment described in Section 8.4 hereof, and the collateral
assignment by Landlord to Landlord's Lender of Landlord's security interests in
respect of each Sublease and Warehouse Agreement and such amounts to secure
Landlord's obligations under Landlord's Loan Documents.
8.2.8 Certain Leases Senior. With respect to those leases listed on
Exhibit 8.2.8, hereto, the parties acknowledge that Landlord is, as of the
Commencement Date, the lessor thereunder (whether by operation of law or
otherwise) and that such leases are, by operation of law, senior to this Lease.
Tenant shall perform and comply with all obligations of lessor under such leases
and, provided no Event of Default shall have occurred and be continuing, Tenant
shall be entitled to the receipt of all amounts payable by the lessees under
such leases.
8.3 Sublease and Warehouse Agreement Limitation. Anything contained in
this Lease to the contrary notwithstanding, Tenant shall not sublet the Leased
Property, or enter into Warehouse Agreements, on any basis such that (i) the
rental or other consideration to be paid by the Subtenant or other party
thereunder would be based, in whole or in part, on the income or profits derived
by the business activities of the Subtenant or such other Party, or (ii) any
portion of the amounts received or accrued by Landlord hereunder would fail to
qualify as "rents from real property" within the meaning of Section 856(d) of
the Code, or any similar or successor provision thereto.
8.4 Collateral Assignment of Subleases and Warehouse Agreements to
Landlord. As security for Tenant's obligations under this Lease and not
otherwise, but subject to any limitations pursuant to applicable law or
contracts (including the terms of any existing or future Subleases and Warehouse
Agreements), Tenant hereby assigns, transfers and sets over unto Landlord all of
Tenant's right, title and interest in and to all Subleases and Warehouse
Agreements, and Tenant hereby confers upon Landlord, its agents and
representatives, a right of entry in, and sufficient possession of, the Leased
Property to permit and assure the collection by Landlord of all sums payable to
Tenant, if any, under the Subleases and all sums payable to Tenant pursuant to
the Warehouse Agreements. The exercise of this right of entry and qualified
possession by Landlord shall
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not constitute an eviction of Tenant from the Leased Property. Further, Tenant
acknowledges that Landlord shall collaterally assign its rights under this
Section 8.4 to Landlord's Lender, to secure Landlord's obligations in respect of
Landlord's Debt. This assignment, although presently effective, is operative
only upon the occurrence of an Event of Default hereunder and not before.
Nothing in this Section 8.4, however, shall be deemed to limit or qualify the
rights of any Leasehold Mortgagee pursuant to Section 8.5 below.
8.5 Leasehold Mortgages.
8.5.1 Landlord's Estate. No Leasehold Mortgage or any extension
thereof made by Tenant shall be a lien or encumbrance upon the estate or
interest of Landlord in and to the Leased Property or any part thereof.
8.5.2 Certain Leasehold Mortgage Requirements. No Leasehold Mortgage
shall be valid or of any force or effect, or be deemed for purposes of this
Lease to be a Leasehold Mortgage, unless and until (a) a true copy of the
original of each instrument creating and effecting such Leasehold Mortgage,
certified by the Leasehold Mortgagee to be a true copy of such instrument, and
written notice containing the name and post office address of the Leasehold
Mortgagee, shall have been delivered to Landlord, (b) any consent required
hereunder by Landlord shall have been given, and (c) the Leasehold Mortgage
shall contain in substance the following provisions:
"This mortgage is executed upon the condition that no purchaser at
any foreclosure sale or assignee under an assignment in lieu of
foreclosure shall acquire any right, title or interest in or to the
lease hereby mortgaged, unless the said purchaser or assignee, or
the person, firm or corporation to whom or to which such purchaser's
or assignee's right has been assigned, shall in the instrument
transferring to such purchaser or to such assignee the interest of
tenant under the lease hereby mortgaged, assume and agree to perform
all of the terms, covenants and conditions of that lease thereafter
to be observed or performed on the part of such tenant (subject to
the terms of Section 8.5.3(d) and/or Section 8.5.6 thereof, to the
extent applicable), that no further or additional mortgage or
assignment of the lease hereby mortgaged shall be made except in
accordance with the provisions contained in Article VIII of that
lease, and that a duplicate original of said instrument containing
such assumption agreement, duly executed and acknowledged by such
purchaser or such assignee and in recordable form, shall be
delivered to the landlord under the hereby mortgaged lease
immediately after the consummation of such sale, or in any event,
prior to taking possession of the premises demised thereby as
"Tenant" under the lease."
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8.5.3 Leasehold Mortgagee Provisions.
(a) If Tenant shall enter into a Leasehold Mortgage and complies, in
connection therewith, with the provisions of Section 8.5.1 and 8.5.2, Landlord
shall give to such Leasehold Mortgagee, at the address of such Leasehold
Mortgagee set forth in the notice mentioned in Section 8.5.2, a copy of each
notice of Default by Tenant and each notice of termination of this Lease at the
same time as, and whenever, any such notice of Default or termination shall be
given to Tenant, and no such notice shall be deemed to have been duly given to
Tenant unless and until a copy thereof shall have been so given to each such
Leasehold Mortgagee. Each Leasehold Mortgagee (i) shall thereupon have a period
of ten (10) days more in the case of a monetary Default and twenty (20) days
more in the case of any non-monetary Default, after notice of such Default is
given to the Leasehold Mortgagee, for curing the Default, or causing the same to
be cured by Tenant or otherwise, than is given Tenant after such notice is given
to Tenant, and (ii) shall, within such period and otherwise as herein provided,
have the right to cure such Default, cause the same to be cured by Tenant or
otherwise. Landlord shall accept performance by a Leasehold Mortgagee of any
covenant, condition, or agreement on Tenant's part to be performed hereunder
with the same force and effect as though performed by Tenant.
(b) Notwithstanding the provisions of Section 8.5.3(a) hereof,
no Event of Default shall be deemed to exist as long as a Leasehold
Mortgagee, in good faith, (i) shall have commenced promptly to cure the
Default in question and prosecutes the same to completion with reasonable
diligence and continuity, subject to Unavoidable Delays, which for the
purpose of this Section 8.5.3(b) shall include causes beyond the control
of such Leasehold Mortgagee instead of causes beyond the control of
Tenant, or (ii) if possession of the Leased Property is required in order
to cure the Default in question, such Leasehold Mortgagee (x) shall have
entered into possession of the Leased Property with the permission of
Tenant for such purpose or (y) shall have notified Landlord of its
intention to institute foreclosure proceedings to obtain possession
directly or through a receiver, and within fourteen (14) days of
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the giving of such notice commenced such foreclosure proceedings and
thereafter (1) prosecutes such proceedings with reasonable diligence and
continuity (subject to Unavoidable Delays) or (2) receives an assignment
of this Lease in lieu of foreclosure from Tenant, and, upon obtaining
possession pursuant to clause (x) or (y), commences promptly to cure the
Default in question and prosecutes the same to completion with reasonable
diligence and continuity (subject to Unavoidable Delays) or (iii) if the
Leasehold Mortgagee is a collateral assignee or the holder of a security
interest in ownership interests in Tenant and the foreclosure of its
collateral assignment or security interest is required in order to act
under (i) or (ii) above, such Leasehold Mortgagee shall have notified
Landlord of its intention to institute proceedings to foreclose such
collateral assignment or pledge and within fourteen (14) days of the
giving of such notice commences such foreclosure proceedings, and
thereafter (1) prosecutes such proceedings with reasonable diligence and
continuity (subject to Unavoidable Delays) or (2) receives a direct and
absolute assignment from the assignor under the collateral assignment of
its interest in the Leasehold Mortgage or of the ownership interest, in
lieu of foreclosure, and upon the completion of such foreclosure, or the
obtaining of such assignment, commences promptly to act under (i) or (ii)
above; provided that the Leasehold Mortgagee shall have delivered to
Landlord, in writing, its agreement to take the action described in clause
(i), (ii) or (iii) herein and shall have assumed the obligation to cure
the Default in question and that during the period in which such action is
being taken (and any foreclosure proceedings are pending), all of the
other obligations of Tenant under this Lease, to the extent they are
susceptible of being performed by the Leasehold Mortgagee, are being duly
performed within any applicable grace periods. However, at any time after
the delivery of the aforementioned agreement, the Leasehold Mortgagee may
notify Landlord, in writing, that it has relinquished possession of the
Leased Property or that it will not institute foreclosure proceedings, or
if such proceedings have been commenced, that it has discontinued them,
and in such event, the Leasehold Mortgagee shall have no further liability
under such agreement from and after the date it delivers such notice to
Landlord (except for any obligations assumed by the Leasehold Mortgagee
and accruing prior to the date it delivers such notice), and, thereupon,
Landlord shall have the unrestricted right to terminate this Lease and to
take any other action it deems appropriate by reason of any Default by
Tenant, and upon any such termination the provisions of Section 8.5.4
shall apply. Anything contained in this Section 8.5.3(b) to the contrary
notwithstanding, the provisions of this Section 8.5.3(b) shall not apply
in the case of a Leasehold Mortgagee which is not an Institutional Lender
unless such Leasehold Mortgagee shall provide Landlord with security for
the performance of the assumed obligation in amount and form reasonably
satisfactory to Landlord, during the period that such Leasehold Mortgagee
is taking the required action to cure the Default in question.
(c) Landlord and Tenant agree that, from and after the date upon
which Landlord receives the notice and documents mentioned in clause (a) of
Section 8.5.2, they shall not modify or amend this Lease in any respect
materially adverse to the right of Tenant or Leasehold Mortgagee or cancel or
terminate this Lease other than as provided herein without the prior written
consent of the Leasehold Mortgagees which have given such notice.
(d) Except as provided in Section 8.5.3(b), no Leasehold Mortgagee
shall become liable under the provisions of this Lease unless and until such
time as it becomes, and then only for as long as it remains, the owner of the
leasehold estate created hereby.
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8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease.
(a) In case of termination of this Lease by reason of any Event of
Default or for any other reason, Landlord, subject to the provisions of Section
8.5.4(e), shall give prompt notice thereof to each Leasehold Mortgagee under a
mortgage made in compliance with the provisions of Sections 8.5.1 and 8.5.2,
which notice shall be given as provided in Section 8.5.3(a) hereof. Landlord, on
written request of such Leasehold Mortgagee made any time within thirty (30)
days after the giving of such notice by Landlord, shall execute and deliver
within thirty (30) days thereafter a new lease of the Leased Property to the
Leasehold Mortgagee, or its designee or nominee, for the remainder of the Term,
upon all the covenants, conditions, limitations and agreements herein contained,
provided that the Leasehold Mortgagee (i) shall pay to Landlord, simultaneously
with the delivery of such new lease, all unpaid Rent due under this Lease up to
and including the date of the commencement of the term of such new lease and all
expenses including attorneys' fees and disbursements and court costs, incurred
by Landlord in connection with the Default by Tenant, the termination of this
Lease and the preparation of the new lease, and (ii) shall deliver to Landlord a
statement, in writing, acknowledging that Landlord, by entering into a new lease
with the Leasehold Mortgagee or its nominee or designee, shall not have or be
deemed to have waived any rights or remedies with respect to Defaults existing
under this Lease, notwithstanding that any such Defaults existed prior to the
execution of the new lease, and that the breached obligations which gave rise to
the Defaults and which are susceptible of being cured by the Leasehold Mortgagee
or its nominee or designee are also obligations under said new lease, but such
statement shall be subject to the proviso that the applicable grace periods, if
any, provided under the new lease for curing such obligations shall begin to run
as of the first day of the term of said new lease.
(b) Any such new lease and the leasehold estate thereby created
shall, subject to the same conditions contained in this Lease, continue to
maintain the same priority as this Lease with regard to any Leasehold Mortgage
or any other lien, charge or encumbrance whether or not the same shall then be
in existence. Concurrently with the execution and delivery of such new lease,
Landlord shall assign to the tenant named therein all of its right, title and
interest in and to moneys received from any Subleases and Warehouse Agreements
that have not been applied to Rent and have not been applied or being held for
application to the costs incurred by Landlord to operate, maintain and repair
the Leased Property.
(c) Upon the execution and delivery of a new lease under this
Section 8.5.4, all Subleases and Warehouse Agreements which theretofore may have
been assigned to Landlord thereupon shall be assigned and transferred, without
recourse, representation or warranty, by Landlord to the tenant named in such
new lease. Between the date of termination of this Lease and the earlier of (i)
the date of execution and
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delivery of the new lease and (ii) the date of Leasehold Mortgagee's option to
request a new lease pursuant to this Section 8.5.4 expires without the exercise
of such option, Landlord shall not enter into any new Subleases or Warehouse
Agreements, cancel or modify any then existing Subleases or Warehouse
Agreements, or accept any cancellation, termination or surrender thereof (unless
such termination shall be effected as a matter of law on the termination of this
Lease) without the written consent of the Leasehold Mortgagee, except as
permitted in the Subleases or Warehouse Agreements.
(d) If there is more than one Leasehold Mortgage, Landlord shall
recognize the Leasehold Mortgagee whose Leasehold Mortgage is junior in lien as
the Leasehold Mortgagee entitled to the rights afforded by Sections 8.5.3, 8.5.4
and 8.5.5 (unless a Leasehold Mortgagee senior in lien requires that the holder
thereof have a superior entitlement to such rights, in which event such
recognition shall be of the holder of that Leasehold Mortgage), provided that
such Leasehold Mortgagee shall have complied with the provision of Sections
8.5.1 and 8.5.2. A security agreement providing for a security interest in the
ownership interests in Tenant and otherwise complying with the terms hereof for
a Leasehold Mortgage shall be treated as a Leasehold Mortgage that is junior in
lien.
8.5.5 Notice of Arbitration. In any circumstances where arbitration
is provided for under this Lease, Landlord agrees that Landlord shall give any
Leasehold Mortgagee who shall have given Landlord a notice as provided in
Section 8.5.2(a), notice of any demand by Landlord for any arbitration, and
Landlord shall recognize the Leasehold Mortgagee entitled to the rights afforded
hereunder in accordance with Section 8.5.4(d) as the only proper party to
participate in the arbitration. In such case, Tenant agrees not to participate
in such arbitration.
ARTICLE IX
9.1 Maintenance and Repair.
(a) Subject to Landlord's obligation under Section 9.1(b), Tenant,
at its expense, shall keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto and which are under Tenant's control
(and Tenant's Personal Property) in good order and repair, reasonable wear and
tear excepted (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of such Leased Property or
Tenant's Personal Property, or any portion of either) and shall promptly make
all necessary and appropriate repairs and replacements thereto, of every kind
and nature, whether interior or exterior, structural or non-structural, ordinary
or extraordinary, foreseen or unforeseen, arising by reason of a condition
(concealed or otherwise) occurring subsequent or prior to the Commencement Date.
All repairs shall, to
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the extent reasonably achievable, be made in good, workmanlike and first-class
manner, in accordance with all applicable federal, state and local statutes,
ordinances, by-laws, codes, rules and regulations relating to such work. Tenant
will not take or omit to take any action the taking or omission of which might
materially impair the value or usefulness of the Leased Property or any part
thereof for the Primary Intended Use.
(b) Notwithstanding anything herein to the contrary, Landlord shall
promptly make all necessary and appropriate repairs and replacements to the
Leased Property (other than those repairs and replacements (i) caused by the
negligence or wilfull misconduct of Tenant or any Person claiming by, through or
under Tenant or (ii) required as a result of Casualty or Condemnation to the
Leased Property) the costs of which are required to be depreciated under the
Internal Revenue Code on a 39-year basis (or any successor period of
depreciation for buildings), provided that Tenant shall make such repairs or pay
such expenditures (as applicable) to the extent the same exceed, on a cumulative
basis, $3,000,000 per annum, increased 5 percent as of January 1, 2003 and
January 1, 2008. Landlord's obligation pursuant to the prior sentence, however,
shall be subject to prior reasonable notice from Tenant as to the need to make
such repair and replacement. Further, Landlord may elect that Tenant perform
such repair and replacement, in which event, Landlord shall reimburse or pay to
Tenant, within fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in making such
repairs and replacements.
(c) Except as expressly specified in Section 9.1(b), Landlord shall
not under any circumstances be required to build or rebuild any improvements on
the Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or non-structural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, or to
maintain the Leased Property in any way, except as expressly provided herein.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or thereafter enacted.
(d) Nothing contained herein and no action or inaction by Landlord
shall be construed as (i) constituting the consent or request of Landlord,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property for the construction, alteration, addition,
repair or demolition of or to the Leased Property, or (ii) giving Tenant any
right, power or permission to contract for or permit the performance of any
labor or services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any
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right, title, interest, lien, claim or other encumbrance upon the estate of
Landlord in the Leased Property.
(e) Tenant will, upon the expiration or prior termination of the
Term with respect to any Leased Property, vacate and surrender the same to
Landlord in the condition in which the same was originally received from
Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the Term). In addition, Tenant shall
not be permitted to remove any of Tenant's Personal Property from the Leased
Property unless such removal shall not damage the Leased Property in any
material respect.
9.2 Encroachments, Restrictions, etc. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other agreement affecting the Leased
Property, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of any adverse final determination, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment, whether
the same shall affect Landlord or Tenant or (ii) make such changes in the Leased
Improvements, and take such other actions, as Tenant in good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment, and to
end such violation or impairment, including, if necessary, the alteration of any
of the Leased Improvements, and in any event take all such actions as may be
necessary in order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article VIII. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance, and
Tenant shall be entitled to a credit for any sums recovered by Landlord under
any such policy of title or other insurance.
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ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance. Tenant shall at all times keep the applicable Leased
Property, and all property located in or on the applicable Leased Property,
including Tenant's Personal Property, insured with the kinds and amounts of
insurance described below or with such other insurance as may be reasonably
requested by Landlord (taking into consideration any insurance requirements
relating to Landlord's Debt).
(a) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall keep all of the Leased Property insured and
obtain and maintain policies of insurance insuring against loss or damage
by standard perils included within the classification "All Risks of
Physical Loss", which policy or policies shall cover (by endorsement or
otherwise) warehouse legal liability. Such insurance (i) shall be in an
aggregate amount of not less than the lesser of (y) the then full
replacement cost of the Leased Property and the Equipment (without
deduction for physical depreciation) and (z) $150,000,000 and (ii) shall
have deductibles no greater than $150,000 (as escalated by the CPI
Increase) (with such higher deductibles for wind and earthquake coverage
as the applicable issuer may require). The policies of insurance carried
in accordance with this paragraph shall be paid in accordance with the
agreed upon payment schedule incorporated into such policies and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation.
(b) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall also obtain and maintain the following policies
of insurance:
(i) Flood insurance with respect a Leased Property, if any
part of such Leased Property is located in an area identified by the
Federal Emergency Management Agency as an area federally designated
a "100 year flood plain" and (A) flood insurance is generally
available at reasonable premiums and in such amount as generally
required by institutional lenders for similar properties or (B) if
not so available from a private carrier, from the federal government
at commercially reasonable premiums to the extent available. In
either case, the flood insurance shall be in an amount at least
equal to the Termination Amount with respect to such Leased Property
or the maximum limit of coverage available with respect to such
Leased Property under said program, whichever is less;
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(ii) Commercial general liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing
minimum limits per occurrence of $1,000,000 for any policy year. In
addition, at least $25,000,000 excess and/or umbrella liability
insurance shall be obtained, and at all times at least $10,000,000
excess and/or umbrella liability insurance shall be available (such
that, at all times, such coverage shall be maintained against which
no claim shall have been asserted) and maintained for any and all
claims, including legal liability imposed upon Tenant and related
court costs and attorneys' fees generally covered by such insurance
policies; provided that if there are one or more claims in
connection with a property other than the Leased Property that
results in the amount of excess and/or umbrella liability insurance
coverage to be less than $25,000,000, Tenant shall give notice to
Landlord that such coverage has so decreased and Tenant shall cause
such coverage to be increased to $25,000,000.
(iii) Rental loss and/or business interruption insurance in an
amount sufficient to avoid any co-insurance penalty and equal to the
greater of (A) the estimated Receipts from the operation of the
Leased Property (including (x) the total payable under the Subleases
and the Warehouse Agreements, and (y) the total amount of all other
amounts to be received by Tenant or third parties that are the legal
obligation of the Subtenants), less non-continuing Operating
Expenses (i.e., Operating Expenses which were incurred in connection
with the ownership, operation and/or maintenance of the Leased
Property prior to the insured event, but which are not incurred
during the period covered by the insurance required pursuant to this
Section 10.1(b)(iii)), for a period of up to the next succeeding
eighteen (18) months, or (B) the projected Operating Expenses
(including debt service) for the maintenance and operation of the
Leased Property for a period of up to the next succeeding eighteen
(18) months as the same may be reduced or increased from time to
time due to changes in such Operating Expenses. The amount of such
insurance shall be increased from time to time as and when the rents
increase or the estimate of (or the actual) Receipts, as may be
applicable, increases or decreases to the extent rents or the
estimates of gross revenue decrease;
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter
installed in any of the
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Improvements (without exclusion for explosions) and insurance
against loss of occupancy or use arising from any breakdown, in such
amounts as are generally available at reasonable premiums and are
generally required by institutional lenders for properties
comparable to the Leased Property;
(v) Worker's compensation insurance with respect to all
employees of Tenant, as and to the extent required by any
Governmental Authority or Legal Requirement;
(vi) During any period of repair or restoration costing in
excess of $5,000,000, builder's "all risk" insurance in an amount
equal to not less than the full insurable value of the related
Leased Property against such risks (including fire and extended
coverage and collapse of the Improvements to agreed limits) as
Landlord may reasonably request, in form and substance reasonably
acceptable to Landlord;
(vii) Coverage to compensate for the cost of demolition and
the increased cost of construction for the Leased Property in an
amount satisfactory to Landlord, which amount shall not exceed
$10,000,000;
(viii) If any Leased Property is located in a federal
earthquake zone, earthquake insurance with respect to such Leased
Property in an amount equal to probable maximum loss with respect to
such Leased Property, with a maximum deductible of five percent (5%)
of the replacement cost of such Leased Property; and
(ix) Such other insurance as may from time to time be
reasonably required by Landlord in order to protect its interests,
provided such insurance is generally available at commercially
reasonable premiums.
(c) All policies of insurance (the "Policies") required pursuant to
Section 10.1 with respect to any Leased Property shall be issued by companies
licensed to do business in the state where such Leased Property is located.
Further, unless otherwise approved by Landlord in writing, the issuer(s) of the
Policies required under Section 10.1(a) for all risk coverage shall have a
claims paying ability rating of "AA" or better by Standard & Poor's and Moody's
and "A-X" or better by Best's, and (b) Policies for all other coverage shall
have a claims paying ability rating of "A" or better by Standard & Poor's and
Moody's and "A-X" or better by Best's. The Policies (i) shall name Landlord and
Landlord's Lender (if any) and its successors and/or assigns, as their interest
may appear, as additional insureds or loss payees (except that in the case of
general liability insurance,
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Landlord and Landlord's Lender shall be named as additional insureds and not a
loss payee); (ii) shall contain, for the benefit of Landlord's Lender, a
Non-Contributory Standard Lender Clause and, except with respect to general
liability insurance, a Lender's Loss Payable Endorsement, or their equivalents,
naming Landlord's Lender as the person to which all payments made by such
insurance company shall be paid; (iii) shall include effective waivers by the
insurer of all claims for insurance premiums against all loss payees, additional
insureds and named insureds (other than Tenant) and all rights of subrogation
against any loss payee, additional insured or named insured; (iv) if directed by
Landlord, shall be assigned to Landlord's Lender; (v) except as otherwise
provided above, shall be subject to a deductible, if any, not greater in any
material respect, in proportion to the coverage maintained, than the deductible
for such coverage on the date hereof; (vi) shall contain such provisions as
Landlord deems reasonably necessary or desirable to protect its interest (and
that of Landlord's Lender, to the extent so requested by Landlord on behalf of
Landlord's Lender), including endorsements providing that: none of Tenant,
Landlord, Landlord's Lender or any other party shall be a co-insurer under said
Policies and that no modification that would result in non-compliance with the
provisions of this Section 10.1, cancellation, termination or non-renewal of any
of the Policies shall be effective until at least thirty (30) days after receipt
by each named insured, additional insured and loss payee of written notice
thereof or ten (10) days after receipt of such notice with respect to nonpayment
of premium; (vii) shall permit Landlord or Landlord's Lender to pay the premiums
and continue any insurance upon failure of Tenant to pay premiums when due, upon
the insolvency of Tenant or through foreclosure or other transfer of title to
the Leased Property (or any of them) (it being understood that Tenant's rights
to coverage under such policies may not be assignable without the consent of the
insurer); and (viii) shall provide that the insurance shall not be impaired or
invalidated by virtue of (A) any act, failure to act, negligence of, or
violation of declarations, warranties or conditions contained in such policy by
Tenant, Landlord, Landlord's Lender or any other named insured, additional
insured or loss payee, except for the willful misconduct of Landlord or
Landlord's Lender knowingly in violation of the conditions of such policy, (B)
the occupation, use, operation or maintenance of the Leased Property for
purposes more hazardous than permitted by the terms of the Policy, (C) any
foreclosure or other proceeding or notice of sale relating to the Leased
Property or (D) any change in the possession of the Leased Property without a
change in the identity of the holder of actual title thereto (provided that with
respect to items (C) and (D), any notice requirements of the applicable Policies
are satisfied).
Notwithstanding the foregoing, Tenant may maintain its current insurance program
in place (rather than comply with the foregoing) through December 31, 1998.
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(d) Insurance Premiums; Certificates of Insurance.
(i) Tenant shall pay the premiums for such Policies (the "Insurance
Premiums") as the same become due and payable and shall furnish to
Landlord the receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Landlord (provided
Tenant is not required to furnish such evidence of payment if such
Insurance Premiums are to be paid pursuant to the Cash Management
Procedures). Within thirty (30) days after request by Landlord, Tenant
shall obtain such increases in the amounts of coverage required hereunder
as may be reasonably requested by Landlord, taking into consideration
changes in liability laws, changes in prudent customs and practices, and
the like. In the event Tenant satisfies the requirements under this
Section 10.1 through the use of a Policy covering properties in addition
to the Leased Property, then (unless such policy is provided in
substantially the same manner as it is as of the date hereof), Tenant
shall provide to Landlord evidence satisfactory to it that the Insurance
Premiums for the Leased Property are separately allocated under such
Policy to the Leased Property and that payment of such allocated amount
shall maintain the effectiveness of such Policy as to the Leased Property
notwithstanding the failure of payment of any other portion of premiums.
If such allocation is required by the immediately preceding sentence (i.e.
in the event that the Policy is not provided in substantially the same
manner as it is as of the date hereof), but such allocation is not
available, Landlord shall have the right to increase the Tax and Insurance
Escrow in an amount sufficient to purchase a non-blanket Policy covering
the Leased Property covered by such Policy from insurance companies which
qualify under this Lease.
(ii) Tenant shall deliver to Landlord on or prior to the Closing
Date certificates setting forth in reasonable detail the material terms
(including any applicable notice requirements) of all Policies from the
respective insurance companies (or their authorized agents) that issued
the Policies, including that such Policies may not be modified in a manner
that would result in such Policies not complying with the provisions of
this Section 10.1, canceled, terminated or not renewed without thirty (30)
days' prior notice to Landlord, or ten (10) days' notice with respect to
nonpayment of premium. Tenant shall deliver to Landlord, concurrently with
each material change in any Policy, a certificate with respect to such
changed Policy certified by the insurance company issuing that Policy, in
substantially the same form and containing substantially the same
information as the certificates required to be delivered by Tenant
pursuant to the first sentence of this clause (d)(ii) and stating that all
premiums then due thereon have been paid to the applicable insurers and
that the same are in full force and effect (or if such certificate and
report shall not be obtainable by Tenant, Tenant may deliver an Officer's
Certificate to such effect in lieu thereof).
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(e) Renewal and Replacement of Policies.
(i) Not less than four (4) Business Days prior to the expiration,
termination or cancellation of any Policy, Tenant shall renew such policy
or obtain a replacement policy or policies (or a binding commitment for
such replacement policy or policies), which shall be effective no later
than the date of the expiration, termination or cancellation of the
previous policy, and shall deliver to Landlord (and, if requested by
Landlord, to Landlord's Lender) a certificate in respect of such policy or
policies (A) containing the same information as the certificates required
to be delivered by Tenant pursuant to clause (d)(ii) above, or a copy of
the binding commitment for such policy or policies and (B) confirming that
such policy complies with all requirements hereof.
(ii) If Tenant does not furnish the certificates as required under
clause (e)(i), Landlord may procure, but shall not be obligated to
procure, such replacement policy or policies and pay the Insurance
Premiums therefor, and Tenant agrees to reimburse Landlord for the cost of
such Insurance Premiums promptly on demand.
(iii) Concurrently with the delivery of each replacement policy or a
binding commitment for the same pursuant to this clause (e), Tenant shall
deliver to Landlord a report from a reputable and experienced insurance
broker or from the insurer, setting forth the particulars as to all
insurance obtained by Tenant pursuant to this Section 10.1 and then in
effect and stating that all Insurance Premiums then due thereon have been
paid in full to the applicable insurers and that such insurance policies
are in full force and effect (or if such report shall not be available
after Tenant shall have used its reasonable efforts to provide the same,
Tenant will deliver to Landlord an Officer's Certificate containing the
information to be provided in such report) and Tenant shall deliver to
Landlord an Officer's Certificate stating that such insurance otherwise
complies in all material respects with the requirements of this Section
10.1.
(f) Separate Insurance. Tenant will not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 10.1 unless such insurance complies with
clause (c) above.
(g) Tenant shall name any Person holding, servicing or administering
Landlord's Debt and reasonably designated by Landlord (including any trustee,
servicer or special servicer) as a loss payee or additional insured with respect
to any Policy under which Landlord's Lender is to be so named hereunder.
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10.2 Casualty; Application of Proceeds.
(a) Right to Adjust.
(i) If any Leased Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Tenant shall give prompt
written notice thereof to Landlord generally describing the nature and
extent of such Casualty. Subject to Section 10.2(b), following the
occurrence of a Casualty, Tenant, regardless of whether proceeds are
available, shall in a reasonably prompt manner proceed to restore, repair,
replace or rebuild the affected Leased Property to the extent practicable
to be of at least equal value and of substantially the same character and
quality as prior to the Casualty, all in accordance with the terms hereof
applicable to Alterations.
(ii) Subject to clause (v) below, in the event of a Casualty that
does not exceed $1,000,000, Tenant may settle and adjust such claim;
provided that such adjustment is carried out in a competent and timely
manner. In such case, Tenant is hereby authorized to collect and receive
for Landlord any Proceeds.
(iii) Subject to clause (v) below, in the event a Casualty shall
exceed $1,000,000, Tenant may settle and adjust such claim only with the
consent of Landlord (and, if required under the terms of Landlord's Loan
Documents, Landlord's Lender), which consent shall not be unreasonably
withheld or delayed, and Landlord (and Landlord's Lender) shall have the
opportunity to participate, at Tenant's cost, in any such adjustments.
(iv) The proceeds of any Policy shall be due and payable solely to a
Depositary.
(v) Notwithstanding the terms of clauses (ii) and (iii) above,
Landlord shall have the sole discretion to adjust any claim with respect
to a Casualty and to collect all Proceeds if an Event of Default shall
have occurred and is continuing.
The provisions of this Section 10.2(a) are subject to the terms of any lease
that would be considered a "Superior Interest" (as defined herein) to the
contrary.
(b) Tenant's Right to Proceeds for Certain Casualty. In the event either
of (i) a Casualty that involves a loss of less than thirty percent (30%) of the
Termination Amount with respect to the affected Leased Property or (ii) a
Condemnation where the loss is in an aggregate amount less than twenty percent
(20%) of the Termination Amount with respect to the affected Leased Property,
Tenant be entitled to apply the Proceeds (after reimbursement of any expenses
incurred by Landlord and Landlord's Lender) to
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reimburse Tenant for the cost of restoring, repairing, replacing or rebuilding
the affected Leased Property (the "Restoration"), in the manner required hereby,
provided and on the condition that, no Event of Default shall have occurred and
be then continuing and, in the reasonable judgment of Landlord:
(i) the Restoration can be completed by the earliest to
occur of:
(A) the 365th day following the receipt of the
Proceeds, or, with Rating Confirmation, such longer period as
may reasonably be required,
(B) the scheduled maturity date of Landlord's
Debt, and
(C) with respect to a Casualty, the expiration of
the payment period on the rental-loss insurance or business
interruption insurance coverage in respect of such Casualty,
and
(ii) after receiving reasonably satisfactory evidence to
such effect, during the period of the Restoration, the sum of (A)
income derived from the Leased Properties (taken as a whole), plus
(B) proceeds of rental-loss insurance or business interruption
insurance, if any, payable together with such other monies as Tenant
may irrevocably make available for the Restoration, will equal or
exceed the sum required for Tenant to pay the Minimum Rent and the
amounts required to be paid under clauses (a), (c) and (d) of
Section 2.4 of the Cash Management Procedures.
Notwithstanding the foregoing, if any of the conditions set forth in the proviso
in this clause (b) is not satisfied, then, notwithstanding anything herein to
the contrary, unless Landlord shall otherwise elect, at its sole option, (w) the
Proceeds shall be paid to Landlord up to the Termination Amount, and the balance
thereof, after payment of all Landlord's and Landlord's Lender's reasonable
expenses in connection therewith, shall be paid to Tenant, (x) this Lease shall
terminate in respect of the affected Leased Property (except for such terms as
are expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set forth on
Exhibit 3.1(a) shall be adjusted to reflect the portion of Minimum Rent
allocated to each Leased Property remaining subject to the terms of this Lease.
Notwithstanding any of the foregoing, in the event of a Casualty or Condemnation
where an Operating Agreement, a Warehouse Agreement with respect to all or
substantially all of a Leased Property, or a Sublease with a Major Subtenant
requires that Tenant restore the affected Leased Property or any affected
portion thereof, Landlord shall permit the application of the Proceeds (after
reimbursement of any expenses incurred by Landlord and Landlord's
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Lender) to reimburse Tenant for the cost of Restoration provided no Event of
Default shall have occurred and then be continuing.
(c) Termination of Lease in Certain Circumstances. In any case in which
Tenant is not entitled to the Proceeds pursuant to Section 10.2(b), then:
(i) if Landlord's Lender does not permit, pursuant to
Landlord's Loan Documents, the application of the Proceeds to the
Restoration (which Landlord's Lender shall notify Landlord and Tenant
within a reasonable time after the Casualty or Condemnation, and in no
event later than the 40th day after the receipt of Proceeds), then (x)
Landlord shall be entitled to the Proceeds up to the Termination Amount
(and Tenant shall be entitled to any balance, after payment of all
Landlord's and Landlord's Lender's reasonable expenses in connection
therewith), (y) this Lease shall terminate as to the affected Leased
Property (except with respect to those matters that are expressly intended
to survive the expiration or earlier termination of this Lease) and (z)
the Minimum Rent shall be reduced by the portion thereof allocable
thereto, as determined by reference to Exhibit 3.1(a), or
(ii) if Landlord's Lender is required or elects under the
terms of the Landlord's Loan Documents to permit the application of
Proceeds to Restoration, then the Proceeds shall be so applied provided
that Landlord is reasonably satisfied that, upon the completion of the
Restoration, Tenant shall be able to satisfy its obligations hereunder in
respect of the affected Leased Property (assuming for these purposes a pro
rata Minimum Rent obligation.
(d) Manner of Reimbursement of Restoration Expenses. If Tenant is entitled
pursuant to Section 10.2(b) or (c) hereof to reimbursement of Restoration costs
from Proceeds, such Proceeds shall be disbursed on a monthly basis upon the
Depositary being furnished with (i) such architect's certificates, Lien waivers,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as the
Depositary may reasonably require and approve, and (ii) all plans and
specifications for such Restoration, such plans and specifications to be
approved by Landlord prior to commencement of any work (such approval not to be
unreasonably withheld or delayed). In addition, no payment made prior to the
Final Completion of the Restoration shall exceed ninety-five percent (95%) of
the value of the work performed from time to time; funds other than Proceeds
shall be disbursed prior to disbursement of such Proceeds; and at all times, the
undisbursed balance of such Proceeds remaining in the hands of the Depositary,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Landlord by or on behalf of Tenant for that purpose, shall be at
least sufficient in the reasonable judgment of Landlord to pay for the cost of
completion of the Restoration, free and clear of all Liens
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or claims for Lien. Prior to any disbursement, Landlord shall have received
evidence reasonably satisfactory to it of the estimated cost of completion of
the Restoration (such estimate to be made by Tenant's architect or contractor
and approved by Landlord in its reasonable discretion), and Tenant shall have
deposited with the Depositary Eligible Collateral in an amount equal to the
excess (if any) of such estimated cost of completion over the net Proceeds. Any
surplus which may remain out of Proceeds received pursuant to a Casualty shall
be paid to Tenant after payment of such costs of Restoration. Any surplus which
may remain out of Proceeds received pursuant to a Condemnation after payment of
such costs of Restoration shall be paid over to and belong to Landlord.
10.3 Condemnation.
(a) Tenant shall promptly give Landlord written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting any Leased Property (a "Condemnation") and shall deliver to Landlord
copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Tenant, regardless of whether
Proceeds are available, shall promptly proceed to restore, repair, replace or
rebuild the same to the extent practicable to be of at least equal value and of
substantially the same character as prior to such Condemnation, all to be
effected in accordance with the terms hereof applicable to Alterations.
(b) Landlord is hereby irrevocably appointed as Tenant's attorney-in-fact,
coupled with an interest, with exclusive power to collect, receive and retain
any Proceeds in respect of a Condemnation and to make any compromise or
settlement in connection with such Condemnation, subject to the provisions of
this Section, and such power shall include the power to substitute Landlord's
Lender in Landlord's discretion. Provided no Event of Default has occurred and
is continuing, (x) in the event of a Condemnation where the loss does not exceed
$1,000,000, Tenant may settle and compromise such Proceeds; provided that the
same is effected in a competent and timely manner, and (y) in the event a
Condemnation, where the loss exceeds $1,000,000, Tenant may settle and
compromise the Proceeds only with the consent of Landlord (and, if required
under the terms of Landlord's Loan Documents, Landlord's Lender), which consent
shall not be unreasonably withheld or delayed, and Landlord shall have the
opportunity to participate, at Tenant's cost, in any litigation and settlement
discussions in respect thereof. Tenant shall cause any Proceeds that are payable
to Tenant to be paid directly to a Depositary to be held and applied in
accordance with the terms hereof.
(c) The Rent shall be subject to adjustment in the manner provided for in
Section 4.2.
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ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures. (a) Tenant hereby agrees that for so long
as the Initial Landlord's Debt is outstanding and Landlord is the "Borrower"
thereunder, Tenant shall (i) comply with all of the obligations of the "Master
Lessee" under the Cash Management Procedures attached hereto as Exhibit 11.1
(the "Cash Management Procedures") as though the same were set forth herein and
(ii) take any and all other actions reasonably necessary to implement each of
the procedures set forth in the Cash Management Procedures. The costs of
establishing and maintaining the reserve accounts shall be allocated between
Landlord and Tenant in an equitable manner, taking into account that, regardless
of the Initial Landlord's Debt, Landlord would have required, and Tenant would
have agreed to establish, reserves comparable a Tax and Insurance Reserve and
Ongoing Maintenance Reserve.
(b) Tenant hereby agrees that in the event the Initial Landlord's Debt
shall no longer be outstanding or Landlord shall no longer be the "Borrower"
thereunder, to cooperate with Landlord and to execute any and all instruments
reasonably requested by Landlord (including, if necessary, the execution of an
amendment to this Lease), in the establishment and maintenance of new reserve
accounts and cash management procedures reasonably requested by a successor
Landlord's Lender in connection with Landlord's Loan Documents.
ARTICLE XII
12.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) if Tenant shall fail to pay the Minimum Rent when due and
payable hereunder, provided that so long as sufficient funds have been
deposited in the Cash Collateral Account pursuant to the Cash Management
Procedures to pay the Minimum Rent (taking into account the other reserve
funding requirements under the Cash Management Procedures), then Tenant
shall not be deemed to be in default under this paragraph (a), or
(b) if Tenant shall fail to pay when due any amount (other than
Minimum Rent) when due and payable and such default shall continue for ten
(10) days after notice thereof to Tenant, provided that so long as
sufficient funds to pay the amount in question shall have been deposited
by Tenant in the Cash Collateral Account pursuant to the Cash Management
Procedures (taking into
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account the other reserve funding requirements under the Cash Management
Procedures), then Tenant shall not be deemed to be in default under this
paragraph (b), or
(c) if Tenant shall fail to observe or perform any term, covenant or
condition of this Lease not specifically provided for in this Section 12.1
and such failure is not cured within a period of thirty (30) days after
receipt of notice from Landlord, unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
period of time shall be extended to such period of time (which, if such
default is materially adverse to the interests of Landlord hereunder,
shall not exceed an additional one hundred and twenty (120) days) as may
be necessary to cure such default with all due diligence, or
(d) if Tenant shall admit in writing its inability to pay its debts
generally as they become due; file a petition in bankruptcy or a petition
to take advantage of any insolvency act; make an assignment for the
benefit of its creditors; consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; or file a
petition or answer seeking reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any State thereof, or
(e) any petition shall be filed by or against Tenant or any
subsidiary of Tenant under Federal bankruptcy laws, or any other
proceeding shall be instituted by or against Tenant or such subsidiary
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for Tenant or such subsidiary, or for any substantial part of the property
of Tenant or such subsidiary, and such proceeding is not dismissed within
ninety (90) days after institution thereof, or Tenant or such subsidiary
shall take any action to authorize or effect any of the actions set forth
above in this paragraph (e), or
(f) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding any
the same shall not be vacated or discharged within the later of ninety
(90) days after commencement thereof or thirty (30) days after receipt by
Tenant of notice thereof from Landlord, (unless Tenant shall be contesting
such lien or attachment in good faith in accordance with the terms of this
Lease),
then, and in any such event, Landlord may terminate this Lease by giving not
less than ten (10) days' notice of such termination and upon the expiration of
the time fixed in such
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notice, if any, the Term shall terminate and all rights of Tenant under this
Lease shall cease. Landlord shall have all rights at law and in equity available
to Landlord as a result of Tenant's breach of this Lease.
Tenant shall, to the maximum extent permitted by law, pay as Additional Charges
all Litigation Costs as a result of any Event of Default hereunder.
12.2 Certain Remedies. Landlord shall have the right to terminate this
Lease, and otherwise exercise remedies, at any time and from time to time, with
respect to one or more, or all, of the Leased Properties, and the termination of
this Lease or other exercise of remedies with respect to one or more Leased
Properties shall in no way constitute a waiver on the part of Landlord to
terminate this Lease on account of such Event of Default, or otherwise exercise
remedies, at any time and from time to time, in one or more other instances,
with respect to the balance of the Leased Properties.
12.3 Damages. Neither (a) the termination of this Lease pursuant to
Section 12.1 with respect to any or all of the Leased Property, (b) the
repossession of the applicable Leased Property or any portion thereof, (c) the
failure of Landlord, notwithstanding reasonable good faith efforts to relet the
applicable Leased Property or any portion thereof, (d) the reletting of all or
any portion thereof, nor (e) the failure of Landlord to collect or receive any
rentals due upon any such reletting, shall relieve Tenant of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event of any such termination, Tenant shall
forthwith pay to Landlord all Rent due and payable with respect to the Leased
Property to and including the date of such termination. Thereafter, Tenant,
until the end of what would have been the Term in the absence of such
termination, and whether or not the applicable Leased Property or any portion
thereof shall have been re-let, shall be liable to Landlord for, and shall pay
to Landlord, as current damages, the Rent and other charges which would be
payable hereunder for the remainder of the Term had such termination not
occurred, less the net proceeds, if any, of any reletting of the applicable
Leased Property, after deducting all expenses in connection with such
re-letting, including all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, advertising costs, expenses of employees, alteration
costs and expenses of preparation for such reletting. Tenant shall pay such
current damages to Landlord monthly on the days on which the Minimum Rent would
have been payable hereunder if this Lease had not been terminated.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages and in lieu of
all such current damages beyond the date of such termination, at Landlord's
election, Tenant shall pay to Landlord either, at Landlord's election, (a) an
amount equal to the excess, if any, of the Rent and other charges which would be
payable hereunder from the date of such
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termination (assuming that, for the purposes of this paragraph, annual payments
by Tenant on account of Taxes and Other Charges would be the same as payments
required for the immediately preceding twelve calendar months, or if less than
twelve calendar months have expired since the Commencement Date, the payments
required for such lesser period projected to an annual amount) for what would be
the then unexpired term of this Lease if the same remained in effect (with
respect to the applicable Leased Property), over the Fair Market Rental for the
same period, or (b) an amount equal to the lesser of (i) the Rent and other
charges that would have been payable for the balance of the Term had it not been
terminated, or (ii) the aggregate of the Minimum Rent, Additional Charges and
other charges accrued in the twelve (12) months ended next prior to such
termination (without reduction for any free rent or other concession or
abatement). In the event this Lease is so terminated prior the expiration of the
first full year of the Term, the liquidated damages which Landlord may elect to
recover pursuant to this Section shall be calculated as if such termination had
occurred on the first anniversary of the Commencement Date. Nothing contained
herein shall, however, limit or prejudice the right of Landlord to prove and
obtain in proceedings for bankruptcy or insolvency an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater than, equal to, or less than the amount of the loss or
damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet the applicable Leased
Property or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may, at Landlord's option, be equal to,
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant concessions or free rent to the extent that
Landlord considers advisable and necessary to relet the same, and (b) make such
alterations, repairs and decorations in the applicable Leased Property or any
portion thereof as Landlord, in its sole judgment, considers advisable and
necessary for the purpose of reletting the applicable Leased Property; and the
making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure to relet the
applicable Leased Property, or, in the event that the applicable Leased Property
is relet, for failure to collect the rent under such reletting. To the fullest
extent permitted by law, Tenant hereby expressly waives any and all rights of
redemption granted under any present or future laws in the event of Tenant's
being evicted or dispossessed, or in the event of Landlord's obtaining
possession of the applicable Leased Property, by reason of the violation by
Tenant of any of the covenants and conditions of this Lease.
12.4 Waiver. If this Lease is terminated pursuant to Section 12.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or
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repossession, (b) any right to a trial by jury in the event of summary
proceedings to enforce the remedies set forth in this Article XII, and (c) the
benefit of any laws now or hereafter in force exempting property from liability
for rent or for debt (provided nothing herein shall be construed to limit
Tenant's liability hereunder, which is intended to be fully recourse to Tenant,
to its interest in the Leased Property).
12.5 Application of Funds. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State where the applicable Leased Property is located.
ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, without waiving or releasing
any obligation or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and at
the expense of Tenant, and may, to the extent permitted by law, enter upon the
applicable Leased Property or any portion thereof for such purpose and take all
such action thereon as, in Landlord's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
sums so paid by Landlord and all costs and expenses (including attorneys' fees
and expenses, in each a case, to the extent permitted by law) so incurred,
together with interest thereon (to the extent permitted by law) at the Overdue
Rate from the date on which such sums or expenses are paid or incurred by
Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XIV
14.1 Holding Over. If Tenant shall for any reason remain in possession of
the applicable Leased Property after the expiration of the Term or earlier
termination of the Term, such possession shall be as a month-to-month tenant
during which time Tenant shall pay as rental each month, one and one-half times
the aggregate of (i) one-twelfth of the aggregate Minimum Rent payable with
respect to the last Lease Year of the Term; (ii) all Additional Charges accruing
during the month and (iii) all other sums, if any, payable by Tenant pursuant to
the provisions of this Lease with respect to the applicable Leased Property.
During such period of month-to-month tenancy, Tenant shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to
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month-to-month tenancies to continue its occupancy and use of the applicable
Leased Property. Nothing contained herein shall constitute the consent, express
or implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance. This Lease and all rights of Tenant
hereunder are subject and subordinate to the Lien affecting the Leased
Properties created pursuant to Lender's Loan Documents, whether now or hereafter
existing, or the interest of any landlord under a lease senior in title to this
Lease, whether now or hereafter existing (all such Liens and interests,
collectively, the "Superior Interests"), and to all renewals, modifications,
consolidations, replacements and extensions of Superior Interests, provided that
the holder of such Superior Interest shall have executed and delivered to Tenant
a "non-disturbance" agreement in favor of Tenant substantially on the same terms
and conditions as are contained in the form attached hereto as Exhibit 15.1.
Subject to the foregoing proviso, this Section shall be self-operative and no
further instrument of subordination shall be required, but in confirmation of
such subordination, Tenant agrees to execute and deliver promptly any
commercially reasonable form of instrument (in recordable form, if requested)
that Landlord or the holder of any Superior Interest (each, a "Superior Party")
may request to evidence such subordination. Concurrently herewith, Tenant and
Landlord's Lender in respect of the Initial Landlord's Debt are executing and
delivering a non-disturbance, subordination and attornment agreement in the form
of said Exhibit 15.1.
15.2 Attornment. If the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of any such Superior Interest, then Tenant shall, at
the option of such purchaser, assignee or any Superior Party, as the case may
be, (x) attorn to such party and perform for its benefit all the terms,
covenants and conditions of this Lease on Tenant's part to be performed with the
same force and effect as if such party were the Landlord originally named in
this Lease, or (y) enter into a new lease with such party, as Landlord, for the
remaining Term and otherwise on the same terms and conditions of this Lease
except that such successor Landlord shall not be (i) liable for any previous
act, omission or negligence of Landlord under this Lease; (ii) subject to any
counterclaim, defense or offset which theretofore shall have accrued to Tenant
against Landlord; (iii) bound by any previous modification or amendment of this
Lease or by any previous prepayment of more than one month's rent in advance of
its due date, unless such modification, amendment or prepayment shall have been
approved in writing by the Superior Party through or by reason of which such
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successor Landlord shall have succeeded to the rights of Landlord under this
Lease; or (iv) liable for any security (if any) deposited pursuant to this Lease
unless such security has actually been delivered to such successor Landlord or
deposited pursuant to the Cash Management Procedures. Nothing contained in this
Section shall be construed to impair any right otherwise exercisable by any such
owner, holder or Tenant.
15.3 Notice of Default to Landlord's Lender. In the event of any act or
omission by Landlord which would give Tenant the right, either immediately or
after the lapse of a period of time, to terminate this Lease, or to claim a
partial or total eviction, Tenant will not exercise any such right (A) until it
has given written notice of such act or omission to Landlord's Lender, and (B)
until a reasonable period of time (not less than thirty (30) days) for remedying
such act or omission shall have elapsed following giving of such notice and
following the time when Lender shall have become entitled under the Landlord's
Loan Documents to remedy the same, provided Lender, with reasonable diligence,
shall (i) have pursued such remedies as are available to it under Landlord's
Loan Documents so as to be able to remedy the act or omission, and (ii)
thereafter shall have commenced and continued to remedy such act or omission or
cause the same to be remedied. Tenant's agreement herein shall not apply to
those situations specifically set forth herein wherein Tenant has an express
option to cancel and terminate this Lease.
15.4 Modifications to Secure Financing. If any Superior Party or
prospective Superior Party shall request modifications of this Lease as a
condition to the provision, continuance or renewal of any such financing, Tenant
will not unreasonably withhold, delay or defer its consent thereto, provided
that such modifications do not materially increase the obligations of Tenant
hereunder or materially adversely affect Tenant's rights under this Lease.
15.5 Delivery of Notices to Landlord's Lender. Subsequent to the receipt
by Tenant of Notice from Landlord as to the identity and address of any Superior
Party (which Notice shall be accompanied by a copy of the instrument creating
such Superior Interest), no Notice from Tenant to Landlord shall be effective
unless and until a duplicate original of such Notice shall be given to such
Superior Party at the address set forth in the above described Notice. The
curing of any of Landlord's defaults by such Superior Party shall be treated as
performance by Landlord. Tenant hereby acknowledges receipt of Notice as to the
identity and address of Landlord's Lender as of the date hereof as follows (as
well as a copy of all of the Landlord's Loan Documents in effect as of the date
hereof) and that, accordingly, the above provisions of this Section 15.5 shall
be effective as to Landlord's Lender as of the date hereof:
Goldman Sachs Mortgage Company
85 Broad Street
New York, New York 10004
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Attention: Mr. Steven T. Mnuchin
with a copy to:
On or before May 22, 1998
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Eugene A. Pinover, Esq.
After May 22, 1998
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Eugene A. Pinover, Esq.
15.6 Right of Landlord's Lender to Enforce Lease. To the extent permitted
under the Landlord's Loan Documents, Landlord's Lender may exercise the rights
of Landlord hereunder, including the right on the part of Landlord to obtain
insurance in the circumstances set forth in Section 10.1(e)(ii) hereof.
15.7 Exercise of Landlord's Discretion. In any instance hereunder in which
Landlord must be reasonable in making a request or granting or withholding an
approval or consent, Tenant acknowledges and agrees that Landlord may take into
account the reasonable objections of Landlord's Lender to the extent Landlord is
required to take such objections into account under Landlord's Loan Documents.
In any instance hereunder in which Landlord may make a request or grant or
withhold an approval in its discretion, Landlord may take into account the views
of Landlord's Lender to the extent Landlord is required to take such views into
account under Landlord's Loan Documents.
ARTICLE XVI
16.1 Indemnification. Notwithstanding the existence of any insurance
required to be provided hereunder, and without regard to the policy limits of
any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord and Landlord's Lender and their respective partners, shareholders,
officers, directors and employees (each, an "Indemnitee") from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and reasonable expenses (including Litigation Costs), to the maximum extent
permitted by law, imposed upon or incurred by or asserted against such
Indemnitee by reason of: (a) any accident, injury to or death of persons or loss
of or
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damage to property occurring on or about the Leased Property or adjoining
sidewalks, including any claims made by employees at the Leased Property, (b)
any use, misuse, non-use, condition, maintenance or repair by Tenant or anyone
claiming by, through or under Tenant, including agents, contractors, invitees or
visitors of the applicable Leased Property or Tenant's Personal Property, (c)
any Taxes or Other Charges, (d) any failure on the part of Tenant or anyone
claiming by, through or under Tenant to perform or comply with any of the terms
of this Lease, (e) any failure by Tenant to perform its obligations under any
Sublease or Warehouse Agreement and any claims made thereunder, (f) any contest
of any Legal Requirement or Insurance Requirement, regardless whether the same
is conducted in accordance with the terms hereof. Any amounts which become
payable by Tenant under this Section shall be paid within ten (10) days after
liability therefor on the part of Tenant is determined by litigation or
otherwise, and if not timely paid, shall bear interest (to the extent permitted
by law) at the Overdue Rate from the date of such determination to the date of
payment. Tenant, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Indemnitee or may
compromise or otherwise dispose of the same as Tenant sees fit. Nothing herein
shall be construed as indemnifying an Indemnitee against its own grossly
negligent acts or omissions or willful misconduct. If at any time an Indemnitee
shall have notice of a claim, such Indemnitee shall give reasonably prompt
written notice of such claim to Tenant; provided that (i) such Indemnitee shall
have no liability for a failure to give notice of any claim of which Tenant has
otherwise been notified or has knowledge and (ii) the failure of such Indemnitee
to give such a notice to Tenant shall not limit the rights of such Indemnitee or
the obligations of Tenant with respect to such claim except to the extent that
Tenant incurs actual expenses or suffers actual monetary loss as a result of
such failure. Tenant shall have the right to control the defense or settlement
of any Claim, provided that (A) Tenant shall first confirm in writing to such
Indemnitee that such claim is within the scope of this indemnity and that Tenant
shall pay any and all amounts required to be paid in respect of such claim and
(B) if the compromise or settlement of any such claim shall not result in the
complete release of such Indemnitee from the claim so compromised or settled,
the compromise or settlement shall require the prior written approval of such
Indemnitee. An Indemnitee shall have the right to approve counsel engaged to
defend such claim and, at its election and sole cost and expense, shall have the
right, but not the obligation, to participate in the defense of any claim.
Tenant's liability for a breach of the provisions of this Article arising during
the Term hereof shall survive any termination of this Lease.
ARTICLE XVII
17.1 No Waiver. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any
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such term. To the extent permitted by law, no waiver of any breach shall affect
or alter this Lease, which shall continue in full force and effect with respect
to any other then existing or subsequent breach.
ARTICLE XVIII
18.1 Remedies Cumulative. Except as otherwise expressly provided herein,
to the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord or Tenant now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Landlord or Tenant or any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord or Tenant of any or all of such other rights, powers and remedies.
ARTICLE XIX
19.1 Acceptance of Surrender. No surrender to Landlord of this Lease or of
any Leased Property, or of any interest therein, shall be valid or effective
unless agreed to and accepted in writing by Landlord and no act by Landlord or
any representative or agent of Landlord, other than such a written acceptance by
Landlord, shall constitute an acceptance of any such surrender.
ARTICLE XX
20.1 No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same Person may
acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold
estate created thereby or any interest herein or in such leasehold estate and
(b) the fee estate in the applicable Leased Property.
ARTICLE XXI
21.1 Conveyance by Landlord. If Landlord or any successor owner of the
applicable Leased Property shall convey such Leased Property in accordance with
the terms hereof other than as security for a debt, and the grantee or
transferee of the Leased Property shall expressly assume all obligations of
Landlord hereunder arising or accruing from and after the date of such
conveyance or transfer, Landlord or such successor owner,
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as the case may be, shall thereupon be released from all future liabilities and
obligations of Landlord under this Lease arising or accruing from and after the
date of such conveyance or other transfer as to the Leased Property and all such
future liabilities and obligations shall thereupon be binding upon the new
owner.
ARTICLE XXII
22.1 Quiet Enjoyment. So long as Tenant shall pay all Rent as the same
becomes due and no Event of Default shall have occurred and be continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Landlord or anyone
claiming by, through or under Landlord, but subject to all liens and
encumbrances of record as of the date hereof or otherwise permitted to be
created by Landlord hereunder, liens as to the obligations of Landlord that are
either not yet due or which are being contested in good faith and by proper
proceedings, and liens hereafter consented to by Tenant. No failure by Landlord
to comply with the foregoing covenant shall give Tenant any right to cancel or
terminate this Lease or abate, reduce or make a deduction from or offset against
the Rent or any other sum payable under this Lease, or to fail to perform any
other obligation of Tenant hereunder or thereunder. Notwithstanding the
foregoing, Tenant shall have the right, by separate and independent action to
pursue any claim it may have against Landlord as a result of a breach by
Landlord of the covenant of quiet enjoyment contained in this Section.
ARTICLE XXIII
23.1 Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
Americold Corporation
One Concourse Parkway, Suite 450
Atlanta, Georgia 30328
Attention: Chief Executive Officer
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with a copy to:
Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Jonathan Eady, Esq.
(b) if to Landlord:
Americold Real Estate, L.P.
c/o Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
Attention: Chief Financial Officer
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Arthur S. Adler, Esq.
(c) if required pursuant to Section 15.5 hereof, to Landlord's
Lender, in accordance with the terms of said Section.
or to such other address as either party may hereunder designate, and shall be
effective upon receipt.
ARTICLE XXIV
24.1 Appraisers. In the event that it becomes necessary to determine the
Fair Market Value or Fair Market Rental of any property for any purpose of this
Lease, and the parties cannot agree amongst themselves on such value within
twenty (20) days after the first request made by one of the parties to do so,
then either party may notify the other of a person selected to act as appraiser
on its behalf. Within fifteen (15) days after receipt of any such notice, the
other party shall by notice to the first party appoint a second person as
appraiser on its behalf. The appraisers thus appointed, each of whom must be a
member of the American Institute of Real Estate Appraisers (or any successor
organization thereto), shall, within 45 days after the date of the notice
appointing the first
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appraiser, proceed to appraise the applicable Leased Property to determine the
Fair Market Value or Fair Market Rental thereof as of the relevant date;
provided that if one appraiser shall have been so appointed, or if two
appraisers shall have been so appointed but only one such appraiser shall have
made such determination within 50 days after the making of the initial
appointment, then the determination of such appraiser shall be final and binding
upon the parties. If two appraisers shall have been appointed and shall have
made their determinations within the respective requisite periods set forth
above and if the difference between the amounts so determined shall not exceed
ten percent (10%) of the lesser of such amounts, then the Fair Market Value or
Fair Market Rental shall be an amount equal to 50% of the sum of the amounts so
determined. If the difference between the amounts so determined shall exceed ten
percent (10%) of the lesser of such amounts, then such two appraisers shall have
20 days to appoint a third appraiser, but if such appraisers fail to do so, then
either party may request the American Arbitration Association or any successor
organization thereto to appoint an appraiser within 20 days of such request, and
both parties shall be bound by any appointment so made within such 20 day
period. If no such appraiser shall have been appointed within such 20 days or
within 90 days of the original request for a determination of Fair Market Value
or Fair Market Rental, whichever is earlier, either Landlord or Tenant may apply
to any court having jurisdiction to have such appointment made by such court.
Any appraiser appointed by the original appraisers, by the American Arbitration
Association or by such court shall be instructed to determine the Fair Market
Value or Fair Market Rental within 30 days after appointment of such Appraiser.
The determination of the appraiser which differs most in terms of dollar amount
from the determination of the other two appraisers shall be excluded, and 50% of
the sum of the remaining two determinations shall be final and binding upon
Landlord and Tenant as the Fair Market Value or Fair Market Rental for such
interest. This provision for determination by appraisal shall be specifically
enforceable to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties except as
otherwise provided by applicable law. Landlord and Tenant shall each pay the
fees and expenses of the appraiser appointed by it and their own legal fees, and
each shall pay one-half of the fees and expenses of the third appraiser and
one-half of all other cost and expenses incurred in connection with each
appraisal.
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ARTICLE XXV
25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or an
Affiliate of Landlord may (in its sole discretion) elect to qualify as a real
estate investment trust ("REIT"). In the event that Landlord or an Affiliate of
Landlord intends to qualify as a REIT, the following requirements (the "REIT
Requirements") must be satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or a portion of the amounts paid by Tenant to Landlord
hereunder to fail to qualify as "rents from real property" within the
meaning of Section 856(d) of the Code.
(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and agrees
to use reasonable efforts to cause its Affiliates, to use their best efforts to
permit the REIT Requirements to be satisfied. Tenant agrees and agrees to use
reasonable efforts to cause its Affiliates, to cooperate in good faith with
Landlord or to ensure that the REIT Requirements are satisfied, including
providing Landlord with information about the ownership of Tenant, and its
Affiliates to the extent that such information is reasonably available. Tenant
agrees, and agrees to use reasonable efforts to cause its Affiliates, upon
request by Landlord to take reasonable action necessary to ensure compliance
with the REIT Requirements. Immediately after becoming aware that the REIT
Requirements are not, or will not be, satisfied, Tenant shall notify, or use
reasonable efforts to cause its Affiliates to notify Landlord of such
noncompliance.
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ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions. Tenant hereby agrees to hold
harmless Landlord and Landlord's Lender, any successors to their respective
interests in this Lease, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Landlord or
any other indemnitee or assessed against the Leased Property by virtue of any
claim or lien by any governmental or quasi-governmental unit, body, or agency,
or any third party, for cleanup costs or other costs pursuant to any
Environmental Laws. Tenant's indemnity shall survive the termination of this
Lease, provided, however, Tenant shall have no indemnity obligation with respect
to (i) Hazardous Substances first introduced to the Leased Property subsequent
to the date that Tenant's occupancy of the Leased Property shall have fully
terminated or (ii) Hazardous Substances introduced to the Leased Property by
Landlord, its successors and assigns. Notwithstanding the foregoing, with
respect to those environmental conditions identified on Exhibit 26.1, Landlord
shall make available to Tenant the funds reserved to cure such matters, on the
same terms as are described in the Lender's Loan Documents relating to the
Initial Landlord's Debt.
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination.
27.2 Severability. If any term or provision of this Lease or any
application thereof shall be invalid or unenforceable, the remainder of this
Lease and any other application of such term or provision shall not be affected
thereby.
27.3 Maximum Permissible Rate. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.
27.4 Headings. The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
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27.5 Exculpation. Landlord's liability hereunder shall be limited solely
to its interest in the Leased Property, and no recourse under or in respect of
this Lease shall be had against any other assets of Landlord whatsoever.
Furthermore, except as otherwise expressly provided herein, in no event shall
Landlord (original or successor) ever be liable to Tenant for any indirect or
consequential damages suffered by Tenant from whatever cause.
27.6 Transfer of Licenses. Upon the expiration or earlier
termination of the Term, Tenant shall use its best efforts to transfer to
Landlord or Landlord's nominee or to cooperate with Landlord or Landlord's
nominee in connection with the processing by Landlord or Landlord's nominee of
any applications for all licenses, operating permits and other governmental
authorization and all contracts, including contracts with governmental or
quasi-governmental entities which may be necessary for the operation of the
Leased Property; provided that the costs and expenses of any such transfer or
the processing of any such application shall be paid by Landlord or Landlord's
nominee.
27.7 Exhibition of Leased Property. Landlord and Landlord's agent shall
have the right to enter the applicable Leased Property at all reasonable times
for the purpose of exhibiting the Leased Property to others.
27.8 Entire Agreement. This Lease contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof.
27.9 Governing Law. This Lease shall be construed with respect to each
Leased Property under the substantive laws of the State of in which such Leased
Property is situated.
27.10 No Waiver. No waiver of any condition or covenant herein contained,
or of any breach of any such condition or covenant, shall be held or taken to be
a waiver of any subsequent breach of such covenant or condition, or to permit or
excuse its continuance or any future breach thereof or of any condition or
covenant herein construed as a waiver of such default, or of Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing default.
27.11 Successors and Assigns. This Lease shall be binding upon and shall
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
27.12 Modifications in Writing. This Lease may only be modified by a
writing signed by both Landlord and Tenant.
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27.13 No Waiver. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
27.14 Claims Against Landlord. In the event that a claim or adjudication
is made that Landlord or its agents have acted unreasonably or unreasonably
delayed (or refrained from), acting in any case where by law or under this
Lease, Landlord or such agent, as the case may be, has an obligation to act
reasonably or promptly, Tenant agrees that neither Landlord nor its agents shall
be liable for any monetary damages, and Tenant's sole remedies shall be limited
to commencing an action seeking injunctive relief or declaratory judgment,
except in any instance in which it has been finally determined that Landlord's
action, delay or inaction has constituted gross negligence, fraud, willful
misconduct or an illegal act. The parties hereto agree that any action or
proceeding to determine whether Landlord has acted reasonably shall be
determined by an action seeking declaratory judgment.
ARTICLE XXVIII
28.1 Memorandum of Lease. Landlord and Tenant shall, promptly upon the
request of either enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the state in which the applicable
Leased Property is located, in which reference to this Lease, and all options
contained therein, shall be made. Tenant shall pay all costs and expenses of
recording such Memorandum of Lease.
ARTICLE XXIX
29.1 Provisions Relating to Purchase of the Leased Personal Property. It
is the parties' intention and belief that the Leased Property in its entirety
consists of real property and little personalty. Nevertheless, to the extent
deemed necessary by Landlord, in its sole discretion, in connection with the
qualification of Landlord or its Affiliate as a REIT, upon thirty (30) days'
notice to Tenant, Tenant shall purchase from Landlord such portions of the
Leased Property as may be considered (in Landlord's sole discretion) as
personalty and as Landlord shall designate, at a purchase price equal to the
fair market value thereof (as mutually agreed upon by Landlord and Tenant or
failing such agreement, by arbitration in accordance with Article XXIV). Such
purchase price shall be payable in equal monthly installments over four years
(or if less, the remainder of the Term), together with annual interest thereon
at 8 percent, and shall be paid to Landlord on Rent Payment Dates in the same
manner as Minimum Rent. Each installment of Minimum Rent shall be decreased by
such purchase-price installment, exclusive of the interest.
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[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed as of April 22, 1998.
AMERICOLD REAL ESTATE, L.P., a Delaware limited
partnership
By: Americold Realty, Inc, a Delaware corporation, its
general partner
By: /s/ Irwin Goldberg
----------------------------------------------
Name:
Title:
AMERICOLD CORPORATION, an Oregon corporation
By: /s/ Frederick B. Beilstein III
----------------------------------------------------
Name: Frederick B. Beilstein
Title: Senior Vice President
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EXHIBIT A-1
Legal Description of the Land
[omitted: legal descriptions of parcels in Portage County, Wisconsin; Walla
Walla County, Washington; Burlington, Washington; Moses Lake, Washington;
Connell, Washington; Walla Walla County, Washington; Clearfield, Utah; Lehigh
County, Pennsylvania; Millrun, Pennsylvania; Portland, Oregon; Hermston, Oregon;
Woodburn, Oregon; Salem, Oregon; Gloucester, Massachusetts; Nampa, Idaho;
Burley, Idaho; Fulton County, Georgia; Plant City, Florida; Denver, Colorado;
Turlock, California; Watsonville, California; Los Angeles, California; Tampa,
Florida; Fort Dodge, Iowa; Bettendorf, Iowa; Rochelle, Illinois; and Boston,
Massachusetts]
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EXHIBIT 1.5(b)
List of Ground Leases and Expiration Dates
Watsonville - Riverside, California
Lease Agreement, dated February 1, 1984 by and between Richard A. Shaw, Inc., a
California corporation , as lessor, and Termicold Corporation, as lessee, a
memorandum of which Lease Agreement was recorded on May 5, 1987 in Book 4154,
Page 52 of the Real Property Records of Santa Cruz County, California, as same
has been and may hereafter be modified or amended. Expires 12/31/2024 with three
options to extend, each for ten-years.
Burley, Idaho
Lease Agreement, dated January 22, 1993 by and between ORE-IDA Foods, Inc., a
Delaware corporation , as lessor, and Americold Corporation, as lessee, a
memorandum of which Lease Agreement was recorded on [__________] in Book
[__________], Page [__________] of the Real Property Records of Cassia County,
Idaho, as same has been and may hereafter be modified or amended. Expires
1/22/2013 with options to extend for eight additionsal terms of ten years each.
Denver (Ash/50th Street), Colorado
Lease Agreement, dated April 6, 1976 by and between Country Life Insurance
Company, an Illinois corporation, as lessor, and Beatrice Foods, Co., as lessee,
a memorandum of which Lease Agreement was recorded on February 2, 1989 in Book
1288, Page 562 of the Real Property Records of the City and County of Denver,
Colorado, as same has been and may hereafter be modified or amended. Expires
7/1/2001 with four options to extend for five-years each.
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Exhibit 2(a)
Loan Agreement, dated as of April 22, 1998, between Americold Real Estate, L.P.,
as Borrower, and Goldman Sachs Mortgage Company, as Lender.
[omitted]
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Exhibit 3.1(a)
Minimum Rent Allocation
Americold Master Lease
<TABLE>
<CAPTION>
Property Percentage of Total
- -------- -------------------
<S> <C>
Ash Street 1.03%
Bettendorf 2.22%
Boston 1.32%
Burlington 3.52%
Burley 9.23%
Clearfield 6.04%
Connell 4.80%
E. Main Street 1.48%
Fogelsville 5.60%
Ft. Dodge 0.67%
Hermiston 5.44%
Jesse St. 1.52%
Lois Avenue 0.14%
Milwaukie 4.17%
Moses Lake 7.07%
Nampa 1.32%
Plant City 0.38%
Plover 10.18%
Rail Road Ave. 0.33%
Watsonville 4.11%
Rochelle 5.86%
Rogers St. 2.25%
Rowe Square 2.78%
Salem 6.66%
Southgate 1.10%
Turlock 2 1.91%
Walla Walla 1.71%
Woodburn 5.31%
- -------- -----
100.00%
</TABLE>
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EXHIBIT 3.1(b)
Calculation of Percentage Rent
Percentage Rent, with respect to each Lease Year, shall be the product of (i)
37.50 percent times (ii) all Receipts for such Lease Year in excess of the
Breakpoint. The "Breakpoint", with respect to any Lease Year, shall be the
annual Minimum Rent for such Lease Year divided by 37.50 percent. Thus, for
example, assuming a payment of Minimum Rent in the first Lease Year of
$33,045,855.56 (taking into account the partial Fiscal Year), the Breakpoint for
the first Lease Year shall be $88,122,281.49.
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EXHIBIT 6.1(j)
Deferred Maintenance Conditions (excluding Environmental)
[omitted]
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EXHIBIT 8.2.8
Certain Superior Leases
[omitted]
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Exhibit 11.1
CASH MANAGEMENT PROCEDURES
Capitalized terms used but not defined in this Exhibit shall have the meanings
ascribed to them in the Loan Agreement and if not defined therein, in the Master
Lease. References to Sections shall mean the Sections of this Exhibit unless
otherwise stated.
1. Deposit to Local Accounts
1.1 Within one (1) Business Day after the Master Lessee's receipt of
the same, the Master Lessee shall deposit or cause the deposit of all Receipts
to one or more Local Accounts (as hereinafter defined) or, if the Master Lessee
(in its sole discretion) does not elect to use Local Accounts, to the Cash
Collateral Account (as hereinafter defined). All funds in the Local Accounts
shall be swept daily to the Cash Collateral Account.
1.2 A "Local Account" shall mean a segregated "sweep" bank account
in the name of Master Lessee (or the name under which a Mortgaged Property is
operated), which is not required to be an Eligible Account, at a financial
institution located in the vicinity of one or more of the Mortgaged Properties.
Each Local Account shall be maintained solely for the purpose of receiving
deposits in the ordinary course of business of Receipts from one or more
Mortgaged Properties. Funds on deposit in each any other properties (other than
one or more Mortgaged Properties) owned or managed by the Master Lessee or by
any other person, and may only be disbursed from such account for the purpose of
being swept into the Cash Collateral Account.
2. Establishment of Cash Collateral Account, Reserve Accounts and
Operating Account and Disbursements from Cash Collateral Account
2.1 Lender shall establish the Cash Collateral Account, the
Operating Account (as defined below) and each Reserve Account (as defined below)
with the same depositary institution not later than the Closing.
2.1.1 The "Cash Collateral Account" shall mean a segregated
lockbox account in the name of the Servicer on behalf of the Lender, to
which all Receipts will be deposited either from the Local Accounts or
directly upon receipt by the Master Lessee or Borrower.
2.1.2 The "Operating Account" shall mean a segregated account
in the name of the Servicer on behalf of the Lender, to which
disbursements from the Cash Collateral Account shall be made, and
withdrawals by the Master Lessee shall be permitted, in the manner
described below in this Section 2 and Section 3.
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2.1.3 The "Reserve Accounts" shall mean the various segregated
accounts described below in Section 2.4.1(a), (c), (d) and (e) and Section
2.4.2(a), (b), (d) and (e), as well as those accounts generally described
in Section 2.5, each in the name of the Servicer on behalf of the Lender.
2.2 The Cash Collateral Account and each Reserve Account shall be an
Eligible Account.
2.3 The Servicer on behalf of the Lender will have sole control over
the Cash Collateral Account and each Reserve Account, subject, nevertheless, to
the Servicer's obligations under this Exhibit and the other provisions of the
Loan Documents to disburse funds therefrom to or on behalf of the Master Lessee
or the Borrower.
2.4 During each period commencing on the day immediately following a
Payment Date and ending on the following Payment Date (each such period, a
"Collection Period"), provided that no Event of Default has occurred and is
continuing (but subject to Sections 4 and 7.6 hereof), Lender shall transfer
from the Cash Collateral Account (or authorize such transfer) to the extent
available therein, disbursements to the accounts, and in the amounts and in the
priority set forth in Section 2.4.1 or 2.4.2, as applicable. Such disbursements
from the Cash Collateral Account shall be made not less frequently than once
every two (2) Business Days and, in any event, on each and every Payment Date.
2.4.1 Prior to the Anticipated Repayment Date:
a. to the Tax and Insurance Reserve Account, up to the amount
required by Section 9.3.1 of the Loan Agreement;
b. to an account designated by the Servicer, up to an amount
equal to the scheduled payment of principal due under the Note and
the interest payable on the outstanding principal balance of the
Loan at the Initial Interest Rate on the Payment Date coinciding
with the end of such Collection Period (collectively, the "Monthly
Debt Service"), to be applied on such Payment Date to the payment of
such principal and interest;
c. to the Ongoing Maintenance Reserve Account, up to the
amount required to be deposited thereto pursuant to Section 9.2.1(b)
of the Loan Agreement, as such amount may be adjusted pursuant to
the terms of the Loan Agreement;
d. to the Building Improvements Reserve Account, up to the
amount required to be deposited thereto pursuant to Section 9.2.1(c)
of the Loan
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Agreement, as such amount may be adjusted pursuant to the terms of
the Loan Agreement;
e. (i) if the Master Lease or a replacement Master Lease shall
be in effect,
(A) if a Low Debt Service Reserve Trigger Event shall
have occurred and a corresponding Low Debt Service Reserve
Return Event shall have not occurred:
(w) to the Operating Account, an amount equal to
the budgeted Operating Expenses (as defined below) with
respect to the calendar month ending within the
Collection Period in question, as set forth in the
Annual Budget approved by Borrower under the Master
Lease and (if required under the Loan Agreement) by
Servicer, subject to the terms of Section 3.4.1,
(x) to Servicer, for payment of any Default
Interest due and owing, up to an amount equal to the sum
of the installments of Minimum Rent (as defined in the
Master Lease), Percentage Rent (as defined in the Master
Lease), if any, and purchase price (if any) payable
pursuant to Section 29.1 of the Master Lease due in each
case on the Rent Payment Date coinciding with the end of
such Collection Period (collectively, the "Master Lease
Installment"), less the sum of the Monthly Debt Service
disbursed pursuant to Section 2.4.1(b) and the amounts
disbursed pursuant to Section 2.4.1(d),
(y) to the Low Debt Service Reserve Account, in an
amount up to the Master Lease Installment, less the sum
of the Monthly Debt Service disbursed pursuant to
Section 2.4.1(b), the amount disbursed pursuant to
Section 2.4.1(d), and the amount disbursed pursuant to
Section 2.4.1(e)(i)(A)(x), and
(z) to the Master Lessee, the balance.
(B) if a Low Debt Service Reserve Trigger Event shall
have not occurred, or if a Low Debt Service Reserve Trigger
Event and a corresponding Low Debt Service Reserve Return
Event shall have occurred,
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(w) to the Operating Account, an amount equal to
the budgeted Operating Expenses with respect to the
calendar month ending within the Collection Period in
question, as set forth in the Annual Budget approved by
Borrower under the Master Lease and (if required under
the Loan Agreement) by Servicer, subject to the terms of
Section 3.4.1,
(x) to Servicer, for payment of Default Interest
then due and owing, up to an amount no greater than the
excess of the Master Lease Installment over the sum of
the Monthly Debt Service disbursed pursuant to Section
2.4.1(b) and the amount disbursed pursuant to Section
2.4.1(d),
(y) to an account designated by the Borrower, up
to an amount equal to the excess of the Master Lease
Installment over the sum of the Monthly Debt Service,
the amount required to be disbursed on account of the
Building Improvements Reserve and the amount required to
be disbursed on account of Default Interest (such
excess, if any, the "Master Lease Installment Balance"),
which shall be applied to the payment of the Master
Lease Installment on the Rent Payment Date (as defined
in the Master Lease) coinciding with the end of such
Collection Period, and
(z) to the Master Lessee, the balance.
(ii) if the Master Lease or a replacement Master Lease shall
not be in effect,
(A) if a Low Debt Service Reserve Trigger Event shall
have occurred and a corresponding Low Debt Service Reserve
Return Event shall have not occurred:
(x) to the Operating Account, an amount equal to
the budgeted Operating Expenses with respect to the
calendar month ending within the Collection Period in
question, as set forth in the Annual Budget approved by
Servicer (if such approval is required under the Loan
Agreement), subject to the terms of Section 3.4.1,
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(y) to Servicer, for payment of any Default
Interest due and owing, and
(z) to the Low Debt Service Reserve Account, the
balance.
(B) if a Low Debt Service Reserve Trigger Event shall
have not occurred, or if a Low Debt Service Reserve Trigger
Event and a corresponding Low Debt Service Reserve Return
Event shall have occurred,
(x) to the Operating Account, an amount equal to
the budgeted Operating Expenses with respect to the
calendar month ending within the Collection Period in
question, as set forth in the Annual Budget approved by
Servicer (if such approval is required under the Loan
Agreement), subject to the terms of Section 3.4.1,
(y) to Servicer, for payment of any Default
Interest due and owing, and
(z) to an account designated by the Borrower, the
balance.
2.4.2 On and subsequent to the Anticipated Repayment Date:
a. to the Tax and Insurance Reserve Account, up to the amount
required by Section 9.3.1 of the Loan Agreement;
b. to the Operating Account, up to an amount equal to the
budgeted Operating Expenses with respect to the calendar month
ending within the Collection Period in question, as set forth in the
Annual Budget approved by Borrower under the Master Lease and (if
required under the Loan Agreement) by Servicer, subject to the terms
of Section 3.4.1;
c. to an account designated by the Servicer, up to an amount
equal to the Monthly Debt Service, to be applied on the Payment Date
coinciding with the end of such Collection Period to the payment of
Monthly Debt Service;
d. to the Ongoing Maintenance Reserve Account, up to the
amount required to be deposited thereto pursuant to Section 9.2.1(b)
of the Loan
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Agreement, as such amount may be adjusted pursuant to the terms of
the Loan Agreement;
e. to the Building Improvements Reserve Account, up to the
amount required to be deposited thereto pursuant to Section 9.2.1(c)
of the Loan Agreement, as such amount may be adjusted pursuant to
the terms of the Loan Agreement;
f. if the Master Lease or a replacement Master Lease shall
then be in effect, to an account designated by the Servicer, up to
an amount equal to the Master Lease Installment Balance, to be
applied (i) first, to repayment of the principal amount of the Note,
until the principal of the Note has been paid in full, (ii) next, to
the payment of Default Interest due and owing; and (iii) next, to
the payment of the Additional Interest accrued and unpaid on the
Note; and
g. to the Master Lessee; provided that if the Master Lease or
a replacement Master Lease shall not be in effect, to an account
designated by the Servicer, to be applied first, to repayment of the
principal amount of the Note, until the principal of the Note has
been paid in full; next, to the payment of any Default Interest due
and owing; next, to the payment of Additional Interest accrued and
unpaid on the Note; and thereafter, to Borrower.
2.4.3 Amounts disbursed pursuant to Sections 2.4.1(b) and
2.4.1(d); clauses (x) and (y) of Sections 2.4.1(e)(i)(A) and
2.4.1(e)(i)(B); and Sections 2.4.2(c), 2.4.2(e) and 2.4.2(f) shall be
deemed, as between Borrower and Master Lessee, to have been paid on
account of the Master Lease Installment due on the Rent Payment Date
coinciding with the end of the Collection Period in question and in no
event shall exceed in the aggregate the amount of such Master Lease
Installment.
2.4.4 As used herein, the term "Operating Expenses" shall have
the meaning given such term in the Loan Agreement, but shall exclude any
expenses that are to be paid from other Reserve Accounts established
hereunder, such as, without limitation, the Tax and Insurance Reserve
Account, the Ongoing Maintenance Reserve Account and the Building
Improvements Reserve Account.
2.5 In addition to the Reserve Accounts to be established under Section
2.4, the Servicer will establish a separate Reserve Account for each cash
security required to be delivered pursuant to a specific provision of the Loan
Agreement and not otherwise described above in Section 2.4, including (i)
Proceeds held by the Servicer in accordance with Section 8.1.2 of the Loan
Agreement (a "Casualty/Condemnation Proceeds Reserve Account"), (ii) amounts to
be delivered under Section 5.1(b)(ii)(E) of the Loan Agreement (a "Contest
Reserve Account"), (iii) amounts to be delivered into the "Lease Payment
Account" under
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Section 7.2(c) of the Loan Agreement (a "Lease Termination Reserve Account"),
and (iv) a Deferred Maintenance Reserve Account required by Section 9.2.1(a) of
the Loan Agreement. Any cash or other security described in this Section 2.5
shall be deposited to the applicable Reserve Account in the manner provided for
in this Section 2.5, without regard to whether the Reserve Accounts contemplated
by Section 2.4 have been fully funded.
3. Disbursements from Reserve Accounts
3.1 Disbursements shall be made from the Reserve Accounts by the Servicer
in the manner described in the Loan Documents and, with respect to the Tax and
Insurance Reserve Account, as described in Sections 3.2 and 3.3.
3.2 In determining the amount of insurance premiums to be paid and the
amounts to be disbursed from the Tax and Insurance Reserve Account in accordance
with the terms of Section 9.3. of the Loan Agreement, if any insurance is
obtained for one or more of the Mortgaged Properties under a blanket insurance
program of the Master Lessee or its Affiliates, then the insurance premiums for
the relevant Mortgaged Properties shall be such properties' allocable share of
the blanket insurance premiums (as reasonably determined by Master Lessee) and
Master Lessee shall be entitled to reimbursement for such premiums at the same
time and in the same manner that Borrower would be entitled thereto under the
terms of the Loan Agreement directly from the Tax and Insurance Reserve Account.
3.3 Provided that the necessary invoices or bills have been provided to
the Servicer by the Master Lessee or Borrower, the Servicer shall pay directly
from the Tax and Insurance Reserve Account all real estate taxes and insurance
premiums (determined in accordance with the last sentence of Section 3.2 to the
extent said sentence is applicable), or, if such amounts are insufficient, from
amounts in the Cash Collateral Account and distributable to the Master Lessee or
from additional funds provided by Borrower or Master Lessee, and the Borrower
and Master Lessee (to the extent such funds are sufficient to make such payments
and the necessary invoices or bills are timely provided as hereinbelow provided)
will be relieved of the obligation to make such payments under the Loan
Documents and Master Lease, respectively. Borrower and/or the Master Lessee
shall promptly send all such invoices or bills to the Servicer. Such payments
shall be made before any fine, penalty, interest or cost may be added for
non-payment, provided that the necessary invoices or bills shall have been
provided to Servicer at least ten (10) days prior to the due date therefor and
sufficient funds are available from the applicable Reserve Account and/or
additional funds provided by the Master Lessee or the Borrower.
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3.4 Operating Expenses. From and after the Anticipated Repayment Date,
Master Lessee shall pay Operating Expenses from the Operating Account in
accordance with the terms of the Master Lease, provided that there shall be
added or deducted to such transfers to the Operating Account in accordance with
Section 3.4.1.
3.4.1 Adjustments to Subsequent Disbursements to the Operating
Account. From and after the Anticipated Repayment Date, on or before the
21st day after each month, Master Lessee will provide Servicer with a
statement showing the difference between Operating Expenses for such month
and amounts disbursed to the Operating Account from the Cash Collateral
Account with respect to such month in accordance with the foregoing, and
(i) to the extent that such Operating Expenses exceed
the amounts so disbursed, then such excess shall be added to the
amount next to be disbursed to the Operating Account in accordance
with Section 3.4 hereof; and
(ii) to the extent that amounts so disbursed to the
Operating Account exceeded such Operating Expenses, then such excess
shall be deducted from the amount next to be disbursed to the
Operating Account in accordance with Section 3.4 hereof.
3.5 Ongoing Maintenance Reserve Account Disbursements. Master Lessee shall
have the right to obtain disbursements from the Ongoing Maintenance Reserve
Account for capital improvements, maintenance, replacements and repairs and
personalty repairs and replacement made by Master Lessee at, or with respect to,
any Mortgaged Property (but excluding any items to be paid from the Building
Improvements Reserve Account), on the following terms and conditions:
(a) disbursements shall be made only to pay or to reimburse Master
Lessee in respect of actual costs of the work, which costs were approved by
Servicer (such approval not to be unreasonably withheld or delayed) or incurred
for Alterations made in accordance with the terms of the Master Lease (or if no
Master Lease shall be in effect, in accordance with the terms of the Loan
Agreement);
(b) each request for disbursement from any Reserve Account shall be
substantially in a form attached to the Deposit Account Agreement, shall specify
the work for which the disbursement is requested and shall include an Officer's
Certificate certifying that such funds will be applied to pay or reimburse for
materials or work permitted hereunder and done in accordance herewith (which, in
each case, have not been previously paid or reimbursed from funds in any Reserve
Account, but regardless whether such costs were paid or incurred during the
month in respect of which such request is submitted to the Servicer),
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and copies of invoices for all items or materials purchased and all contracted
labor or services provided. Master Lessee will not be required to obtain
approval of the Servicer or any other Person for individual expenditures from
said Reserve Account, except as otherwise required by the Master Lease.
(c) Servicer shall have received from Master Lessee evidence
reasonably satisfactory to Servicer that Master Lessee has incurred such
expenses and that the materials for which the request is made are on site at the
applicable Mortgaged Property and are properly secured or have been installed in
such Mortgaged Property;
(d) Servicer shall authorize the disbursement from the applicable
Reserve Account in question, within five (5) Business Days after the receipt of
Master Lessee's request for such disbursement and the satisfaction of the other
conditions set forth above in this Section, but in no event more often than once
in any 15-day period, the amount requested by Master Lessee for such expenses.
3.6 Lease Termination Reserve Account. Disbursements shall be made
from the Lease Termination Reserve Account in the manner provided for in Section
7.2(c) of the Loan Agreement.
4. Security for Loan; Master Lessee's Rights
Borrower's right, title and interest in the funds in the Local
Accounts, Operating Account, the Cash Collateral Account and each Reserve
Account thereof, and all Permitted Investments thereof, are pledged to the
Lender as further security for the Loan pursuant to the Loan Agreement and the
Deposit Account Agreement, which pledge is subject to the interests of the
Master Lessee in the manner described in Section 7.6 hereof. The authority of
the Master Lessee to pay Operating Expenses in the manner set forth in this
Exhibit shall not be terminated, unless the Master Lease shall have been
terminated in accordance with its terms and until all Operating Expenses
incurred or contracted for prior to or as a result of such termination have been
paid or an amount sufficient to pay such expenses is set aside in a reserve.
Unless and until the Master Lease is terminated in accordance with its terms,
and all expenses to be paid for with, or reimbursed from, funds in a Reserve
Account that were incurred prior to the termination shall have been paid in full
(or an amount sufficient to pay such expenses has been set aside as a reserve),
(i) the Servicer shall not freeze or otherwise restrict the ability of the
Master Lessee to obtain disbursements of funds from such Reserve Account in
accordance with the terms hereof and shall not apply funds on deposit in such
Reserve Account to the repayment of the Note, (ii) the right of the Master
Lessee to direct the expenditure of funds in any Reserve Account in accordance
with the terms hereof shall not be terminated unless otherwise agreed to by the
Servicer, the Borrower and the Master Lessee, and (iii) Servicer shall continue
to pay, or reimburse the Master Lessee for, real estate taxes and insurance
premiums from the Tax and Insurance Reserve Account.
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5. Investment of Funds in Accounts
5.1 Borrower shall have the right to instruct the Servicer (or the
"Deposit Bank" as defined in the Deposit Account Agreement) to invest funds in
the Deferred Maintenance Reserve Account, the Building Improvements Reserve
Account and the Low Debt Service Coverage Reserve Account, at the risk of and
for the benefit of Borrower, in Permitted Investments.
5.2 Master Lessee (absent an "Event of Default" as defined in the
Master Lease) and Borrower (if no Master Lease or replacement Master Lease is in
effect or if there is continuing an Event of Default under the Master Lease)
shall have the right to instruct the Servicer (or the Deposit Bank) to invest
funds in the Cash Collateral Account, Tax and Insurance Reserve Account, the
Ongoing Maintenance Reserve Account and the Operating Account, as well as any
other Reserve Account described in Section 2.5 hereof and funded by the Master
Lessee, as well as any Casualty/Condemnation Proceeds Reserve Account, in each
case at the risk of and for the benefit of Master Lessee or Borrower, as
applicable, in Permitted Investments.
5.3 Upon the occurrence of an Event of Default under the Loan
Agreement, Servicer shall have the right to issue investment instructions that
Borrower may otherwise issue pursuant to the above terms of this Section 5.
6. Notice of New Accounts
Master Lessee and Borrower, as applicable, shall notify the Servicer
in writing of the account name and account number of any Local Account and of
each supplemental or replacement account established by the Master Lessee or
Borrower, as applicable, from time to time in connection with the Mortgaged
Property, and the institution in which each such account is maintained. The
Master Lessee shall not change any Local Account without obtaining the consent
of the Servicer, which shall not be unreasonably withheld or delayed. If any
Local Account shall be changed, or any new Local Account shall be opened, by the
Master Lessee or Borrower, such Local Account shall comply with all of the
requirements set forth above in Section 1 hereof, and the Master Lessee or
Borrower, as the case may be, shall send a notice to the Servicer, specifying
the new or changed Local Account and the Local Account replaced thereby.
Master Lessee or Borrower shall have the right to request that the
Servicer change the depositary bank for the Cash Collateral Account, the Reserve
Accounts and the Operating Account, provided that the account shall satisfy the
requirements of an Eligible Account.
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7. General
7.1 The Servicer shall permit the Master Lessee and Borrower
to have electronic access (via standard telephone lines) to information each
Business Day, and shall provide to the Master Lessee and Borrower such
information as the Master Lessee or Borrower may reasonably request, regarding
activity (including disbursements) and balances and source of receipts in the
Cash Collateral Account, the Reserve Accounts, the Operating Account and any
other accounts maintained by Servicer pursuant to this Exhibit.
7.2 Unless the context specifies otherwise, transfers of funds
held in any account that are required by this Exhibit shall require only the
transfer of available funds.
7.3 The Servicer may rely conclusively on written instructions
(which may be sent by facsimile) that the Master Lessee shall provide as to the
amounts to be disbursed from the Cash Collateral Account to the Operating
Account and from the Ongoing Maintenance Reserve Account to Master Lessee, and
such disbursements shall be effected pursuant to instructions given to Servicer
(with a copy to Borrower) prior to 11:00 a.m. (New York time) at least two (2)
Business Day prior to disbursement. The Servicer shall have no duty to
recompute, recalculate, or verify the data contained in such instructions or
information and shall incur no liability to the Master Lessee if the Servicer
acts in accordance therewith.
7.4 All transfers required to be made hereunder shall be
effected by federal wire, automated clearing house funds, or other transfer of
next-day available funds, provided that any such transfer required to be made
within five days prior to a Payment Date shall be made by federal wire of
immediately available funds.
7.5 If, on any Payment Date, the amount in the Cash Collateral
Account shall be sufficient to make the transfer described in clause (b) of
Section 2.4, Borrower shall be deemed to have paid the Monthly Debt Service
unless Servicer is legally constrained from effecting such transfer in
accordance with said Section, including by reason of any bankruptcy or
insolvency related to Borrower (but excluding any legal constraint applicable to
Lender or Servicer but not related to Borrower).
7.6 It is acknowledged by Lender, Servicer and Borrower that
(i) the funds in the Local Accounts, Cash Collateral Account, Ongoing
Maintenance Reserve Account, the Building Improvements Reserve Account (in
certain cases) and Operating Account belong in part to the Master Lessee, (ii)
Master Lessee has agreed to these Cash Management Procedures to secure Master
Lessee's obligations under the Master Lease, and (iii) Master Lessee is not
guaranteeing the performance of Borrower under the Loan Documents and Master
Lessee is not hereby, or in any other agreement or instrument, pledging its
right, title or interest in or to the Local Accounts, Cash Collateral Account,
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Ongoing Maintenance Account, Building Improvements Reserve Account or Operating
Account, or the funds therein, the earnings, income or interest thereon, or the
proceeds thereof, for the performance of or compliance with Borrower's
obligations and covenants under the Loan Documents (except insofar as Master
Lessee has expressly obligated itself for such performance or compliance under
the terms of the Master Lease). Accordingly, any foreclosure by Lender on the
interests of Borrower in any of the Local Accounts, Cash Collateral Account,
Ongoing Maintenance Account, Building Improvements Reserve Account or Operating
Account shall be subject to the right, title and interest of Master Lessee in
and to such accounts, the funds therein, all earnings, income and interest
thereon or the proceeds thereof. In light of and without limiting the foregoing,
upon acceleration of the maturity of the Note following an Event of Default, if
the Master Lease shall be in effect (subject to Section 7.8 below), the Lender
shall be entitled to apply all of the funds held in such Reserve Accounts solely
for the purposes for which each such Reserve Account was established, subject to
the rights of the Master Lessee under the Master Lease, and any right of the
Lender under any Loan Document that purports to permit the Lender or Servicer to
withdraw or utilize funds from the Cash Collateral Account or any other Reserve
Account upon a default or other occurrence with respect to Borrower shall not be
exercised in contravention of the rights of the Master Lessee under the Master
Lease.
7.7 During the period during which an "Event of Default" (as
defined in the Master Lease or any replacement Master Lease) shall have occurred
and be continuing, no disbursements hereunder shall be made to the Master Lessee
except with the approval of Borrower and Servicer, each acting reasonably,
provided that to the extent Borrower or (in accordance with the Loan Documents)
Servicer has incurred or paid a cost or expense for which a Reserve Account was
established (e.g., Borrower or Servicer shall have performed a capital repair to
be funded from the Ongoing Maintenance Reserve Account, completed an item of
"Deferred Maintenance" or paid real estate taxes), then the amount of such cost
and expense shall be disbursed to Borrower or Servicer, as applicable, from the
applicable Reserve Account.
7.8 At any time as the Master Lease (or any replacement Master
Lease permitted under the Loan Agreement) shall not be in effect, all references
herein to the Master Lessee shall be deemed to refer to the Borrower.
7.9 Nothing herein shall be deemed to affect in any respect
the rights and remedies of Borrower as against the Master Lessee upon its
default under the Master Lease.
7.10 Lender, Servicer and Borrower each agrees that it shall
give instructions to the Deposit Bank, as defined in the Deposit Account
Agreement, so as to give effect to and implement the terms hereof. In the event
of any conflict between the terms of this Exhibit and the Deposit Account
Agreement, or between the terms of this Exhibit and the
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other portions of the Loan Agreement, in each case with respect to the rights
and obligations as between or among Lender (or Servicer), Borrower and/or Master
Lessee, the terms of this Exhibit shall control. Master Lessee agrees that it
shall give instructions to the banks maintaining the Local Accounts so as to
give effect to and implement the terms hereof.
7.11 Lender and Servicer each agrees that in the event any
funds from properties or other assets that are not part of the Mortgaged
Properties are inadvertently deposited to any of the Local Accounts or the Cash
Collateral Account, Lender or Servicer shall promptly instruct the Deposit Bank
or any other relevant depositary institution to redeliver such funds as promptly
as practicable, and no security interest in favor of the Lender shall attach to
such funds, provided that nothing herein shall be deemed to modify Borrower's
representations, warranties and covenants set forth in Schedule 4B to the Loan
Agreement.
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EXHIBIT 15.1
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT is made by and among Americold Real Estate,
L.P., a Delaware limited partnership ("Lessor"), Americold Corporation, an
Oregon corporation ("Tenant"), and Goldman Sachs Mortgage Company, a New York
limited partnership (together with its successors and assigns "Lender") pursuant
to that certain Loan Agreement (the "Loan Agreement") , dated as of April 22,
1998, by and between Lender and Landlord.
W I T N E S S E T H
WHEREAS, under a certain master lease dated April 22, 1998
(hereinafter referred to as the "Lease"), Landlord did lease, let and demise the
property (hereinafter called the "Leased Property"), as described in the Lease
to Tenant for the period of time and upon the covenants, terms and conditions
therein stated; and
WHEREAS, the Lease has not been further amended or modified;
and
WHEREAS, by making a mortgage loan, Lender became the owner of
an indebtedness and holder of a certain Note or Notes, secured by first priority
mortgages, deeds of trust and deeds to secure debt (collectively, the
"Mortgages"), which shall constitute liens upon the property described in said
Mortgages and as described in Exhibit A attached hereto (the "Mortgaged
Premises"), and is secured by an assignment of Landlord's interest in the Lease
as more particularly set forth in the Mortgage; and
WHEREAS, Landlord and Tenant acknowledge and agree to the
aforesaid assignment of Landlord's interest in the Lease; and
WHEREAS, Lender desires the Lease and all rights of the Tenant
thereunder to be subordinate to the Mortgage and all rights of Lender
thereunder, and the Tenant desires Lender's assurance not to disturb Tenant's
rights of possession of the Leased Property under the Lease in the event that
Lender exercises its remedies as a Lender under the Mortgages;
NOW THEREFORE, the parties hereto, in consideration of the
covenants contained herein, have agreed and hereby agree as follows:
Section 1.
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The Lease, as the same may heretofore and hereafter be
modified, amended or extended, is and shall be subject and subordinate to the
Mortgages on the Mortgaged Premises, to each and every advance made or hereafter
made under the Loan Agreement, and to all renewals, modifications,
consolidations, replacements and extensions of the Mortgages.
Lender agrees that it shall make available to Tenant the
insurance policy proceeds and condemnation awards (or payments made in
anticipation thereof or in connection therewith) in accordance with the terms of
Section 10.2(b) and 10.2(d) of the Lease.
Section 2.
So long as no default by Tenant has occurred and has continued
to exist for such period of time (after notice, if any, required by the Lease)
as would entitle Landlord to terminate the Lease (hereinafter called an "Event
of Default"), (A) Lender shall not, in any foreclosure action or proceeding
which may be instituted or taken by Lender under any Mortgage by reason of any
default thereunder, evict Tenant from the Leased Premises by the Lease, or
terminate or disturb Tenant's leasehold estate under the Lease, and (B) none of
Tenant's rights under the Lease shall be disturbed by reason of any default
under any of the Mortgages.
Section 3.
Tenant shall give Lender copies of all notices and other
communications given by Tenant to the Landlord under the Lease relating to
defaults on the part of the Landlord under the Lease.
Section 4.
In the event of any act or omission by Landlord which would
give Tenant the right, either immediately or after the lapse of a period of
time, to terminate the Lease, or to claim a partial or total eviction, Tenant
will not exercise any such right (A) until it has given written notice of such
act or omission to Lender by delivering such notice of such act or omission by
certified mail, return receipt requested, addressed to Lender at the address
specified under Section 7 hereof, and (B) until a reasonable period of time (not
less than thirty (30) days) for remedying such act or omission shall have
elapsed following giving of such notice and following the time when Lender shall
have become entitled under the Mortgages or any additional mortgage to remedy
the same, provided Lender, with reasonable diligence, shall (i) have pursued
such remedies as are available to it under the Mortgages so as to be able to
remedy the act or omission, and (ii) thereafter shall have commenced and
continued to remedy such act or omission or cause the same to be remedied.
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Section 5.
Without limitation of any of the provisions of the Lease, in
the event that, by reason of any default on the part of the Landlord, Lender or
its assigns shall succeed to the interest of Landlord or any successor to
Landlord, then subject to the provisions of this Agreement the Lease shall
nevertheless continue in full force and effect and Tenant shall attorn to Lender
or its assigns and shall recognize Lender or its assigns as its landlord. Upon
request of Lender, Tenant shall execute and deliver to Lender or its assigns an
agreement of attornment. If Lender or its assigns shall succeed to the interest
of Landlord or any successor to Landlord, in no event shall Lender be obligated
to remedy and default, nor shall Lender or its assigns have any liability under
the Lease prior to the date Lender or its assigns shall succeed to the rights of
Landlord or any successor to Landlord under the Lease, nor any liability for
offsets or defenses which Tenant might have had against Landlord or any
successor to Landlord. Lender and its assigns shall have no personal liability
as successor to Landlord, and Tenant shall look only to the estate and property
of Lender or its assigns (as applicable) in the Mortgaged Premises or the
proceeds thereof for the satisfaction of Tenant's remedies for the collection of
a judgment (or other judicial process) requiring the payment of money in the
event of any default by Lender and its assigns as Landlord under the Lease. No
other property or assets of Lender or its assigns shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to the Lease, the relationship of Landlord and
Tenant thereunder or Tenant's use or occupancy of the Leased Property.
Section 6.
Tenant has not subordinated the Lease or any of its rights
under the Lease to any lien or mortgage other than the Mortgage prior to the
date hereof, and it will not subordinate the Lease or the rights of the Tenant
thereunder to any lien or mortgage other than the Mortgage without the prior
written consent of Lender, unless otherwise permitted under the Lease. If Tenant
at any time acquires the interest of the Landlord under the Lease, the Lease
will remain in full force and effect and the interests of the Tenant and the
Landlord under the Lease will not merge.
Section 7.
All notices, demands, requests, consents, approvals and other
communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
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(a) if to Tenant:
Americold Corporation
One Concourse Parkway, Suite 450
Atlanta, Georgia 30328
Attention: Chief Executive Officer
with a copy to:
Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Jonathan Eady, Esq.
(b) if to Lender:
Goldman Sachs Mortgage Company
85 Broad Street
New York, New York 10004
Attn: Steven T. Mnuchin
with a simultaneous copy, under separate cover, to:
GMAC Commercial Mortgage Servicing Acquisitions
Department
650 Dresher Road
Horsham, Pennsylvania 19044
Attention: Ingrid Olson
or as to each party, to such other address as the party may
designate by a notice given in accordance with the requirements contained in
this Section 7.
Section 8.
No prepayment of rent or additional rent due under the Lease
of more than one month in advance, and no amendment, modification, surrender or
cancellation of the Lease, shall be binding upon Lender, as holder of the
Mortgages or as Landlord under the Lease if it succeeds to that position, unless
consented to in writing by Lender. In addition, Lender as holder of the
Mortgages or as Landlord under the Lease if it succeeds to that position shall
in no event have any liability for the performance or completion of any work or
to make improvements to the Mortgaged Premises.
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<PAGE> 110
Section 9.
If at any time Lender shall notify Tenant that an Event of
Default has occurred under the Mortgage and shall demand that any then unpaid
rent or additional rent and any rent or additional rent thereafter payable under
the Lease be paid directly to Lender, then Tenant shall thenceforth and until
notified by Lender that the matter in default has been paid or remedied pay such
rent or additional rent to Lender as the same becomes due under the Lease,
without the necessity for further notice and without obligation on the part of
Tenant to inquire whether or not default under the Mortgage occurred or has been
remedied. Any such payment made by the Tenant to Lender shall discharge in full
Tenant's obligation to make that payment to Landlord.
Section 10.
This Agreement may not be modified except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
This Agreement shall apply to, bind and inure to the benefit of the parties
hereto and their respective successors and assigns. As used herein "Lender"
shall include any subsequent holder of the Mortgage. This Agreement shall
supersede and replace any agreement entered into prior to the date hereof by
Tenant (or any predecessor in interest of Tenant under the Lease) with any
previous holder of a mortgage covering the Mortgaged premises, which has been
assigned to Lender.
Section 11.
This Agreement shall be construed in accordance with the laws
of the State in which the Leased Property is situate.
[remainder of page intentionally left blank]
<PAGE> 111
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed, sealed and delivered in their respective names and in
their behalf; and if a corporation, by its officers duly authorized, as of this
22nd day of April, 1998.
Landlord:
AMERICOLD REAL ESTATE, L.P., a Delaware
limited partnership
By: Americold Realty, Inc., its general
partner
By:
-----------------------
Tenant:
AMERICOLD CORPORATION., an Oregon
corporation
By:
------------------------------
Lender:
GOLDMAN SACHS MORTGAGE COMPANY, a
New York limited partnership
By: Goldman Sachs Real Estate Funding
Corp., its general partner
By:
-----------------------
J. Theodore Borter
Authorized Signatory
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<PAGE> 112
STATE OF )
) SS.:
COUNTY OF )
On this day of , 1998, before me personally
came to me known, who being by me duly sworn, did depose and say that he
resides at , that he is the
of , the trust described in and which executed the foregoing
as authorized signatory and on behalf of ; that he knows
the seal of said trust, that the seal affixed to said instrument is such trust
seal, that it was so affixed by order of the board of trustees of said trust,
and that he signed his name thereto by like order.
In witness whereof I hereunto set my hand and official seal.
--------------------------
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this day of , 1998, before me
personally came to me known, who by me being duly sworn, did
depose and say that he resides at , that he is
the of Goldman Sachs Real Estate Funding Corp., the
general partner of Goldman Sachs Mortgage Company, the limited partnership
described in and which executed the foregoing instrument; that it was executed
by authority of the board of directors of said corporation and that he signed
his name thereto by like authority; and he acknowledged to me that said
instrument was executed by said corporation for and on behalf of said limited
partnership for the purposes therein mentioned.
--------------------------
Notary Public
(Notarial Seal)
<PAGE> 113
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this day of , 1998, before me personally came to
me known, who being by me duly sworn, did depose and say that he resides
at , that he is the of
, the corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation, that such corporate seal
was affixed to the foregoing instrument; that it was so affixed by order of the
Board of Directors of said Corporation, and who thereupon signed his name
thereto by like order.
In witness whereof I hereunto set my hand and official seal.
--------------------------
Notary Public
(Notarial Seal)
<PAGE> 114
Exhibit 26.1
Deferred Maintenance Conditions (Environmental)
[omitted]
<PAGE> 115
Exhibit 10.6
FIRST AMENDMENT TO MASTER LEASE AGREEMENT, dated as of March 10,
1999 (this "Amendment"), between AMERICOLD REAL ESTATE, L.P., a Delaware limited
partnership ("Landlord"), and AMERICOLD LOGISTICS, LLC., a Delaware limited
liability company ("Tenant").
W I T N E S E T H:
WHEREAS, Americold Corporation, an Oregon corporation ("Americold"),
and Landlord are parties to a certain Master Lease Agreement (the "Lease"),
dated as of April 22, 1998 (all capitalized terms used but not defined herein
shall have the meaning given such terms in the Lease);
WHEREAS, Americold has assigned all of its interest in the Lease to
Tenant; and
WHEREAS, the Landlord and Tenant wish to amend the Lease to better
express in certain respects their agreement with respect to the Lease.
NOW, THEREFORE, for TEN DOLLARS and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Section 1.4 of the Lease is hereby amended and restated
in its entirety to read as follows:
"1.4. Initial Term. The initial term of this Lease (the "Initial
Term") shall commence on the Commencement Date and shall expire on
February 28, 2014, unless otherwise terminated as provided herein."
Section 2. Section 1.5(a) of the Lease is hereby amended and rested
in its entirety to read as follows:
"1.5 Renewal Terms. Provided (i) no Event of Default shall have
occurred and be continuing hereunder or under the Other Leases and (ii)
the tenant under each of the Other Leases shall have exercised its
respective renewal option under the applicable Other Lease to the extent
the same is available, Tenant shall have the right to renew this Lease (as
to all, but not less than all, the Leased Property subject to this Lease
at such time) for two (2) successive five (5) year terms ("Extended
Terms") upon giving written notice to Landlord of each such renewal at
least eighteen (18) months prior to the termination of the then current
Term. During each such Extended
<PAGE> 116
Term, all of the terms and conditions of this Lease shall continue in full
force and effect, except that the Minimum Rent for and during each
Extended Term shall be the greater of (i) the then current fair market
rental ("Fair Market Rental"), which unless otherwise mutually agreed to
by Landlord and Tenant shall be determined by the appraisal procedure set
forth in Article XXIV and (ii) the Minimum Rent for the Lease Year
immediately preceding the Extended Term plus five percent (5%). Tenant's
failure to exercise its renewal option as to the first Extended Term shall
result in the loss of its renewal option as to the second Extended Term.
As used herein, the term "Other Leases" shall refer to, collectively, (i)
that certain Master Lease Agreement, dated as of February 28, 1999,
between Americold Corporation, as landlord, and AmeriCold Logistics, LLC,
as tenant, as amended, (ii) that certain Master Lease Agreement, dated as
of April 22, 1998, between URS Real Estate, L.P., as landlord, and URS
Logistics, Inc., as tenant, as amended, and (iii) such other Master Lease
Agreements as may be entered into from time to time between Landlord or
its Affiliates and Tenant or its Affiliates."
Section 3. The definition of "Pre-Approved Party" is hereby amended
and restated in its entirety to read as follows:
""Pre-Approved Party" shall mean (i) URS Logistics, Inc., a
Delaware corporation; (ii) Americold Corporation, an Oregon
corporation; (iii) any Person with or into which URS Logistics, Inc.
and/or Americold Corporation is merged on consolidated or to which
URS Logistics, Inc. and/or Americold Corporation transfer all or
substantially all of its or their assets or which succeeds to all or
substantially all of the business of URS Logistics, Inc. and/or
Americold Corporation; (iv) any Person fifty-one percent (51%) or
more owned, directly or indirectly, and controlled by one or more or
more of the Persons identified in clauses (i) - (iii) above; (v) any
Person in which one or more Persons described in clauses (i) - (iv)
above are sole operating partners or managing members; (vi) any
other Person as to which Tenant shall have obtained a Rating
Confirmation; and (vii) any Landlord's Lender that acquires Tenant's
interest in this Lease by foreclosure or any action in lieu
thereof."
Section 4. The definition of the term "Vornado Operating" is hereby
amended and restated in its entirety to read as follows:
""Vornado Operating" shall mean Vornado Operating Company, a
Delaware corporation formerly known as Vornado Operating, Inc.."
Section 5. Section 3.1(a) and Section 3.1 (b) of the Lease is hereby
amended and restated in its entirety to read as follows:
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"3.1 Rent. Tenant will pay to Landlord, in lawful money of the
United States of America which shall be legal tender for the payment
of public and private debts, at Landlord's address set forth above
or at such other place or to such other person, firms or
corporations as Landlord may designate in writing from time to time,
(i) Minimum Rent (as defined below), and (ii) Percentage Rent;
provided that so long as the Initial Landlord's Debt is outstanding
and Landlord is the "Borrower" thereunder, Minimum Rent and
Percentage Rent shall be paid in accordance with the Cash Management
Procedures. In addition, Tenant will pay to Landlord or the Person
otherwise entitled thereto all Additional Charges during the Term on
or before the same are delinquent.
(a) Minimum Rent:
(i) For the period commencing on the Commencement Date through
December 31, 2003, the sum of FORTY NINE MILLION THIRTY ONE THOUSAND
AND 00/100 DOLLARS ($49,031,000.00) per annum.
(ii) For the period commencing on January 1, 2004 through
December 31, 2008, the sum of FIFTY MILLION FIVE HUNDRED SEVENTY TWO
THOUSAND AND 00/100 DOLLARS ($50,572,000.00) per annum.
(iii) For the period commencing on January 1, 2009 through
February 28, 2014, the greater of (x) FIFTY THREE MILLION ONE
HUNDRED ONE THOUSAND AND 00/100 DOLLARS ($53,101,000.00) per annum
and (y) the Fair Market Rental of the Leased Property, which unless
otherwise mutually agreed to by Landlord and Tenant shall be
determined by the appraisal procedure set forth in Article XXIV.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable:
(x) for the period from the Commencement Date through (and including) the
Rent Payment Date (as defined herein) occurring in September, 2000, in
arrears, and
(y) for the period from (but excluding) the Rent Payment Date occurring in
September, 2000, through the balance of the Term, in advance,
in either case in twelve (12) equal installments on the eleventh (11th) day of
each calendar month of the Initial Term and each Extended Term (the "Rent
Payment Date"); provided that if such 11th day is not a Business Day, then the
Rent Payment Date shall be the next preceding Business Day; provided further
that the advance Minimum Rent installment otherwise payable on the Rent Payment
Date in September, 2000, shall instead be deferred and paid in six (6) equal
installments on each Rent Payment Date occurring in September, 2000 through
February, 2001. Minimum Rent shall be paid for the period of the eleventh
(11th) of each month (or, if applicable, the Commencement Date) through the
tenth (10th) of the next month (or, if applicable, the expiration of the Term)
(each, a "Rental Period"), provided that the first and last payments of Minimum
Rent shall be prorated as to any partial Rental Period, based on
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<PAGE> 118
the number of days within the Term during such Rental Period and the number of
days insuch Rental Period. The first installment payment of Minimum Rent shall
be payable on May 11, 1998, for the Rental Period beginning with the
Commencement Date and ending May 10, 1998.
Notwithstanding the foregoing, for the period commencing with the
date hereof and expiring on the third (3rd) anniversary of the date hereof, to
the extent that Available Cash is less than the amount of Fixed Rent and
Percentage Rent, as certified by Tenant (together with reasonable documentation
thereof) and agreed to by Landlord, the Fixed Rent and Percentage Rent shall
accrue, and the payment thereof (together with interest at the Interest Rate)
shall be deferred to, the earlier of (A) the third (3rd) anniversary of the date
hereof and (B) such date as Available Cash shall be available, to the extent of
such Available Cash (and Available Cash shall be applied first to interest, then
to the accrued Fixed Rent and then to the accrued Percentage Rent), provided
that the maximum amount of Fixed Rent that may be deferred under this paragraph
shall be fifteen percent (15%) of the stated Fixed Rent obligation. As used
herein, "Available Cash" shall be Receipts less Operating Expenses. In no event,
however, shall the rent deferral permitted hereunder be such that Landlord will
have insufficient cash flow to service Landlord's Debt or to the extent that
such rent deferral is not permitted under the terms of the Initial Landlord's
Debt.
(b) Percentage Rent:
(i) Generally; Payment in Installments. In addition to the Minimum
Rent payable with respect to the Leased Property, Tenant shall pay
Percentage Rent for each Lease Year. Percentage Rent shall be payable
quarterly in arrears in four (4) installments, on the Rent Payment Date
occurring in April, July, August and January of each Lease Year, in
respect of the quarter ending in the prior month, commencing in April,
1999. Each quarterly installment shall be based on, and accompanied by, an
Officer's Certificate setting forth Tenant's current estimated Receipts
for the Leased Property (on a Leased Property-by-Leased Property basis) on
a cumulative basis for the period commencing with the Lease Year through
the end of the quarter in question, and shall take into account previous
installments paid in respect of such Lease Year.
(ii) Presentation of Certificate and Audit. Not later than the 25th
day following the end of each Lease Year, Tenant shall deliver to Landlord
an Officer's Certificate setting forth (x) the Receipts for the Leased
Property (on a Leased Property-by-Leased Property basis) and (y) the
computation made by Tenant in determining Percentage Rent, in each case
(a) for such Lease Year and (b) for each individual calendar quarter
during such Lease Year, together with an audit of such Receipts conducted
by a "Big Six" firm of independent certified public accountants proposed
by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed). Tenant shall utilize, or cause to be
utilized, an
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<PAGE> 119
accounting system for the Leased Property in accordance with its usual and
customary practices and in accordance with GAAP, which will accurately
record Receipts for the Leased Property. Tenant shall retain such records,
for at least three (3) years after the expiration of each Lease Year.
(iii) Confirmation of Percentage Rent. Landlord, at its own expense,
except as provided herein below, shall have the right, exercisable by
Notice to Tenant within two (2) years after receipt of the applicable
Officer's Certificate referred to in clause (ii) above, by its accountants
or representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns).
(iv) Adjustments of Percentage Rent. If the certificate or audit
described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a deficiency in the payment of Percentage Rent and
any differences between the parties are resolved (which, absent the
parties' agreement shall be determined pursuant to arbitration in
accordance with Schedule 15.4), Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as determined or
agreed upon or compromised as aforesaid, is more than four percent (4%) of
the Receipts reported by Tenant for such Lease Year and, as a result,
Landlord did not receive at least ninety-five percent (95%) of the
Percentage Rent payable with respect to such Lease Year, Tenant shall pay
the reasonable cost of such audit and examination. If the certificate or
audit described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a overpayment of Percentage Rent and any
differences between the parties are resolved (which, absent the parties'
agreement shall be determined pursuant to arbitration in accordance with
Schedule 15.4), then (provided no Event of Default has occurred and is
continuing) Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at the
Interest Rate accruing from the date of payment by Tenant until the date
such credit is applied. If such credit cannot be made because the Term has
expired prior to application in full thereof, then (provided no Event of
Default has occurred and is continuing and provided Tenant has paid all
amounts required under this Lease), Landlord shall repay the unapplied
balance of such credit to Tenant.
(v) Maximum Adjustments of Percentage Rent. Notwithstanding the
foregoing, (A) in no event shall Tenant be permitted under Section
3.1(b)(iv) a credit or refund in respect of Percentage Rent in excess of
15 percent of the aggregate installments of Percentage Rent paid in
respect of any Lease Year pursuant to Section 3.1(b)(i) and (B) in no
event shall Tenant be permitted under Section 3.1(b)(i) a
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credit or refund in respect of Percentage Rent in excess of 15 percent of
the aggregate installments of Percentage Rent paid in respect of
immediately preceding calendar quarter pursuant to Section 3.1(b)(i).
(vi) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public information, (2) disclosed to the extent that Landlord is
advised by counsel that Landlord is required to disclose such information
by subpoena, court order, securities laws and regulations, any other laws
or regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to any Landlord's Debt, provided that,
with respect to the disclosures permitted under clause (4), Landlord shall
obtain the agreement of the Persons to whom disclosure is made to maintain
such information as confidential in accordance with terms of this
Subsection (iv) and in no event shall public or Rule 144A holders of
Landlord's Debt be permitted to receive such information on an individual
Leased Property basis.
(vii) Survival. The obligations of Tenant and Landlord contained in
this Section 3.1 shall survive the expiration or earlier termination of
this Lease."
Section 6. Section 6.1(h) of the Lease is hereby amended as follows:
(a) The phrase "Tenant will use reasonable efforts to furnish to
Landlord within eighty (80) days (and in no event later than ninety (90)
days) following the end of each Fiscal Year of Tenant," in the first
sentence of Section 6.1(h)(2) of the Lease is hereby replaced with "Tenant
will use reasonable efforts to furnish to Landlord within sixty (60) days
(and in no event later than seventy-five (75) days) following the end of
each Fiscal Year of Tenant,";
(b) The phrase "Tenant will furnish, or cause to be furnished, to
Landlord on or before the thirtieth (30th) day after the end of each
calendar month," in the first sentence of Section 6.1(h)(3) of the Lease
is hereby replaced with "Tenant will furnish, or cause to be furnished, to
Landlord on or before the fifteenth (15th) day after the end of each
calendar month,";
(c) The phrase "Tenant will furnish, or cause to be furnished, to
Landlord on or before the forty-fifth (45th) day after the end of each
calendar quarter," in the first sentence of Section 6.1(h)(4) of the Lease
is hereby replaced with "Tenant will
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<PAGE> 121
furnish, or cause to be furnished, to Landlord on or before the fifteenth
(15th) day after the end of each calendar quarter,"; and
(d) The phrase "Tenant shall furnish to Landlord, within ten (10)
Business Days after request," in Section 6.1(h)(5) of the Lease is hereby
replaced with "Tenant shall furnish to Landlord, within seven (7) days
after request,".
Section 7. Section 8.1(i) of the Lease is hereby amended and
restated in its entirety to read as follows:
"(i) "For any Material Alteration (other than a Material Alteration
the cost of which one or more Subtenants are obligated to pay for or
reimburse to Tenant and which Tenant reasonably believes will be so
paid or reimbursed in a timely manner), Tenant shall be obligated to
deliver to a Depositary Eligible Collateral in an amount that, when
taken together with any amount then in any reserve account funded
pursuant to the Cash Management Procedures and permitted to be used
in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the
Threshold Amount, which Eligible Collateral shall be held by the
Depositary and released to Tenant as such work progresses in
accordance with Section 8.1(j). In addition, if all Material
Alterations (other than a Material Alteration the cost of which one
or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed
in a timely manner) then being performed exceeds $15,000,000 (the
"Aggregate Threshold Amount"), Tenant shall be obligated to deliver
to the Depositary Eligible Collateral in amount that, when taken
together with (x) any Eligible Collateral previously delivered under
this subsection (i) and (y) any amounts then in any reserve funded
pursuant to the Cash Management Procedures and permitted to be used
in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the
Aggregate Threshold Amount, which Eligible Collateral shall be held
by the Depositary and released to Tenant at such time as the
remaining costs of the Material Alteration are less than the
Aggregate Threshold Amount."
Section 8. Section 9.1(b) of the Lease is hereby amended and
restated in its entirety to read as follows:
"(b) Notwithstanding anything herein to the contrary, Landlord
shall promptly make all necessary and appropriate repairs and
replacements to the Leased Property (other than those repairs and
replacements (i) caused by the negligence or wilfull misconduct of
Tenant or any Person claiming by, through or under Tenant or (ii)
required as a result of Casualty or
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<PAGE> 122
Condemnation to the Leased Property) the costs of which are required to be
depreciated under the Internal Revenue Code on a 39-year basis (or any
successor period of depreciation for buildings), provided that Tenant
shall make such repairs or pay such expenditures (as applicable) to the
extent the same exceed, on a cumulative basis, $3,000,000 per annum,
increased 5 percent as of January 1, 2003 and January 1, 2008. Landlord's
obligation pursuant to the prior sentence, however, shall be subject to
prior reasonable notice from Tenant as to the need to make such repair and
replacement. Further, Landlord may elect that Tenant perform such repair
and replacement, in which event, Landlord shall reimburse or pay to
Tenant, within fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in
making such repairs and replacements. Further, Tenant agrees that (A) it
shall expend annually for the repair and replacement of 39-Year Property
not less than $3,641,654.00 for the period from the Commencement Date
through December 31, 1999, increasing by 5% annually for each succeeding
Fiscal Year (such amount, the "Minimum Tenant's Responsibility"), provided
that Tenant shall not be deemed to have expended any amounts in
satisfaction of the Minimum Tenant's Responsibility until such time as
Tenant shall have expended all amounts required to be spent by Tenant
under Section 2.3 of the Asset Purchase Agreement in connection with which
this Lease was assigned to Tenant, to which Tenant (or its assignee) is
party, (B) to the extent Tenant shall have spent less than the specified
amount in any Lease Year, such unspent amount shall cumulate and Tenant
shall be required to expend the unspent portion in subsequent Lease Years,
and (C) if at the end of the Term, there shall be any cumulative unspent
amounts, Tenant shall pay such amount to Landlord not later than the end
of the Term."
Section 9. Section 15.4 of the Lease is hereby amended and restated
in its entirety to read as follows:
"15.4 Modifications to Secure Financing. If any Superior Party
or prospective Superior Party shall request modifications of this
Lease as a condition to the provision, continuance or renewal of any
such financing, Tenant will not unreasonably withhold, delay or
defer its consent thereto, provided that (i) either such
modifications do not materially increase the obligations of Tenant
hereunder or materially adversely affect Tenant's rights under this
Lease or (ii) if such modifications would materially increase the
obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, then Landlord shall compensate
Tenant for the same. Disputes as between Landlord and Tenant
regarding whether a proposed modification would materially increase
the obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, and the
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<PAGE> 123
compensation that would be payable to Tenant as a result thereof
shall be determined by arbitration in accordance with the terms of
Schedule 15.4 hereto."
Section 10. Section 25.1 of the Lease is hereby amended and restated
in its entirety to read as follows:
"25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or
an Affiliate of Landlord intends to elect to qualify as a real estate
investment trust ("REIT"). Accordingly, unless otherwise notified by
Landlord,, the following requirements (the "REIT Requirements") must be
satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or a portion of the amounts paid by Tenant to Landlord
hereunder to fail to qualify as "rents from real property" within the
meaning of Section 856(d) of the Code.
(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and
agrees to use reasonable efforts to cause its Affiliates, to use their
best efforts to permit the REIT Requirements to be satisfied. Tenant
agrees, and agrees to use reasonable efforts to cause its Affiliates, to
cooperate in good faith with Landlord or to ensure that the REIT
Requirements are satisfied, including providing Landlord with information
about the ownership of Tenant, and its Affiliates to the extent that such
information is reasonably available. In addition, Tenant agrees, and
agrees to cause its Affiliates, to cooperate with Landlord in connection
with any additional requirements relating to Landlord's qualification as a
REIT arising from and after the
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date hereof. Immediately after becoming aware that the REIT Requirements
are not, or will not be, satisfied, Tenant shall notify Landlord of such
noncompliance.
Section 11. Section 29.1 of the Lease is hereby amended and restated
in its entirety to read as follows:
"29.1 Landlord's Option to Purchase Tenant's Personal Property.
Tenant hereby grants Landlord the option to purchase all of the equipment
and personal property (tangible and intangible) that is employed by Tenant
in connection with the use and operation of each of the Properties, and
the business conducted thereat, including any interest of Tenant in the
warehousing and customer contracts (to the extent the same is assignable)
and the interest of Tenant in any equipment leases and the like. Such
option shall be exercisable by Landlord at any time prior to the date of
expiration or earlier termination of this Lease in respect of a Property
and the conveyance in respect thereof shall be consummated (and the
payment of the purchase price therefor made) concurrently with such
expiration or earlier termination. The purchase price payable for Tenant's
Personalty shall be the Fair Market Value thereof, determined in
accordance with the terms of Article XXIV hereof (as adjusted to the
extent required to reflect that the subject of the appraisal is Tenant's
Personalty rather than a Leased Property). Tenant agrees to cooperate with
Landlord in effecting the smooth and orderly transfer of Tenant's
Personalty in the event of Landlord's exercise of the Purchase Option.
Tenant's Personalty shall be conveyed free and clear of all liens,
encumbrances or rights of other parties, except as may have been disclosed
to the appraisers in the process of establishing the Fair Market Value
thereof."
Section 12. Exhibit 3.1(b) "Calculation of Percentage Rent" is
hereby amended and restated in its entirety to read as follows:
"Percentage Rent, with respect to each Lease Year, shall be
calculated annually as follows:
(i) for the period from the Commencement Date through December 31,
2003, the product of (a) 41.5% times (ii) all Receipts for the
applicable Lease Year in excess of the Breakpoint;
(ii) for the period from January 1, 2004 through December 31, 2008,
the product of (a) 43% times (ii) all Receipts for the
applicable Lease Year in excess of the Breakpoint; and
(iii) for the period from January 1, 2009 through February 28, 2014,
the product of (a) 43.5% times (ii) all Receipts for the
applicable Lease Year in excess of the Breakpoint.
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<PAGE> 125
As used herein, the "Breakpoint" with respect to any Lease Year shall be
$118,147,000. The Breakpoint shall be adjusted to account for the termination of
this Lease with respect to any one or more of the Leased Properties in
accordance with the terms of this Lease on a pro rata basis among each Leased
Property based on the percentages set forth next to each Leased Property in
Exhibit 3.1(a) attached to this Lease.
Section 13. The Lease is hereby amended by adding the following
Schedule 15.4 thereto:
"Schedule 15.4
Arbitration Procedures
Arbitration shall be held in the city of Atlanta, Georgia in accordance with the
rules of the American Arbitration Association then in effect. There shall be one
arbitrator appointed in accordance with those rules. As part of the award, the
arbitrator shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. The arbitration
shall commence within thirty (30) days after demand for arbitration is made by a
party hereto. The arbitrator shall render his/her award within thirty (30) days
after the completion of the arbitration and the arbitration shall be held on
consecutive Business Days. Failure by either party to submit to arbitration as
required under this Lease shall result in the arbitrator ruling in favor of the
other party is such other party has submitted to arbitration under this Lease.
Judgement may be entered on the arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction of the
Georgia courts for that purpose. The arbitrator may grant injunctive or other
equitable relief."
Section 14. Each party hereto represents and warrants that this
Amendment has been duly authorized, executed and delivered on behalf of such
party.
Section 15. The Lease is in full force and effect and, except as set
forth herein, is unmodified.
Section 16. This Amendment may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
[remainder of page intentionally left blank]
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<PAGE> 126
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized representatives on this 10th day of
March 1999, effective as of the day and year first above written.
AMERICOLD REAL ESTATE, L.P.
By: Americold Realty, Inc., its general
partner
By: /s/ Irwin Goldberg
----------------------------------------
Name: Irwin Goldberg
Title: Vice President and Chief
Financial Officer
AMERICOLD LOGISTICS, LLC
By: URS Logistics, Inc., its member
By: /s/ Frederick B. Beilstein III
----------------------------------------
Name: Frederick B. Beilstein III
Title: Senior Vice President
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<PAGE> 127
Exhibit 10.7
ASSIGNMENT AND ASSUMPTION OF MASTER LEASE
THIS ASSIGNMENT AND ASSUMPTION OF MASTER LEASE ("Assignment") is made and
entered into as of this 28th day of February, 1999, by and between Americold
Corporation, an Oregon corporation ("Assignor") and AmeriCold Logistics, LLC, a
Delaware limited liability company ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor is in the business of providing refrigerated, frozen and
dry warehouse storage services, logistics, distribution and transportation
services and other services (the "Business") on a contract basis for its
customers; and
WHEREAS, Assignor and Assignee have entered into that certain Asset
Purchase Agreement, dated as of February 26, 1999 (the "Purchase Agreement"),
pursuant to which Assignee has agreed to purchase from Assignor, and Assignor
has agreed to sell to Assignee, substantially all of the tangible and intangible
personal property assets of Assignor used or held for use in Assignor's
Business, as described in the Purchase Agreement; and
WHEREAS, Assignor is a party to that certain Master Lease Agreement, dated
April 22, 1998, by and between AmeriCold Real Estate, L.P., as landlord, and
Assignor, as tenant (the "Master Lease") relating to certain real property
and/or refrigerated warehouse facilities which Assignor uses in its operation of
the Business; and
WHEREAS, in conjunction with the transaction contemplated by the Purchase
Agreement, Assignee has required that Assignor transfer and assign to Assignee
all of the right, title and interest of Assignor in, to and under the Master
Lease (as such may have been amended, extended, renewed or supplemented from
time to time), and Assignor desires and intends by this instrument to assign to
Assignee all of Assignor's right, title and interest in, to and under the Master
Lease.
NOW, THEREFORE, in consideration of the forgoing premises, the
consideration set forth in the Purchase Agreement, the covenants hereafter
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby covenant and agree
as follows:
1. Assignment by Assignor. Assignor hereby assigns, transfers, sets over,
grants and conveys to Assignee, its successors and assigns, all of the right,
title, and interest of Assignor in and to the Master Lease, as such may have
been amended, extended, renewed or supplemented from time to time.
2. Assumption by Assignee. Assignee hereby accepts this Assignment and as
a part of the consideration therefor assumes all of the responsibilities and
obligations of Assignor arising and to be performed after the date hereof
relating to the Master Lease.
<PAGE> 128
3. Further Assurances. Assignor and Assignee shall execute such other
documents or instruments and/or take such other actions and make such other
deliveries as may be necessary to assign the Master Lease to Assignee or to
otherwise effect the transactions contemplated by this Assignment. Assignor
covenants and agrees that in the event that (i) any rights, title or interest in
and to the Master Lease covered in this Assignment cannot be transferred or
assigned by Assignor without the consent of or notice to a third party and in
respect of which any necessary consent or notice has not as of the date hereof
been given or obtained or (ii) any rights, title or interest in and to the
Master Lease are non-assignable by their nature and will not pass by this
Assignment, the beneficial interest in and to the same will in any event pass to
Assignee, and Assignor covenants and agrees (a) to hold, and hereby declares
that Assignor holds such rights, title or interest in trust for, and for the
benefit of, Assignee, (b) to use all reasonable means to obtain and to secure
such consents and give such notice as may be required to effect a valid transfer
or transfers of rights, title or interest in and to the Master Lease and (c) to
make or complete such transfer or transfers of title as soon as reasonably
possible.
4. Environmental Indemnity Provisions.
Assignor hereby agrees to hold harmless Assignee and/or any
successors in interest, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Assignee or
any other indemnitee or assessed against the property covered by the Master
Lease by virtue of any claim or lien by any governmental or quasi-governmental
unit, body or agency, or any third party, for cleanup costs or other costs
pursuant to any environmental laws, but only to the extent that the same relate
to the period prior to the date hereof.
5. Miscellaneous Provisions.
(a) Non-Waiver; Modification. Except as expressly provided for
herein, Assignor and Assignee each hereby agree that nothing contained in this
Assignment shall be deemed or construed to waive or to modify the terms of the
Master Lease.
(b) Reliance. Any individual, partnership, corporation or other
entity may rely, without further inquiry, upon the powers and rights herein
granted to Assignee and upon any notarization, certification, verification or
affidavit by any notary public of any state relating to the authorization,
execution and delivery of this Assignment or to the authenticity of any copy,
conformed or otherwise, hereof.
(c) Assignment and Binding Agreement. This Assignment shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, personal representatives, successors and assigns.
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<PAGE> 129
(d) Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Governing Law and Submission to Jurisdiction. Except as
otherwise expressly provided herein, this Assignment shall be governed by and
construed under the laws of the State of Delaware without giving effect to
otherwise applicable principles of conflicts of laws.
(f) Pronouns; Captions. All personal pronouns in this Assignment,
whether used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular. All captions in this Assignment are intended solely for the
convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof.
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<PAGE> 130
IN WITNESS WHEREOF, the parties hereto have caused the execution and
sealing of this Assignment as of the day and year first written above.
ASSIGNOR:
AMERICOLD CORPORATION
By: /s/ Daniel F. McNamara
---------------------------------------
Name: Daniel F. McNamara
Its: President
[CORPORATE SEAL]
ASSIGNEE:
AMERICOLD LOGISTICS, LLC
By: /s/ Frederick B. Beilstein III (SEAL)
---------------------------------------
Name: Frederick B. Beilstein III
Its: Senior Vice President
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<PAGE> 1
Exhibit 10.6
FIRST AMENDMENT TO MASTER LEASE AGREEMENT, dated as of March 10,
1999 (this "Amendment"), between AMERICOLD REAL ESTATE, L.P., a Delaware limited
partnership ("Landlord"), and AMERICOLD LOGISTICS, LLC., a Delaware limited
liability company ("Tenant").
W I T N E S E T H:
WHEREAS, Americold Corporation, an Oregon corporation ("Americold"),
and Landlord are parties to a certain Master Lease Agreement (the "Lease"),
dated as of April 22, 1998 (all capitalized terms used but not defined herein
shall have the meaning given such terms in the Lease);
WHEREAS, Americold has assigned all of its interest in the Lease to
Tenant; and
WHEREAS, the Landlord and Tenant wish to amend the Lease to better
express in certain respects their agreement with respect to the Lease.
NOW, THEREFORE, for TEN DOLLARS and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Section 1.4 of the Lease is hereby amended and restated
in its entirety to read as follows:
"1.4. Initial Term. The initial term of this Lease (the "Initial
Term") shall commence on the Commencement Date and shall expire on
February 28, 2014, unless otherwise terminated as provided herein."
Section 2. Section 1.5(a) of the Lease is hereby amended and rested
in its entirety to read as follows:
"1.5 Renewal Terms. Provided (i) no Event of Default shall have
occurred and be continuing hereunder or under the Other Leases and (ii)
the tenant under each of the Other Leases shall have exercised its
respective renewal option under the applicable Other Lease to the extent
the same is available, Tenant shall have the right to renew this Lease (as
to all, but not less than all, the Leased Property subject to this Lease
at such time) for two (2) successive five (5) year terms ("Extended
Terms") upon giving written notice to Landlord of each such renewal at
least eighteen (18) months prior to the termination of the then current
Term. During each such Extended
<PAGE> 2
Term, all of the terms and conditions of this Lease shall continue in full
force and effect, except that the Minimum Rent for and during each
Extended Term shall be the greater of (i) the then current fair market
rental ("Fair Market Rental"), which unless otherwise mutually agreed to
by Landlord and Tenant shall be determined by the appraisal procedure set
forth in Article XXIV and (ii) the Minimum Rent for the Lease Year
immediately preceding the Extended Term plus five percent (5%). Tenant's
failure to exercise its renewal option as to the first Extended Term shall
result in the loss of its renewal option as to the second Extended Term.
As used herein, the term "Other Leases" shall refer to, collectively, (i)
that certain Master Lease Agreement, dated as of February 28, 1999,
between Americold Corporation, as landlord, and AmeriCold Logistics, LLC,
as tenant, as amended, (ii) that certain Master Lease Agreement, dated as
of April 22, 1998, between URS Real Estate, L.P., as landlord, and URS
Logistics, Inc., as tenant, as amended, and (iii) such other Master Lease
Agreements as may be entered into from time to time between Landlord or
its Affiliates and Tenant or its Affiliates."
Section 3. The definition of "Pre-Approved Party" is hereby amended
and restated in its entirety to read as follows:
""Pre-Approved Party" shall mean (i) URS Logistics, Inc., a
Delaware corporation; (ii) Americold Corporation, an Oregon
corporation; (iii) any Person with or into which URS Logistics, Inc.
and/or Americold Corporation is merged on consolidated or to which
URS Logistics, Inc. and/or Americold Corporation transfer all or
substantially all of its or their assets or which succeeds to all or
substantially all of the business of URS Logistics, Inc. and/or
Americold Corporation; (iv) any Person fifty-one percent (51%) or
more owned, directly or indirectly, and controlled by one or more or
more of the Persons identified in clauses (i) - (iii) above; (v) any
Person in which one or more Persons described in clauses (i) - (iv)
above are sole operating partners or managing members; (vi) any
other Person as to which Tenant shall have obtained a Rating
Confirmation; and (vii) any Landlord's Lender that acquires Tenant's
interest in this Lease by foreclosure or any action in lieu
thereof."
Section 4. The definition of the term "Vornado Operating" is hereby
amended and restated in its entirety to read as follows:
""Vornado Operating" shall mean Vornado Operating Company, a
Delaware corporation formerly known as Vornado Operating, Inc.."
Section 5. Section 3.1(a) and Section 3.1 (b) of the Lease is hereby
amended and restated in its entirety to read as follows:
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<PAGE> 3
"3.1 Rent. Tenant will pay to Landlord, in lawful money of the
United States of America which shall be legal tender for the payment
of public and private debts, at Landlord's address set forth above
or at such other place or to such other person, firms or
corporations as Landlord may designate in writing from time to time,
(i) Minimum Rent (as defined below), and (ii) Percentage Rent;
provided that so long as the Initial Landlord's Debt is outstanding
and Landlord is the "Borrower" thereunder, Minimum Rent and
Percentage Rent shall be paid in accordance with the Cash Management
Procedures. In addition, Tenant will pay to Landlord or the Person
otherwise entitled thereto all Additional Charges during the Term on
or before the same are delinquent.
(a) Minimum Rent:
(i) For the period commencing on the Commencement Date through
December 31, 2003, the sum of FORTY NINE MILLION THIRTY ONE THOUSAND
AND 00/100 DOLLARS ($49,031,000.00) per annum.
(ii) For the period commencing on January 1, 2004 through
December 31, 2008, the sum of FIFTY MILLION FIVE HUNDRED SEVENTY TWO
THOUSAND AND 00/100 DOLLARS ($50,572,000.00) per annum.
(iii) For the period commencing on January 1, 2009 through
February 28, 2014, the greater of (x) FIFTY THREE MILLION ONE
HUNDRED ONE THOUSAND AND 00/100 DOLLARS ($53,101,000.00) per annum
and (y) the Fair Market Rental of the Leased Property, which unless
otherwise mutually agreed to by Landlord and Tenant shall be
determined by the appraisal procedure set forth in Article XXIV.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable:
(x) for the period from the Commencement Date through (and including) the
Rent Payment Date (as defined herein) occurring in September, 2000, in
arrears, and
(y) for the period from (but excluding) the Rent Payment Date occurring in
September, 2000, through the balance of the Term, in advance,
in either case in twelve (12) equal installments on the eleventh (11th) day of
each calendar month of the Initial Term and each Extended Term (the "Rent
Payment Date"); provided that if such 11th day is not a Business Day, then the
Rent Payment Date shall be the next preceding Business Day; provided further
that the advance Minimum Rent installment otherwise payable on the Rent Payment
Date in September, 2000, shall instead be deferred and paid in six (6) equal
installments on each Rent Payment Date occurring in September, 2000 through
February, 2001. Minimum Rent shall be paid for the period of the eleventh
(11th) of each month (or, if applicable, the Commencement Date) through the
tenth (10th) of the next month (or, if applicable, the expiration of the Term)
(each, a "Rental Period"), provided that the first and last payments of Minimum
Rent shall be prorated as to any partial Rental Period, based on
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<PAGE> 4
the number of days within the Term during such Rental Period and the number of
days insuch Rental Period. The first installment payment of Minimum Rent shall
be payable on May 11, 1998, for the Rental Period beginning with the
Commencement Date and ending May 10, 1998.
Notwithstanding the foregoing, for the period commencing with the
date hereof and expiring on the third (3rd) anniversary of the date hereof, to
the extent that Available Cash is less than the amount of Fixed Rent and
Percentage Rent, as certified by Tenant (together with reasonable documentation
thereof) and agreed to by Landlord, the Fixed Rent and Percentage Rent shall
accrue, and the payment thereof (together with interest at the Interest Rate)
shall be deferred to, the earlier of (A) the third (3rd) anniversary of the date
hereof and (B) such date as Available Cash shall be available, to the extent of
such Available Cash (and Available Cash shall be applied first to interest, then
to the accrued Fixed Rent and then to the accrued Percentage Rent), provided
that the maximum amount of Fixed Rent that may be deferred under this paragraph
shall be fifteen percent (15%) of the stated Fixed Rent obligation. As used
herein, "Available Cash" shall be Receipts less Operating Expenses. In no event,
however, shall the rent deferral permitted hereunder be such that Landlord will
have insufficient cash flow to service Landlord's Debt or to the extent that
such rent deferral is not permitted under the terms of the Initial Landlord's
Debt.
(b) Percentage Rent:
(i) Generally; Payment in Installments. In addition to the Minimum
Rent payable with respect to the Leased Property, Tenant shall pay
Percentage Rent for each Lease Year. Percentage Rent shall be payable
quarterly in arrears in four (4) installments, on the Rent Payment Date
occurring in April, July, August and January of each Lease Year, in
respect of the quarter ending in the prior month, commencing in April,
1999. Each quarterly installment shall be based on, and accompanied by, an
Officer's Certificate setting forth Tenant's current estimated Receipts
for the Leased Property (on a Leased Property-by-Leased Property basis) on
a cumulative basis for the period commencing with the Lease Year through
the end of the quarter in question, and shall take into account previous
installments paid in respect of such Lease Year.
(ii) Presentation of Certificate and Audit. Not later than the 25th
day following the end of each Lease Year, Tenant shall deliver to Landlord
an Officer's Certificate setting forth (x) the Receipts for the Leased
Property (on a Leased Property-by-Leased Property basis) and (y) the
computation made by Tenant in determining Percentage Rent, in each case
(a) for such Lease Year and (b) for each individual calendar quarter
during such Lease Year, together with an audit of such Receipts conducted
by a "Big Six" firm of independent certified public accountants proposed
by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed). Tenant shall utilize, or cause to be
utilized, an
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<PAGE> 5
accounting system for the Leased Property in accordance with its usual and
customary practices and in accordance with GAAP, which will accurately
record Receipts for the Leased Property. Tenant shall retain such records,
for at least three (3) years after the expiration of each Lease Year.
(iii) Confirmation of Percentage Rent. Landlord, at its own expense,
except as provided herein below, shall have the right, exercisable by
Notice to Tenant within two (2) years after receipt of the applicable
Officer's Certificate referred to in clause (ii) above, by its accountants
or representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns).
(iv) Adjustments of Percentage Rent. If the certificate or audit
described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a deficiency in the payment of Percentage Rent and
any differences between the parties are resolved (which, absent the
parties' agreement shall be determined pursuant to arbitration in
accordance with Schedule 15.4), Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as determined or
agreed upon or compromised as aforesaid, is more than four percent (4%) of
the Receipts reported by Tenant for such Lease Year and, as a result,
Landlord did not receive at least ninety-five percent (95%) of the
Percentage Rent payable with respect to such Lease Year, Tenant shall pay
the reasonable cost of such audit and examination. If the certificate or
audit described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a overpayment of Percentage Rent and any
differences between the parties are resolved (which, absent the parties'
agreement shall be determined pursuant to arbitration in accordance with
Schedule 15.4), then (provided no Event of Default has occurred and is
continuing) Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at the
Interest Rate accruing from the date of payment by Tenant until the date
such credit is applied. If such credit cannot be made because the Term has
expired prior to application in full thereof, then (provided no Event of
Default has occurred and is continuing and provided Tenant has paid all
amounts required under this Lease), Landlord shall repay the unapplied
balance of such credit to Tenant.
(v) Maximum Adjustments of Percentage Rent. Notwithstanding the
foregoing, (A) in no event shall Tenant be permitted under Section
3.1(b)(iv) a credit or refund in respect of Percentage Rent in excess of
15 percent of the aggregate installments of Percentage Rent paid in
respect of any Lease Year pursuant to Section 3.1(b)(i) and (B) in no
event shall Tenant be permitted under Section 3.1(b)(i) a
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<PAGE> 6
credit or refund in respect of Percentage Rent in excess of 15 percent of
the aggregate installments of Percentage Rent paid in respect of
immediately preceding calendar quarter pursuant to Section 3.1(b)(i).
(vi) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public information, (2) disclosed to the extent that Landlord is
advised by counsel that Landlord is required to disclose such information
by subpoena, court order, securities laws and regulations, any other laws
or regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to any Landlord's Debt, provided that,
with respect to the disclosures permitted under clause (4), Landlord shall
obtain the agreement of the Persons to whom disclosure is made to maintain
such information as confidential in accordance with terms of this
Subsection (iv) and in no event shall public or Rule 144A holders of
Landlord's Debt be permitted to receive such information on an individual
Leased Property basis.
(vii) Survival. The obligations of Tenant and Landlord contained in
this Section 3.1 shall survive the expiration or earlier termination of
this Lease."
Section 6. Section 6.1(h) of the Lease is hereby amended as follows:
(a) The phrase "Tenant will use reasonable efforts to furnish to
Landlord within eighty (80) days (and in no event later than ninety (90)
days) following the end of each Fiscal Year of Tenant," in the first
sentence of Section 6.1(h)(2) of the Lease is hereby replaced with "Tenant
will use reasonable efforts to furnish to Landlord within sixty (60) days
(and in no event later than seventy-five (75) days) following the end of
each Fiscal Year of Tenant,";
(b) The phrase "Tenant will furnish, or cause to be furnished, to
Landlord on or before the thirtieth (30th) day after the end of each
calendar month," in the first sentence of Section 6.1(h)(3) of the Lease
is hereby replaced with "Tenant will furnish, or cause to be furnished, to
Landlord on or before the fifteenth (15th) day after the end of each
calendar month,";
(c) The phrase "Tenant will furnish, or cause to be furnished, to
Landlord on or before the forty-fifth (45th) day after the end of each
calendar quarter," in the first sentence of Section 6.1(h)(4) of the Lease
is hereby replaced with "Tenant will
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<PAGE> 7
furnish, or cause to be furnished, to Landlord on or before the fifteenth
(15th) day after the end of each calendar quarter,"; and
(d) The phrase "Tenant shall furnish to Landlord, within ten (10)
Business Days after request," in Section 6.1(h)(5) of the Lease is hereby
replaced with "Tenant shall furnish to Landlord, within seven (7) days
after request,".
Section 7. Section 8.1(i) of the Lease is hereby amended and
restated in its entirety to read as follows:
"(i) "For any Material Alteration (other than a Material Alteration
the cost of which one or more Subtenants are obligated to pay for or
reimburse to Tenant and which Tenant reasonably believes will be so
paid or reimbursed in a timely manner), Tenant shall be obligated to
deliver to a Depositary Eligible Collateral in an amount that, when
taken together with any amount then in any reserve account funded
pursuant to the Cash Management Procedures and permitted to be used
in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the
Threshold Amount, which Eligible Collateral shall be held by the
Depositary and released to Tenant as such work progresses in
accordance with Section 8.1(j). In addition, if all Material
Alterations (other than a Material Alteration the cost of which one
or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed
in a timely manner) then being performed exceeds $15,000,000 (the
"Aggregate Threshold Amount"), Tenant shall be obligated to deliver
to the Depositary Eligible Collateral in amount that, when taken
together with (x) any Eligible Collateral previously delivered under
this subsection (i) and (y) any amounts then in any reserve funded
pursuant to the Cash Management Procedures and permitted to be used
in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the
Aggregate Threshold Amount, which Eligible Collateral shall be held
by the Depositary and released to Tenant at such time as the
remaining costs of the Material Alteration are less than the
Aggregate Threshold Amount."
Section 8. Section 9.1(b) of the Lease is hereby amended and
restated in its entirety to read as follows:
"(b) Notwithstanding anything herein to the contrary, Landlord
shall promptly make all necessary and appropriate repairs and
replacements to the Leased Property (other than those repairs and
replacements (i) caused by the negligence or wilfull misconduct of
Tenant or any Person claiming by, through or under Tenant or (ii)
required as a result of Casualty or
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<PAGE> 8
Condemnation to the Leased Property) the costs of which are required to be
depreciated under the Internal Revenue Code on a 39-year basis (or any
successor period of depreciation for buildings), provided that Tenant
shall make such repairs or pay such expenditures (as applicable) to the
extent the same exceed, on a cumulative basis, $3,000,000 per annum,
increased 5 percent as of January 1, 2003 and January 1, 2008. Landlord's
obligation pursuant to the prior sentence, however, shall be subject to
prior reasonable notice from Tenant as to the need to make such repair and
replacement. Further, Landlord may elect that Tenant perform such repair
and replacement, in which event, Landlord shall reimburse or pay to
Tenant, within fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in
making such repairs and replacements. Further, Tenant agrees that (A) it
shall expend annually for the repair and replacement of 39-Year Property
not less than $3,641,654.00 for the period from the Commencement Date
through December 31, 1999, increasing by 5% annually for each succeeding
Fiscal Year (such amount, the "Minimum Tenant's Responsibility"), provided
that Tenant shall not be deemed to have expended any amounts in
satisfaction of the Minimum Tenant's Responsibility until such time as
Tenant shall have expended all amounts required to be spent by Tenant
under Section 2.3 of the Asset Purchase Agreement in connection with which
this Lease was assigned to Tenant, to which Tenant (or its assignee) is
party, (B) to the extent Tenant shall have spent less than the specified
amount in any Lease Year, such unspent amount shall cumulate and Tenant
shall be required to expend the unspent portion in subsequent Lease Years,
and (C) if at the end of the Term, there shall be any cumulative unspent
amounts, Tenant shall pay such amount to Landlord not later than the end
of the Term."
Section 9. Section 15.4 of the Lease is hereby amended and restated
in its entirety to read as follows:
"15.4 Modifications to Secure Financing. If any Superior Party
or prospective Superior Party shall request modifications of this
Lease as a condition to the provision, continuance or renewal of any
such financing, Tenant will not unreasonably withhold, delay or
defer its consent thereto, provided that (i) either such
modifications do not materially increase the obligations of Tenant
hereunder or materially adversely affect Tenant's rights under this
Lease or (ii) if such modifications would materially increase the
obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, then Landlord shall compensate
Tenant for the same. Disputes as between Landlord and Tenant
regarding whether a proposed modification would materially increase
the obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, and the
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<PAGE> 9
compensation that would be payable to Tenant as a result thereof
shall be determined by arbitration in accordance with the terms of
Schedule 15.4 hereto."
Section 10. Section 25.1 of the Lease is hereby amended and restated
in its entirety to read as follows:
"25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or
an Affiliate of Landlord intends to elect to qualify as a real estate
investment trust ("REIT"). Accordingly, unless otherwise notified by
Landlord,, the following requirements (the "REIT Requirements") must be
satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or a portion of the amounts paid by Tenant to Landlord
hereunder to fail to qualify as "rents from real property" within the
meaning of Section 856(d) of the Code.
(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and
agrees to use reasonable efforts to cause its Affiliates, to use their
best efforts to permit the REIT Requirements to be satisfied. Tenant
agrees, and agrees to use reasonable efforts to cause its Affiliates, to
cooperate in good faith with Landlord or to ensure that the REIT
Requirements are satisfied, including providing Landlord with information
about the ownership of Tenant, and its Affiliates to the extent that such
information is reasonably available. In addition, Tenant agrees, and
agrees to cause its Affiliates, to cooperate with Landlord in connection
with any additional requirements relating to Landlord's qualification as a
REIT arising from and after the
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<PAGE> 10
date hereof. Immediately after becoming aware that the REIT Requirements
are not, or will not be, satisfied, Tenant shall notify Landlord of such
noncompliance.
Section 11. Section 29.1 of the Lease is hereby amended and restated
in its entirety to read as follows:
"29.1 Landlord's Option to Purchase Tenant's Personal Property.
Tenant hereby grants Landlord the option to purchase all of the equipment
and personal property (tangible and intangible) that is employed by Tenant
in connection with the use and operation of each of the Properties, and
the business conducted thereat, including any interest of Tenant in the
warehousing and customer contracts (to the extent the same is assignable)
and the interest of Tenant in any equipment leases and the like. Such
option shall be exercisable by Landlord at any time prior to the date of
expiration or earlier termination of this Lease in respect of a Property
and the conveyance in respect thereof shall be consummated (and the
payment of the purchase price therefor made) concurrently with such
expiration or earlier termination. The purchase price payable for Tenant's
Personalty shall be the Fair Market Value thereof, determined in
accordance with the terms of Article XXIV hereof (as adjusted to the
extent required to reflect that the subject of the appraisal is Tenant's
Personalty rather than a Leased Property). Tenant agrees to cooperate with
Landlord in effecting the smooth and orderly transfer of Tenant's
Personalty in the event of Landlord's exercise of the Purchase Option.
Tenant's Personalty shall be conveyed free and clear of all liens,
encumbrances or rights of other parties, except as may have been disclosed
to the appraisers in the process of establishing the Fair Market Value
thereof."
Section 12. Exhibit 3.1(b) "Calculation of Percentage Rent" is
hereby amended and restated in its entirety to read as follows:
"Percentage Rent, with respect to each Lease Year, shall be
calculated annually as follows:
(i) for the period from the Commencement Date through December 31,
2003, the product of (a) 41.5% times (ii) all Receipts for the
applicable Lease Year in excess of the Breakpoint;
(ii) for the period from January 1, 2004 through December 31, 2008,
the product of (a) 43% times (ii) all Receipts for the
applicable Lease Year in excess of the Breakpoint; and
(iii) for the period from January 1, 2009 through February 28, 2014,
the product of (a) 43.5% times (ii) all Receipts for the
applicable Lease Year in excess of the Breakpoint.
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<PAGE> 11
As used herein, the "Breakpoint" with respect to any Lease Year shall be
$118,147,000. The Breakpoint shall be adjusted to account for the termination of
this Lease with respect to any one or more of the Leased Properties in
accordance with the terms of this Lease on a pro rata basis among each Leased
Property based on the percentages set forth next to each Leased Property in
Exhibit 3.1(a) attached to this Lease.
Section 13. The Lease is hereby amended by adding the following
Schedule 15.4 thereto:
"Schedule 15.4
Arbitration Procedures
Arbitration shall be held in the city of Atlanta, Georgia in accordance with the
rules of the American Arbitration Association then in effect. There shall be one
arbitrator appointed in accordance with those rules. As part of the award, the
arbitrator shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. The arbitration
shall commence within thirty (30) days after demand for arbitration is made by a
party hereto. The arbitrator shall render his/her award within thirty (30) days
after the completion of the arbitration and the arbitration shall be held on
consecutive Business Days. Failure by either party to submit to arbitration as
required under this Lease shall result in the arbitrator ruling in favor of the
other party is such other party has submitted to arbitration under this Lease.
Judgement may be entered on the arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction of the
Georgia courts for that purpose. The arbitrator may grant injunctive or other
equitable relief."
Section 14. Each party hereto represents and warrants that this
Amendment has been duly authorized, executed and delivered on behalf of such
party.
Section 15. The Lease is in full force and effect and, except as set
forth herein, is unmodified.
Section 16. This Amendment may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
[remainder of page intentionally left blank]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized representatives on this 10th day of
March 1999, effective as of the day and year first above written.
AMERICOLD REAL ESTATE, L.P.
By: Americold Realty, Inc., its general
partner
By: /s/ Irwin Goldberg
----------------------------------------
Name: Irwin Goldberg
Title: Vice President and Chief
Financial Officer
AMERICOLD LOGISTICS, LLC
By: URS Logistics, Inc., its member
By: /s/ Frederick B. Beilstein III
----------------------------------------
Name: Frederick B. Beilstein III
Title: Senior Vice President
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<PAGE> 1
Exhibit 10.7
ASSIGNMENT AND ASSUMPTION OF MASTER LEASE
THIS ASSIGNMENT AND ASSUMPTION OF MASTER LEASE ("Assignment") is made and
entered into as of this 28th day of February, 1999, by and between Americold
Corporation, an Oregon corporation ("Assignor") and AmeriCold Logistics, LLC, a
Delaware limited liability company ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor is in the business of providing refrigerated, frozen and
dry warehouse storage services, logistics, distribution and transportation
services and other services (the "Business") on a contract basis for its
customers; and
WHEREAS, Assignor and Assignee have entered into that certain Asset
Purchase Agreement, dated as of February 26, 1999 (the "Purchase Agreement"),
pursuant to which Assignee has agreed to purchase from Assignor, and Assignor
has agreed to sell to Assignee, substantially all of the tangible and intangible
personal property assets of Assignor used or held for use in Assignor's
Business, as described in the Purchase Agreement; and
WHEREAS, Assignor is a party to that certain Master Lease Agreement, dated
April 22, 1998, by and between AmeriCold Real Estate, L.P., as landlord, and
Assignor, as tenant (the "Master Lease") relating to certain real property
and/or refrigerated warehouse facilities which Assignor uses in its operation of
the Business; and
WHEREAS, in conjunction with the transaction contemplated by the Purchase
Agreement, Assignee has required that Assignor transfer and assign to Assignee
all of the right, title and interest of Assignor in, to and under the Master
Lease (as such may have been amended, extended, renewed or supplemented from
time to time), and Assignor desires and intends by this instrument to assign to
Assignee all of Assignor's right, title and interest in, to and under the Master
Lease.
NOW, THEREFORE, in consideration of the forgoing premises, the
consideration set forth in the Purchase Agreement, the covenants hereafter
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby covenant and agree
as follows:
1. Assignment by Assignor. Assignor hereby assigns, transfers, sets over,
grants and conveys to Assignee, its successors and assigns, all of the right,
title, and interest of Assignor in and to the Master Lease, as such may have
been amended, extended, renewed or supplemented from time to time.
2. Assumption by Assignee. Assignee hereby accepts this Assignment and as
a part of the consideration therefor assumes all of the responsibilities and
obligations of Assignor arising and to be performed after the date hereof
relating to the Master Lease.
<PAGE> 2
3. Further Assurances. Assignor and Assignee shall execute such other
documents or instruments and/or take such other actions and make such other
deliveries as may be necessary to assign the Master Lease to Assignee or to
otherwise effect the transactions contemplated by this Assignment. Assignor
covenants and agrees that in the event that (i) any rights, title or interest in
and to the Master Lease covered in this Assignment cannot be transferred or
assigned by Assignor without the consent of or notice to a third party and in
respect of which any necessary consent or notice has not as of the date hereof
been given or obtained or (ii) any rights, title or interest in and to the
Master Lease are non-assignable by their nature and will not pass by this
Assignment, the beneficial interest in and to the same will in any event pass to
Assignee, and Assignor covenants and agrees (a) to hold, and hereby declares
that Assignor holds such rights, title or interest in trust for, and for the
benefit of, Assignee, (b) to use all reasonable means to obtain and to secure
such consents and give such notice as may be required to effect a valid transfer
or transfers of rights, title or interest in and to the Master Lease and (c) to
make or complete such transfer or transfers of title as soon as reasonably
possible.
4. Environmental Indemnity Provisions.
Assignor hereby agrees to hold harmless Assignee and/or any
successors in interest, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Assignee or
any other indemnitee or assessed against the property covered by the Master
Lease by virtue of any claim or lien by any governmental or quasi-governmental
unit, body or agency, or any third party, for cleanup costs or other costs
pursuant to any environmental laws, but only to the extent that the same relate
to the period prior to the date hereof.
5. Miscellaneous Provisions.
(a) Non-Waiver; Modification. Except as expressly provided for
herein, Assignor and Assignee each hereby agree that nothing contained in this
Assignment shall be deemed or construed to waive or to modify the terms of the
Master Lease.
(b) Reliance. Any individual, partnership, corporation or other
entity may rely, without further inquiry, upon the powers and rights herein
granted to Assignee and upon any notarization, certification, verification or
affidavit by any notary public of any state relating to the authorization,
execution and delivery of this Assignment or to the authenticity of any copy,
conformed or otherwise, hereof.
(c) Assignment and Binding Agreement. This Assignment shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, personal representatives, successors and assigns.
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<PAGE> 3
(d) Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Governing Law and Submission to Jurisdiction. Except as
otherwise expressly provided herein, this Assignment shall be governed by and
construed under the laws of the State of Delaware without giving effect to
otherwise applicable principles of conflicts of laws.
(f) Pronouns; Captions. All personal pronouns in this Assignment,
whether used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular. All captions in this Assignment are intended solely for the
convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused the execution and
sealing of this Assignment as of the day and year first written above.
ASSIGNOR:
AMERICOLD CORPORATION
By: /s/ Daniel F. McNamara
---------------------------------------
Name: Daniel F. McNamara
Its: President
[CORPORATE SEAL]
ASSIGNEE:
AMERICOLD LOGISTICS, LLC
By: /s/ Frederick B. Beilstein III (SEAL)
---------------------------------------
Name: Frederick B. Beilstein III
Its: Senior Vice President
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<PAGE> 1
Exhibit 10.8
================================================================================
MASTER LEASE AGREEMENT
Dated as of March 11, 1999
Between
URS LOGISTICS, INC.
as Landlord,
and
AMERICOLD LOGISTICS II, LLC,
as Tenant
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
1.1 Leased Property........................................................1
1.2 Release of Unimproved Parcels. .......................................2
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.......3
1.4 Initial Term...........................................................5
1.5 Renewal Terms..........................................................5
1.6 Limitation of Term as a Result of Ground Lease Terms...................6
1.7 Condition of the Leased Property.......................................6
ARTICLE II
2.1 Definitions............................................................7
ARTICLE III
3.1 Rent..................................................................22
3.2 Net Lease.............................................................26
ARTICLE IV
4.1 No Termination, Abatement, etc........................................26
4.2 Abatement Procedures..................................................27
ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property......................................28
5.2 Tenant's Personal Property............................................28
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants......................................................28
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ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants...........................................35
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations...........................................................36
8.2 Subletting and Assignment; Warehouse Agreements.......................40
8.2.1 Generally.......................................................40
8.2.2 Certain Sublettings and Assignments.............................40
8.2.3 Landlord's Right to Collect from Assignees and Subtenants.......41
8.2.4 No Release......................................................41
8.2.5 Required Assignment and Subletting Provisions...................41
8.2.6 Reimbursement of Landlord's Costs...............................42
8.2.7 Warehouse Agreements............................................42
8.2.8 Certain Leases Senior. ........................................42
8.3 REIT Related Limitations on Subleasing and Warehouse Agreement........43
8.4 Collateral Assignment of Subleases and Warehouse
Agreements to Landlord ..............................................43
8.5 Leasehold Mortgages...................................................43
8.5.1 Landlord's Estate...............................................43
8.5.2 Certain Leasehold Mortgage Requirements.........................43
8.5.3 Leasehold Mortgagee Provisions..................................44
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease.....46
8.5.5 Notice of Arbitration. .........................................47
ARTICLE IX
9.1 Maintenance and Repair................................................48
9.2 Encroachments, Restrictions, etc......................................50
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance.............................................................51
10.2 Casualty; Application of Proceeds.....................................56
10.3 Condemnation..........................................................59
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<PAGE> 4
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures............................................60
ARTICLE XII
12.1 Events of Default.....................................................61
12.2 Certain Remedies......................................................62
12.3 Damages...............................................................62
12.4 Waiver................................................................64
12.5 Application of Funds..................................................64
ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default.............................64
ARTICLE XIV
14.1 Holding Over..........................................................65
ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance......................................65
15.2 Attornment............................................................65
15.3 Notice of Default to Landlord's Lender................................66
15.4 Modifications to Secure Financing.....................................66
15.5 Delivery of Notices to Landlord's Lender..............................67
15.6 Right of Landlord's Lender to Enforce Lease...........................67
15.7 Exercise of Landlord's Discretion.....................................67
ARTICLE XVI
16.1 Indemnification.......................................................67
ARTICLE XVII
17.1 No Waiver.............................................................68
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ARTICLE XVIII
18.1 Remedies Cumulative...................................................69
ARTICLE XIX
19.1 Acceptance of Surrender...............................................69
ARTICLE XX
20.1 No Merger of Title....................................................69
ARTICLE XXI
21.1 Conveyance by Landlord................................................69
ARTICLE XXII
22.1 Quiet Enjoyment.......................................................70
ARTICLE XXIII
23.1 Notices...............................................................70
ARTICLE XXIV
24.1 Appraisers............................................................71
ARTICLE XXV
25.1 General REIT Provisions...............................................72
25.1.1 REIT Requirements..............................................72
25.1.2 Satisfaction of REIT Requirements..............................72
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions....................................73
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ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims....................................................73
27.2 Severability..........................................................73
27.3 Maximum Permissible Rate..............................................73
27.4 Headings..............................................................74
27.5 Exculpation...........................................................74
27.6 Transfer of Licenses..................................................74
27.7 Exhibition of Leased Property.........................................74
27.8 Entire Agreement......................................................74
27.9 Governing Law.........................................................74
27.10 No Waiver.............................................................74
27.11 Successors and Assigns................................................74
27.12 Modifications in Writing..............................................75
27.13 No Waiver.............................................................75
27.14 Claims Against Landlord...............................................75
ARTICLE XXVIII
28.1 Memorandum of Lease...................................................75
ARTICLE XXIX
29.1 Landlord's Option to Purchase Tenant's Personal Property..............75
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LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A-1 - Legal Description of the Land
EXHIBIT 1.5(b) - List of Ground Leases and Expiration Dates
EXHIBIT 2.1(a) - Release Amounts
EXHIBIT 3.1(a) - Minimum Rent Allocations
EXHIBIT 3.1(b) - Calculation of Percentage Rent
EXHIBIT 8.2.8 - Certain Superior Leases
SCHEDULE 9.1(b) - Capital Expenditure Responsibilities
EXHIBIT 15.1 - Form of Non-Disturbance Agreement
SCHEDULE 15.4 - Arbitration Procedures
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MASTER LEASE AGREEMENT (this "Lease"), dated as of the 11th day of March,
1999, between URS LOGISTICS, INC., a Delaware corporation ("Landlord"), having
offices c/o Vornado Realty Trust, Park 80 West, Plaza II, Saddle Brook, New
Jersey 07663 Attention: Chief Financial Officer, and AMERICOLD LOGISTICS II,
LLC, a Delaware limited liability company ("Tenant"), having its principal
offices at 10 Glenlake Parkway, 9th Floor, Atlanta, Georgia 30328, Attention:
Chief Executive Officer.
RECITALS
WHEREAS, Landlord has agreed to let to Tenant, and Tenant has agreed to
lease from Landlord, certain parcels of real property and improvements each for
use and operation as dry and cold warehousing facilities and related uses,
defined hereinbelow as the "Leased Property" (all capitalized terms used but not
elsewhere defined herein shall have the meaning provided therefor in Article II
hereof).
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE I
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following
(collectively, the "Leased Property"):
(i) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit A attached hereto and made a part hereof
(collectively, the "Land");
(ii) all buildings, structures, Fixtures and other improvements of
every kind, including alleyways and connecting tunnels, sidewalks, utility
pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased
Improvements");
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(iii) all easements, rights and appurtenances relating to the Land
and the Leased Improvements; and
(iv) all permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components
thereof, now and hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air- and
water-pollution-control, waste-disposal, air- cooling and air-conditioning
systems and apparatus, sprinkler systems and fire- and theft-protection
equipment, and built-in oxygen and vacuum systems, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto
to constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but excluding all items included within
Tenant's Personal Property (collectively the "Fixtures").
1.2 Release of Unimproved Parcels. Notwithstanding anything herein to the
contrary, Landlord shall have the right from time to time to terminate this
Lease, with respect to any Unimproved Parcels located at the Leased Property as
well as grant in connection therewith in respect of the Leased Property
remaining subject to this Lease reasonable easements, restrictions, covenants,
reservations and rights of way for, among other things, traffic circulation,
ingress, egress, parking, access, water and sewer lines, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes at no
cost to Landlord and with no adjustment in Rent; provided, in each such case,
(x) such Unimproved Parcel shall be used either for the purpose of erecting,
maintaining and operating cold or dry storage warehouses or other structures and
improvements not inconsistent with the use of the related Leased Property, and
(y) such termination will not materially adversely affect either the value of
the remaining portion of the related Leased Property (as distinguished from the
value of the entire Leased Property) or the net operating income of the
remaining portion of the Leased Property (taking into account, to the extent
applicable, any potential loss of revenue resulting if the transfer and
development of the Unimproved Parcel by Landlord were not to occur), as
supported by the Officer's Certificate of Landlord described below. As used
herein, "Unimproved Parcel" shall mean, with respect to a Leased Property, one
or more land areas comprising such Leased Property on which no improvements
generating Receipts are situate, and not materially required for the generation
of Receipts. In connection with any termination permitted pursuant to this
Section, Tenant agrees to execute and deliver any instrument reasonably
necessary or appropriate to facilitate said action, subject to Tenant's receipt
of:
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1. a plot plan identifying the location of the applicable Unimproved
Parcel;
2. a metes and bounds description of the portion of such Unimproved
Parcel; and
3. an amendment to the legal description attached as an exhibit to this
Lease implementing the proposed release, including a metes and
bounds description of the portion of the Land at the relevant Leased
Property that will continue to be subject to this Lease after the
proposed termination.
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.
(a) Subject to the terms of this Section, if, at any time during the Term,
in the good faith judgment of Tenant (as evidenced by an Officer's Certificate
on behalf of Tenant which describes the basis for such judgment), (x) any Leased
Property becomes or imminently will become uneconomic or unsuitable for its
Primary Intended Use, and will remain uneconomic or unsuitable for such use for
the foreseeable future, and Tenant undertakes to cease its operation of such
Leased Property for its Primary Intended Use as soon as is reasonably
practicable or (y) a Default hereunder relating to a particular Leased Property
has occurred and is continuing and Tenant, notwithstanding the exercise of
reasonable diligence, is unable to cure such Event of Default other than by
terminating this Lease with respect to the Leased Property in question (in each
case, any such Leased Property, an "Uneconomic Property"), then, unless
otherwise prohibited by the terms of any Landlord's Debt, Tenant shall have the
right, so long as (i) no Event of Default shall have occurred and be continuing
(other than one arising from the Default described in clause (y) above), and
(ii) any other requirements relating to the substitution of such Uneconomic
Property under any applicable Landlord's Loan Document have been satisfied, to
purchase such Uneconomic Property described in clause (x) above in accordance
with the terms of this Section. Tenant shall signify its election to exercise
such purchase option by giving notice of the election to Landlord, accompanied
by the Officer's Certificate described in the immediately preceding sentence.
Tenant's restoration of the operations at any Uneconomic Property as a result of
events which are not within the control of Tenant and were not foreseeable by
Tenant at the time such Officer's Certificate was delivered shall not be deemed
to evidence Tenant's bad faith in making the determination which is the subject
of such Officer's Certificate.
(b) In the event Tenant elects to exercise its right to purchase a Leased
Property pursuant to this Section, Tenant shall, as described in clause (x)
above, either:
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(i) offer to Landlord a property owned by Tenant of like kind and
quality to the Leased Property proposed to be purchased by Tenant (each a
"New Leased Property"), which New Leased Property, if accepted by Landlord
(in Landlord's reasonable discretion), would serve as consideration for
Tenant's purchase of the Leased Property in question (each a "New Property
Purchase"); or
(ii) offer to pay Landlord the Termination Amount for the Uneconomic
Property in question (each a "Cash Purchase"). Landlord shall have sixty
days from the date of such offer to either accept or reject Tenant's offer
to make a Cash Purchase. Upon the closing of the Cash Purchase or
Landlord's rejection thereof, (x) this Lease shall terminate in respect of
the Uneconomic Property in question (except for such terms as are
expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set
forth on Exhibit 3.1(a) shall be adjusted to reflect the portion of
Minimum Rent allocated to each Leased Property remaining subject to the
terms of this Lease (except to the extent otherwise indicated on said
Exhibit 3.1(a)).
(c) As a condition to any New Property Purchase, Tenant shall deliver to
Landlord (i) a deed evidencing the transfer of the fee interest in the New
Leased Property to Landlord, (ii) a Title Policy with respect to the New Leased
Property, (iii) a survey of the New Leased Property, (iv) environmental reports
relating to the New Leased Property, (iv) an amendment to this Lease (x)
terminating this Lease with respect to the Uneconomic Property and (y) causing
the New Leased Property to become a Leased Property hereunder and (v) any and
all other documents, reports, legal opinions or other items reasonably requested
by Landlord. Upon any such purchase, the Uneconomic Property removed will no
longer be a Leased Property hereunder and this Lease, as such relates to the
Uneconomic Property in question, will be terminated. Upon any New Property
Purchase, the applicable New Leased Property shall be a Leased Property
hereunder and the percentage of Minimum Rent (as set forth on Exhibit 3.1(a)
hereto) assigned to the applicable Uneconomic Property shall be assigned to such
New Leased Property.
(d) As a condition to any Cash Purchase, Tenant shall pay to Landlord (in
immediately available federal funds) the applicable Termination Amount and shall
deliver to Landlord (i) an amendment to this Lease terminating this Lease with
respect to the Uneconomic Property (ii) any and all other documents, reports,
legal opinions or other items reasonably requested by Landlord. Upon any such
purchase, the Uneconomic Property removed will no longer be a Leased Property
hereunder and this Lease, as such
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relates to the Uneconomic Property in question, will be terminated in accordance
with the last sentence of Section 1.3(b)(ii) herein.
(e) Tenant hereby covenants and agrees that any purchase of an Uneconomic
Property pursuant to this Section shall not in any way impair the obligations of
Tenant to make payments of Rent hereunder.
(f) Tenant hereby agrees to pay all expenses in connection with any
actions taken pursuant to this Section, including all out-of-pocket expenses and
costs incurred by Landlord or Landlord's Lender (or any of their respective
affiliates), regardless whether a substitution is ultimately effected, including
fees and costs of: audits; travel; accounting services; environmental and
engineering reports; credit reports; appraisals; property evaluations;
preparation, negotiation, execution and delivery of any amendments of or
documents supplemental to this Lease or Landlord's Loan Documents; attorneys'
fees and expenses of Landlord and Landlord's Lender; transfer, transfer gains,
intangibles, deed and mortgage recording taxes; title insurance; survey; and
document recordings and filings.
1.4 Initial Term. The initial term of this Lease (the "Initial Term")
shall commence on the Commencement Date and shall expire on February 28, 2014,
unless otherwise terminated as provided herein, subject to the terms of Section
1.6.
1.5 Renewal Terms. (a) Subject to Section 1.6, provided (i) no Event of
Default shall have occurred and be continuing hereunder or under the Other
Leases and (ii) the tenant under each of the Other Leases shall have exercised
its respective renewal option under the applicable Other Lease to the extent the
same is available, Tenant shall have the right to renew this Lease (as to all,
but not less than all, the Leased Property subject to this Lease at such time)
for two (2) successive five (5) year terms ("Extended Terms") upon giving
written notice to Landlord of each such renewal at least eighteen (18) months
prior to the termination of the then current Term. During each such Extended
Term, all of the terms and conditions of this Lease shall continue in full force
and effect, except that the Minimum Rent for and during each Extended Term shall
be the greater of (i) the then current fair market rental ("Fair Market
Rental"), which unless otherwise mutually agreed to by Landlord and Tenant shall
be determined by the appraisal procedure set forth in Article XXIV and (ii) the
Minimum Rent for the Lease Year immediately preceding the Extended Term plus
five percent (5%). Tenant's failure to exercise its renewal option as to the
first Extended Term shall result in the loss of its renewal option as to the
second Extended Term.
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(b) Subject to Section 1.6, Landlord shall exercise renewal rights (if
any) that are available under each Ground Lease so as to provide Tenant, to the
greatest extent possible, with an Extended Term described in Section 1.5(a),
provided that (without waiving Landlord's rights under Section 1.6) Landlord
shall not be required to exercise any renewal option in respect of any Ground
Lease unless prior to such time Tenant shall have duly exercised its renewal
option hereunder.
(c) If Landlord or any Affiliate of Landlord shall purchase any fee or
other interest in a Leased Property that is superior to the interest of
Landlord, such as the ground lessor's interest in a Ground Leased Property, then
the estate of Landlord and such superior interest shall not merge and, without
limiting the foregoing, Tenant shall continue to be liable hereunder to pay any
ground rent and perform any other obligations of the lessee under such Ground
Lease. Further, in the event Landlord or any Affiliate of Landlord acquires a
ground lessor's interest in a Ground Leased Property and the term of the related
Ground Lease shall have expired, then Landlord or such Affiliate shall have the
right to enter into a new Ground Lease and receive from Tenant reimbursement (or
payment) of ground rent in an amount equal to the same ground rent as was
payable under the expired Ground Lease, increased by 5 percent, and increased
again by 5 percent every fifth anniversary of the commencement of the new Ground
Lease.
1.6 Limitation of Term as a Result of Ground Lease Terms. With respect to
any Ground Leased Property the Ground Lease for which has an expiration date
(taking into account any renewal options thereunder as of the date hereof or
hereafter exercised) prior to the expiration of Term (taking into account any
exercised renewal options hereunder), (i) this Lease shall expire with respect
to such Ground Leased Property on the business day immediately preceding such
Ground Lease expiration date (taking into account the terms of the following
clause (ii)), and (ii) if a Ground Lease renewal option is not exercised as of
the date hereof and Landlord has not (in its sole discretion) determined to
exercise such renewal option, then Tenant may require Landlord to exercise such
renewal term on the following terms and conditions: (1) no default on the part
of Tenant hereunder or Event of Default shall have occurred and be continuing,
(2) Tenant shall notify Landlord, on a date reasonably prior to the date on
which such renewal option must be exercised, that Tenant wishes Landlord to
exercise such renewal option, and (3) such notice shall constitute Tenant's
agreement to pay to Landlord (as and when the same become due and payable) all
base and additional rent and other sums due and payable under the affected
Ground Lease during such renewal term (including the portion thereof extending
beyond the Term), provided that Landlord shall credit against amounts due under
this clause (3), in respect of the portion of the Ground Lease renewal term,
extending beyond the Term any rent and similar payments Landlord receives from
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any third party in consideration for the lease of the premises in respect of
such portion of the Ground Lease renewal term.
1.7 Condition of the Leased Property. Tenant acknowledges (a) receipt and
delivery of possession of the Leased Property, (b) that Tenant has inspected and
otherwise has knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease and (c) that Tenant has found the same to
be in good order and repair and satisfactory for its purposes hereunder. Tenant
is leasing the Leased Property "AS IS" in its present condition. Tenant waives
any claim or action against Landlord in respect of the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, AS TO ACCESS TO THE LEASED
PROPERTY OR AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, OR AS TO THE ABSENCE OF ANY DEFECT, LATENT OR PATENT, IT BEING AGREED
THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
ARTICLE II
2.1 Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, (iv) the words "herein," hereof" and "hereunder" and other words of
similar import refer to this Lease as a whole and not to any particular Article,
Section or other subdivision, (v) the term "including" and words of similar
import shall be deemed to be followed by the phrase "without limitation," (vi)
the term "attorneys' fees" and "attorneys' fees and expenses" and words of
similar import shall be deemed preceded with the word "reasonable," and (vii)
the phrase "Leased Property" shall be deemed to mean a specific Leased Property
or all of the Leased Property, as the context may require, and shall be deemed
to be followed by the phrase "or any portion thereof".
Additional Charges: As defined in Article III.
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Affiliate: A Person or Persons directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with the
Person or Persons in question. The term "control", as used in the immediately
preceding sentence, shall mean, with respect to a Person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting
rights attributable to the shares of the controlled corporation and, with
respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled Person.
Aggregate Threshold Amount: As defined in Article VIII.
Alteration: As defined in Section 8.1.
Annual Budget: Tenant's annual budget setting forth, in reasonable detail,
Tenant's good faith estimates of the anticipated results of operations of the
Leased Property (taken as a whole), including Receipts, all Operating Expenses,
management fees and capital expenditures, approved by Landlord in accordance
with Section 6.1(h)(4) hereof.
Business Day: Any day other than a Saturday, Sunday or any other day on
which national banks in New York, New York are not open for business.
Cash: Coin or currency of the United States of America or immediately
available federal funds, including such funds delivered by wire transfer.
Cash Management Procedures: As defined in Article XI.
Casualty: As defined in Section 10.2.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: The date of this Lease.
Condemnation: As defined in Section 10.3.
CPI Increase: When used to qualify a fixed dollar amount set forth herein
at the date in question, such fixed dollar amount, as increased by the
percentage by which the Consumer Price Index for All Items, Urban Consumers
published by the United States Department of Labor, applicable to the United
States (all items) (base year 1982-84 =
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100) (the "Consumer Price Index"), or any successor index thereof as such
successor index may be appropriately adjusted to establish substantial
equivalence with the Consumer Price Index, shall have increased over such
Consumer Price Index (or successor, equivalent or comparable index, as
applicable) for the month in 1998 in which the Commencement Date occurs. If the
Consumer Price Index is converted to a different standard reference base or
otherwise revised, then whenever the determination of a CPI Increase figure is
called for herein, the Consumer Price Index shall be converted in accordance
with the conversion factors published by the United States Department of Labor,
Bureau of Labor Statistics, or, if said Bureau shall not publish the same, as
the same may be published by Prentice-Hall, Inc. or any other nationally
recognized publisher of similar statistical information selected by Landlord. If
the Consumer Price Index ceases to be published and there is no successor
thereto, such other index as Landlord shall reasonably select shall be
substituted for the Consumer Price Index.
Credit Facility: Shall mean a clean, irrevocable, unconditional
transferable letter of credit, payable on sight draft only, which shall not be
secured by any Leased Property, for the benefit of Landlord (or, at Landlord's
option, Landlord's Lender) and entitling such beneficiary to draw thereon in New
York, New York or in such other city as Landlord's office may be located (or, at
Landlord's option, the corporate trust office of Landlord's Lender) may be
located at the time of the issuance of such letter of credit, issued by a
domestic bank or the U.S. agency or branch of a foreign bank the long-term
unsecured debt rating of which at the time such letter of credit is delivered
and throughout the term of such letter of credit is not less than the then
Required Rating, or, if the Required Rating is "AAA" and there are no domestic
banks or U.S. agencies or branches of a foreign bank having such long-term
unsecured debt rating then issuing letters of credit, then such letter of credit
may be issued by a domestic bank the long-term unsecured debt rating of which is
not lower than "AA" by the Rating Agencies. Such Credit Facility shall provide
that (i) it will automatically renew unless the issuer of such Credit Facility
delivers written notice to the beneficiary (and to Landlord, if Landlord is not
the beneficiary) at least thirty (30) days prior to its expiration that such
Credit Facility will not be renewed and (ii) if not so renewed, the beneficiary
shall be entitled to draw upon the full amount thereof. Without in any way
limiting the generality of the foregoing, if any Credit Facility is not renewed
or replaced with another Credit Facility prior to the date that is thirty (30)
days prior to its expiration, the beneficiary shall be entitled to draw upon the
full amount thereof.
Crescent Realty: Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership.
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Crescent Trust: Crescent Real Estate Equities Company, a Texas real estate
investment trust.
Default: The occurrence of any event hereunder which, but for the giving
of notice or passage of time, or both, would be an Event of Default hereunder.
Depositary: Landlord or, at Landlord's election, Landlord's Lender or a
depositary selected by Landlord, it being agreed that different Persons may
serve as Depositary at any one time and from time to time.
Eligible Collateral: U.S. Government Securities, Debt Securities, a Credit
Facility, Cash and Cash Equivalents, and a guaranty of payment and performance
(in form and substance reasonably satisfactory to Landlord) by Vornado Trust or
Vornado Realty (provided Vornado Trust or Vornado Realty, as applicable, has a
long-term unsecured debt rating at least equal to the Investment Grade rating)
and/or Crescent Trust or Crescent Realty (provided Crescent Trust or Crescent
Realty, as applicable, has a long-term unsecured debt rating at least equal to
the Investment Grade rating), or any combination of the foregoing.
Environmental Laws: Any and all of the following as applicable to Tenant
and/or the Leased Property: present and future federal, state and local laws
(whether under common law, statute, ordinance, rule, regulation or otherwise),
court or administrative orders or decrees, requirements of permits issued with
respect thereto, and other requirements of governmental authorities relating to
any Hazardous Substances or Hazardous Substances Activity (including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss.ss.9601, et seq.) as heretofore or hereafter amended from time to
time).
Event of Default: As defined in Article XII.
Extended Term: As defined in Article I.
Fair Market Rental: With respect to a particular Leased Property, the
rental that a willing tenant not compelled to rent would pay a willing landlord
not compelled to let for such Leased Property, excluding all capital
improvements (as distinguished from necessary repairs and replacements) paid for
by Tenant, determined in accordance with the appraisal procedures set forth in
Article XXIV or in such other manner as shall be mutually acceptable to Landlord
and Tenant.
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Fair Market Value: With respect to a particular Leased Property, the price
that a willing buyer not compelled to buy would pay a willing seller not
compelled to sell for such Leased Property, excluding all capital improvements
(as distinguished from necessary repairs and replacements) paid for by Tenant,
and (a) assuming the same is unencumbered by this Lease, (b) determined in
accordance with the appraisal procedures set forth in Article XXIV or in such
other manner as shall be mutually acceptable to Landlord and Tenant, and (c) not
taking into account any reduction in value resulting from any indebtedness to
which such Leased Property is subject except as expressly provided hereinbelow.
In determining such Fair Market Value, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions of
any encumbrance which is not removed at or prior to the closing of the
transaction as to which such Fair Market Value determination is being made shall
be taken into account.
Fiscal Year: Each twelve (12) month period from January 1 to December 31.
Fixtures: As defined in Article I.
Governmental Authority: Any court, board, agency, commission, office or
authority of any nature whatsoever of or for any governmental unit (federal,
state, county, district, municipal, city or otherwise), whether now or hereafter
in existence.
Ground Lease: Each of the ground leases identified on Exhibit 1.5(b)
hereto.
Ground Leased Property: Collectively, the Leased Property identified on
Exhibit 1.5(b) hereto.
Hazardous Substances: Any of the following: (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance", "hazardous material", "hazardous waste", "extremely hazardous
waste", "infectious waste", "toxic substance", "toxic pollutant" or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity" and (ii) any
petroleum, natural gas, natural gas liquid, liquefied natural gas, synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas), ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters, and other wastes associated with
the exploration, development or reduction of crude oil, natural gas, or
geothermal resources. Without limiting the foregoing, Hazardous
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Substances shall also include asbestos and asbestos-containing materials and
polychlorinated biphenyls.
Initial Term: As defined in Article I.
Institutional Lender: Any one or more of the following: a bank, investment
bank, trust company, broker-dealer, insurance company, separate account, pension
fund, retirement plan, governmental agency, real estate investment trust,
investment company, investment company adviser or pension fund adviser, or any
Affiliate of any of the foregoing, in each case, whether acting for its own
account or as a trustee, fiduciary or agent of others.
Insurance Premiums: As defined in Section 10.1(d).
Interest Rate: A rate equal to 90-day U.S. Treasuries plus 2.00%.
Insurance Requirements: All terms of any insurance policy required
hereunder covering or applicable to the Leased Property, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Leased Property or
any use of the Leased Property.
Land: As defined in Article I with respect to the Leased Property.
Landlord: URS Logistics, Inc., a Delaware corporation, and its successors
and assigns.
Landlord Liens: Liens on or against the Leased Property or this Lease or
any payment of Rent (i) in favor of any taxing authority by reason of any tax
excluded from the definition of "Taxes" hereunder owed by Landlord or (ii)
securing Landlord's Debt.
Landlord's Debt: The outstanding principal amount borrowed by Landlord
from time to time, together with all interest accrued and unpaid thereon, and
all other sums due in connection therewith, including any yield-maintenance
payments or other prepayment premium or penalty, the payment of which may be
secured by Landlord's interest in the Leased Property and the Rent and other
amounts payable hereunder.
Landlord's Lender: The holder of Landlord's Debt from time to time,
provided that if Landlord's Debt shall be held legally or beneficially by more
than one Person, then
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Landlord's Lender shall be deemed to refer to only one such Person as selected
by Landlord in a notice to Tenant or, failing such selection, as selected by
Tenant.
Landlord's Loan Documents: The instrument(s) and agreement(s) evidencing,
establishing and securing Landlord's Debt, including (to the extent applicable)
a promissory note, loan agreement, a mortgage, deed of trust or deed to secure
debt and assignment of leases and rents.
Lease Year: Any Fiscal Year or portion thereof during the Term, commencing
with the 1999 Fiscal Year.
Leased Improvements; Leased Property: Each as defined in Article I.
Leasehold Mortgage: Any mortgage, deed of trust or other security interest
encumbering Tenant's leasehold estate hereunder, or direct or indirect ownership
interests in Tenant, which has been granted to secure repayment of debt of
Tenant or the holders of such ownership interests.
Leasehold Mortgagee: The holder of a Leasehold Mortgage from time to time.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Landlord, Tenant
or the Leased Property, or the construction, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Tenant, at any time in force affecting the Leased Property
(other than any subleases, this Lease, and service contracts and other similar
agreements now in effect or hereafter entered into in the ordinary course of
Tenant's business), including any which may (i) require repairs, modifications
or alterations in or to the Leased Property, or (ii) in any way limit the use
and enjoyment thereof.
Litigation Costs: All costs reasonably incurred by Landlord in connection
with the enforcement of any provision of this Lease, including attorneys' fees
and expenses, court costs and reasonable consultants' fees and expenses.
Lien: Any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting the Leased Property or Tenant, or any interest therein,
including any conditional sale or other
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title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
notice or other instrument and mechanics', materialmen's and other similar liens
and encumbrances.
Major Subtenant: A tenant under a Sublease for all or substantially all of
a Leased Property.
Material Agreement: Operating Agreements and agreements (i) requiring
payment by Tenant of more than $2,000,000 per annum and not cancellable without
a penalty of $500,000 or more, or (ii) pursuant to which Tenant is entitled to
receive more than $2,000,000 per year, relating, in each case, to the ownership,
development, use, operation, leasing, maintenance or repair of the Leased
Property, provided "Material Agreements" shall not include agreements pursuant
to which either party thereto may discontinue the provision of, or request for,
services, or the delivery of goods to Tenant for storage, without payment of any
penalty or without notice to the other party (regardless whether the agreement
is formally terminated).
Material Alteration: Any Alteration to be performed by or on behalf of
Tenant at a Leased Property (other than an Alteration the cost of which a
Subtenant is obligated to reimburse to Tenant and which Tenant reasonably
believes will be so reimbursed), the cost of which as reasonably estimated by a
Qualified Architect or Engineer exceeds the Threshold Amount.
Material Casualty: As defined in Section 10.2.
Material Condemnation: As defined in Section 10.2.
Minimum Rent: As defined in Article III.
Net Operating Income: Operating Income less Operating Expenses.
New Leased Property: As defined in Article I.
Notice: As defined in Article XXIII (regardless whether the same is
capitalized herein).
Officer's Certificate: A certificate made by an individual authorized to
act on behalf of Tenant and, to the extent applicable, any constituent Person
with respect to Tenant. Without limiting the foregoing, if the individual
signing the certificate is doing
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so on behalf of a corporation, then such individual shall hold the office of
President, Vice President or Chief Financial Officer (or the equivalent) with
respect to such corporation.
Operating Agreements: Reciprocal easement and/or operating agreements;
covenants, conditions and restrictions; and similar agreements affecting any
Leased Property and binding upon and/or benefitting Landlord or Tenant and other
third parties. Without limiting the foregoing, "Operating Agreements" shall not
include any Warehouse Agreements.
Operating Expenses: For any specified period, on an accrual basis, all
expenses paid (or due and payable, except to the extent that the same constitute
Trade Payables that are not more than 60 days outstanding) by Tenant during such
period in connection with the operation of the Leased Property, as well as
bookkeeping, accounting, insurance costs, wages and other costs and expenses
incurred for the Leased Property and legal expenses incurred in connection with
the operation of the Leased Property, determined, in each case, consistently
with GAAP. "Operating Expenses" shall not include (1) depreciation or
amortization or other noncash items (other than expenses that are due and
payable but not yet paid), (2) the principal of and interest on any indebtedness
(except for any payments required under any Permitted Equipment Leases), (3)
income taxes or other taxes in the nature of income taxes, (4) any expenses
(including legal, accounting and other professional fees, expenses and
disbursements) incurred in connection with and allocable to any indebtedness
(except for any of the same in connection with any Permitted Equipment Leases),
(5) the cost of any capital expenditures (except for any payments required under
any Permitted Equipment Leases), (6) distributions to the shareholders, members
or partners in Tenant or any asset management fees or similar compensation
payable to any Affiliate of Tenant, and (7) any item of expense which otherwise
would be considered within Operating Expenses but is paid directly by any
Subtenant. Expenses that are accrued as Operating Expenses during any period
shall not be included in Operating Expenses when paid during any subsequent
period.
Operating Income: For any specified period, on an accrual basis, all
income received or accrued by Tenant during such period in connection with the
operation of the Leased Property, determined consistent with GAAP, including the
following, but without duplication:
(i) all rents, rent equivalents, moneys payable as damages pursuant
to a Lease or in lieu of rent or rent equivalents, royalties (including
all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and
other deposits), accounts, cash, issues,
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profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or
benefit of Tenant or its agents or employees from any and all sources
arising from or attributable to the Leased Property, including any
obligations now existing or hereafter arising or created out of the lease,
sublease, license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Tenant;
(ii) charges received by Tenant for electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any other energy,
telecommunications, telephone, utility or similar items, including
overtime usage, HVAC equipment charges, sprinkler charges, escalation
charges, license fees, maintenance fees, charges for improvements, Taxes
and other amounts payable to Tenant, under any Lease or other agreement
relating to the Leased Property pursuant to which any portion of the
Leased Property, utilities, facilities, equipment, parking facilities or
other services are furnished by Tenant, but excluding any security
deposits received;
(iii) condemnation awards to the extent that such awards are
compensation for lost rent;
(iv) business interruption and loss of "rental value" insurance
proceeds;
(v) income from cash holdings and interest from notes in lieu of
rent; and
(vi) all other amounts received by Tenant during such period in
respect of items which in accordance with GAAP would be included in
Tenant's annual financial statements for such period or any other period
as operating income of the Leased Property and which are reasonably
expected to recur during the next two (2) years following the date on
which Net Cash Flow or Net Operating Income is being calculated.
Notwithstanding the foregoing clauses (i) through (vi), Operating Income shall
not include (A) any condemnation or insurance proceeds (other than of the types
described in clauses (i), (ii) and (iii) above), (B) any proceeds resulting from
the sale, exchange, transfer, financing or refinancing of all or any part of the
Tenant's interest in the Leased Property or any interest therein (other than of
the types described in clause (iii) above), (C) any repayments received from
Subtenants of principal loaned or advanced to Subtenants by Tenant, or (D) any
type of income that would otherwise be considered
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<PAGE> 24
Operating Income pursuant to the provisions above but is paid directly by any
Subtenant to a Person other than Tenant or its agent.
Other Charges: All ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including vault charges and license fees for
the use of vaults, chutes and similar areas adjoining a Leased Property, now or
hereafter levied or assessed or imposed against any Leased Property or any part
thereof (subject to the same exclusion set forth in the proviso in the
definition of "Taxes").
Other Leases: Collectively, (i) that certain Master Lease Agreement, dated
as of April 22, 1998, between URS Real Estate, L.P., as Landlord, and URS
Logistic, Inc., as amended, (ii) that certain Master Lease Agreement, dated as
of April 22, 1998, between Americold Real Estate, L.P., as landlord, and
Americold Corporation, as tenant, as amended, (iii) that certain Master Lease
Agreement, dated as of February 28, 1999, between Americold Corporation, as
landlord, and AmeriCold Logistics, LLC, as tenant, as amended, (iv) that certain
Master Lease Agreement, dated as of the date hereof, among VC Omaha Holdings,
L.L.C. and Carmar Freezers Thomasville, L.L.C., together as landlord, and
AmeriCold Logistics, LLC, as tenant, as amended, and (v) that certain Master
Lease Agreement, dated as of the date hereof, among VC Omaha Holdings, L.L.C.
and certain of its Affiliates, collectively as landlord, and AmeriCold
Logistics, LLC, as tenant, as amended.
Overdue Rate: On any date, a rate equal to the Interest Rate plus 2%, but
in no event greater than the maximum rate then permitted under applicable law.
Percentage Rent: As set forth in Exhibit 3.1(b) attached hereto.
Permitted Encumbrances: Collectively, (a) all Liens disclosed in the Title
Policy, (b) Liens, if any, for Taxes or Other Charges not yet payable or
delinquent or which are being diligently contested in good faith in accordance
with this Lease, (c) Liens in respect of property or assets imposed by law which
were incurred in the ordinary course of business, such as carriers',
warehousemen's, landlord's, mechanics', materialmen's, repairmen's and other
similar Liens arising in the ordinary course of business, and Liens for workers'
compensation, unemployment insurance and similar programs, in each case arising
in the ordinary course of business which are being diligently contested in good
faith in accordance with the terms hereof, (d) Subleases, (e) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances (including any of such matters incurred or
entered into by Tenant in the ordinary course of business) which in each case do
not diminish in any material respect the value of the affected Leased Property
or affect in any material respect
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the validity, enforceability or priority of this Lease or the Liens created by
Landlord's Loan Documents, and (f) such other title and survey exceptions as
Landlord has approved or may approve in writing. In addition, "Permitted
Encumbrances" shall include any Landlord Liens.
Permitted Equipment Leases means capital and/or operating lease
obligations in respect of equipment used at the Leased Property with an
aggregate annual rent obligation reasonable and customary for facilities such as
the Leased Properties, as mutually agreed upon by Landlord and Tenant.
Permitted Investments: The following, subject to qualifications
hereinafter set forth:
1. Obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or instrumentality
thereof, when such obligations are backed by the full faith and
credit of the U.S. These obligations include, but are not limited
to:
o U.S. Treasury obligations All direct or fully guaranteed
obligations
o Farmers Home Administration Certificates of beneficial
ownership
o General Services Administration Participation certificates
o U.S. Maritime Administration Guaranteed Title XI financing
o Small Business Administration Guaranteed participation
certificates Guaranteed pool certificates
o U.S. Department of Housing and Urban Development Local
authority bonds
o Washington Metropolitan Area Transit Authority Guaranteed
transit bonds
2. Federal Housing Administration debentures.
3. Obligations of government-sponsored agencies that are not backed by
the full faith and credit of the U.S., where the obligation is
limited to those
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instruments that have a predetermined fixed dollar amount of
principal due at maturity that cannot vary or change. These
obligations are limited to:
o Federal Home Loan Mortgage Corp. (FHLMC) Debt obligations
o Farm Credit System (formerly: Federal land Banks, Federal
Intermediate Credit Banks, and Banks for Cooperatives)
Consolidated systemwide bonds and notes
o Federal Home Loan Banks (FHL Banks) Consolidated debt
obligations
o Federal National Mortgage Association (FNMA) Debt obligations
o Student Loan Marketing Association (SLMA) Debt obligations
o Financing Corp. (FICO) Debt obligations
o Resolution Funding Corp. (REFCORP) Debt obligations.
4. Federal funds, unsecured certificates of deposit, time deposits,
banker's acceptances, and repurchase agreements having maturities of
not more than 365 days of any bank, the short-term debt obligations
of which are rated "A-1+" (or the equivalent) by the Rating Agencies
or secured by U.S. Treasury obligations (as described in Paragraph 1
above).
5. Deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC).
6. Debt obligations maturing in 365 days or less that are rated AAA or
higher (or the equivalent) by the Rating Agencies.
7. Commercial paper rated "A-1+" (or the equivalent) by the Rating
Agencies and maturing in 365 days or less.
8. Investments in certain short-term debt of issuers rated "A-1" (or
the equivalent) by the Rating Agencies may be permitted with certain
restrictions. The total amount of debt from "A-1" issuers must be
limited to the investment of an amount equal to Monthly Debt Service
Payment Amount. The total amount of "A-1" investments should not
represent more than 20% of the rated issue's outstanding principal
amount and each investment should not mature beyond 30 days.
Investment in "A-1" (or
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the equivalent) rated securities are not eligible for reserve
accounts, cash collateral accounts, or other forms of credit
enhancement. Short-term debt for purposes of this definition
includes: commercial paper, federal funds, repurchase agreements,
unsecured certificates of deposit, time deposits, and banker's
acceptances.
9. Investment in money market funds rated "AAAm" or "AAm-G" (or the
equivalent) by the Rating Agencies.
10. Such other investments as shall be approved in writing by Landlord.
Notwithstanding the foregoing, "Permitted Investments": (i) shall exclude any
security with the Standard & Poor's "r" symbol (or any other Rating Agency's
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
"strips"; (ii) shall not have maturities in excess of one year; (iii) as to the
investments described in (1), (3), (4), (5), (6), (7) and (8): the obligations
shall be limited to those instruments that have a predetermined fixed dollar of
principal due at maturity that cannot vary or change; interest may either be
fixed or variable; and any variable interest should be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index; and (iv) shall exclude any investment where the right to receive
principal and interest derived from the underlying investment provide a yield to
maturity in excess of 120 percent of the yield to maturity at par of such
underlying investment. No investment shall be made which requires a payment
above par for an obligation if the obligation may be prepaid at the option of
the issuer thereof prior to its maturity. All investments shall mature or be
redeemable upon the option of the holder thereof on or prior to the earlier of
(x) three (3) months from the date of their purchase or (y) the Business Day
preceding the day before the date such amounts are required to be applied
hereunder.
Person: Any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.
Policies: As defined in Section 10.1.
Primary Intended Use: As defined in Section 6.1.
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Qualified Architect or Engineer: Any experienced architect, engineer or
construction manager licensed or registered in the jurisdiction where the
applicable Leased Property is located, if required by the laws of such
jurisdiction.
Rating Agencies: Any one or more of the following designated by Landlord:
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA, Inc. or
any other nationally-recognized statistical rating agency selected by Landlord.
Receipts: The items described in Operating Income, determined, however, on
a cash basis.
REIT: As defined in Article XXV.
REIT Requirements: As defined in Article XXV.
Release Amount: With respect to each Leased Property, shall refer to the
applicable "Release Amount" as set forth on Exhibit 2.1(a) hereto. Tenant hereby
agrees that in connection with any new Landlord's Debt, the Release Amount in
respect of any Leased Property shall be the greater of the amount set forth on
Exhibit 2.1(a) and the amount required to be paid by Landlord to Lender to
obtain the release of the lien affecting such Leased Property.
Rent: Collectively, (i) the Minimum Rent, (ii) Percentage Rent and (iii)
Additional Charges.
Rental Period. As defined in Article III.
Rent Payment Date. As defined in Article III.
Restoration: As defined in Section 10.2.
State: The State or Commonwealth in which the particular Leased Property
in located.
Sublease. Any lease, sublease, license agreement or occupancy agreement
entered into by Tenant affecting all or any portion of the Leased Property,
provided that Warehouse Agreements shall not be included within the definition
of Subleases.
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Subtenant: A subtenant, licensee, occupant or other party to any Sublease.
Superior Interests: As defined in Article XV.
Superior Party: As defined in Article XV.
Taxes: All real estate and personal property taxes, assessments, fees,
taxes on rents or rentals, water rates or sewer rents and other governmental
charges now or hereafter levied or assessed or imposed against Landlord, Tenant
or the Leased Property or rents therefrom or which may become Liens, provided
that Taxes shall not include any income, franchise, estate, inheritance or gift
taxes, or any other tax imposed on or measured by the net income of Landlord,
except to the extent that the same is in direct substitution for a tax that
would otherwise be included within the definition of "Taxes" hereunder.
Tenant's Personal Property: All motor vehicles, machinery, equipment,
furniture, furnishings, movable walls or partitions, computers or trade fixtures
or all other personal property, and consumable inventory and supplies, now owned
or hereafter acquired by Tenant and located on the applicable Leased Property or
used or useful in Tenant's business on such Leased Property, including all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, except items, if any, included within the
definition of Fixtures.
Term: Collectively, the Fixed Term and any Extended Terms, to the extent
properly exercised by Tenant pursuant to the provisions of Article I, unless
earlier terminated pursuant to the provisions of this Lease.
Termination Amount: With respect to a specified Leased Property, the
greater of the Fair Market Value thereof and the Release Amount therefor.
Threshold Amount: Two million dollars ($2,000,000).
Title Policy: The ALTA (or equivalent) title insurance policy acquired by
Landlord most recently prior to the date hereof (i) naming Landlord as the
insured and (ii) insuring Landlord's ownership of the Leased Property subject to
the exceptions and exclusions set forth therein.
Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil
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commotion, fire, unavoidable casualty or other causes beyond the control of the
party responsible for performing an obligation hereunder, provided that lack of
funds shall not be deemed a cause beyond the control of either party hereto
unless such lack of funds is caused by the failure of the other party hereto to
perform any obligations of such party under this Lease.
Uneconomic Property. As defined in Article I.
Unimproved Parcel. As defined in Article I.
Unsuitable for Its Primary Intended Use: A state or condition at a Leased
Property such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Tenant, reasonably exercised, the
Leased Property cannot by operated on a commercially practicable basis for its
Primary Intended Use.
Vornado Realty: Vornado Realty L.P., a Delaware limited partnership.
Vornado Trust: Vornado Realty Trust, a Maryland real estate investment
trust.
Warehouse Agreements: Warehousing agreements, logistics and services
agreements, distribution agreements, handling agreements and other similar
agreements in connection with the Primary Intended Use to the extent (but only
to the extent) the same are for goods stored or services rendered at any Leased
Property, in such forms and on such terms as are customarily entered into by
Tenant, together with any amendments and modifications to such agreements.
ARTICLE III
3.1 Rent. Tenant will pay to Landlord, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, at Landlord's address set forth above or at such other place or
to such other person, firms or corporations as Landlord may designate in writing
from time to time, (i) Minimum Rent (as defined below), and (ii) Percentage
Rent. In addition, Tenant will pay to Landlord or the Person otherwise entitled
thereto all Additional Charges during the Term on or before the same are
delinquent.
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(a) Minimum Rent:
For the period commencing on the Commencement Date through February
28, 2014, the sum of NINE HUNDRED THREE THOUSAND AND 00/100 DOLLARS
($903,000.00) per annum.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable:
(x) for the period from the Commencement Date through (and including) the
Rent Payment Date (as defined herein) occurring in September, 2000, in
arrears, and,
(y) for the period from (but excluding) the Rent Payment Date occurring in
September, 2000, through the balance of the Term, in advance,
in either case in twelve (12) equal installments on the eleventh (11th) day of
each calendar month of the Initial Term and each Extended Term (the "Rent
Payment Date"); provided that if such 11th day is not a Business Day, then the
Rent Payment Date shall be the next preceding Business Day; provided further
that the advance Minimum Rent installment otherwise payable on the Rent Payment
Date in September, 2000, shall instead be deferred and paid in six (6) equal
installments on each Rent Payment Date occurring in September, 2000 through
February, 2001. Minimum Rent shall be paid for the period of the eleventh (11th)
of each month (or, if applicable, the Commencement Date) through the tenth
(10th) of the next month (or, if applicable, the expiration of the Term) (each,
a "Rental Period"), provided that the first and last payments of Minimum Rent
shall be prorated as to any partial Rental Period, based on the number of days
within the Term during such Rental Period and the number of days in such Rental
Period. Tenant hereby agrees to make reasonable changes with respect to the
definition of "Rental Period" as may be requested in connection with any
Landlord's Debt. The first installment payment of Minimum Rent shall be payable
on March 11, 1999, for the Rental Period beginning with the Commencement Date
and ending March 10, 1999.
Notwithstanding the foregoing, for the period commencing with the
date hereof and expiring on the third (3rd) anniversary of the date hereof, to
the extent that Available Cash is less than the amount of Fixed Rent and
Percentage Rent, as certified by Tenant (together with reasonable documentation
thereof) and agreed to by Landlord, the Fixed Rent and Percentage Rent shall
accrue, and the payment thereof (together with interest at the Interest Rate)
shall be deferred to, the earlier of (A) the third (3rd) anniversary of the date
hereof and (B) such date as Available Cash shall be available, to the extent of
such Available Cash (and Available Cash shall be applied first to interest, then
to the accrued Fixed Rent and then to the accrued Percentage Rent), provided
that the maximum amount of Fixed Rent that may be deferred under this paragraph
shall be fifteen percent (15%) of the stated Fixed Rent obligation. As used
herein, Available Cash shall be Receipts less Operating Expenses. In no event,
however, shall the rent deferral
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permitted hereunder be such that Landlord will have insufficient cash flow to
service Landlord's Debt.
(b) Percentage Rent:
(i) Generally; Payment in Installments. In addition to the Minimum
Rent payable with respect to the Leased Property, Tenant shall pay
Percentage Rent for each Lease Year. Percentage Rent shall be payable
quarterly in arrears in four (4) installments, on the Rent Payment Date
occurring in April, July, August and January of each Lease Year, in
respect of the quarter ending in the prior month, commencing in 2000. Each
quarterly installment shall be based on, and accompanied by, an Officer's
Certificate setting forth Tenant's current estimated Receipts for the
Leased Property (on a Leased Property-by-Leased Property basis) on a
cumulative basis for the period commencing with the Lease Year through the
end of the quarter in question, and shall take into account previous
installments paid in respect of such Lease Year.
(ii) Presentation of Certificate and Audit. Not later than the 25th
day following the end of each Lease Year, Tenant shall deliver to Landlord
an Officer's Certificate setting forth (x) the Receipts for the Leased
Property (on a Leased Property-by-Leased Property basis) and (y) the
computation made by Tenant in determining Percentage Rent, in each case
(a) for such Lease Year and (b) for each individual calendar quarter
during such Lease Year, together with an audit of such Receipts conducted
by a "Big Six" firm of independent certified public accountants proposed
by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed). Tenant shall utilize, or cause to be
utilized, an accounting system for the Leased Property in accordance with
its usual and customary practices and in accordance with GAAP, which will
accurately record Receipts for the Leased Property. Tenant shall retain
such records, for at least three (3) years after the expiration of each
Lease Year.
(iii) Confirmation of Percentage Rent. Landlord, at its own expense,
except as provided herein below, shall have the right, exercisable by
Notice to Tenant within two (2) years after receipt of the applicable
Officer's Certificate referred to in clause (ii) above, by its accountants
or representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns).
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(iv) Adjustments of Percentage Rent. If the certificate or audit
described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a deficiency in the payment of Percentage Rent and
any differences between the parties are resolved (which, absent the
parties' agreement shall be determined pursuant to arbitration in
accordance with Schedule 15.4), Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as determined or
agreed upon or compromised as aforesaid, is more than four percent (4%) of
the Receipts reported by Tenant for such Lease Year and, as a result,
Landlord did not receive at least ninety-five percent (95%) of the
Percentage Rent payable with respect to such Lease Year, Tenant shall pay
the reasonable cost of such audit and examination. If the certificate or
audit described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a overpayment of Percentage Rent and any
differences between the parties are resolved (which, absent the parties'
agreement shall be determined pursuant to arbitration in accordance with
Schedule 15.4), then (provided no Event of Default has occurred and is
continuing) Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at the
Interest Rate accruing from the date of payment by Tenant until the date
such credit is applied. If such credit cannot be made because the Term has
expired prior to application in full thereof, then (provided no Event of
Default has occurred and is continuing and provided Tenant has paid all
amounts required under this Lease), Landlord shall repay the unapplied
balance of such credit to Tenant.
(v) Maximum Adjustments of Percentage Rent. Notwithstanding the
foregoing, (A) in no event shall Tenant be permitted under Section
3.1(b)(iv) a credit or refund in respect of Percentage Rent in excess of
15 percent of the aggregate installments of Percentage Rent paid in
respect of any Lease Year pursuant to Section 3.1(b)(i) and (B) in no
event shall Tenant be permitted under Section 3.1(b)(i) a credit or refund
in respect of Percentage Rent in excess of 15 percent of the aggregate
installments of Percentage Rent paid in respect of immediately preceding
calendar quarter pursuant to Section 3.1(b)(i).
(vi) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public
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information, (2) disclosed to the extent that Landlord is advised by
counsel that Landlord is required to disclose such information by
subpoena, court order, securities laws and regulations, any other laws or
regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to any Landlord's Debt, provided that,
with respect to the disclosures permitted under clause (4), Landlord shall
obtain the agreement of the Persons to whom disclosure is made to maintain
such information as confidential in accordance with terms of this
Subsection (iv) and in no event shall public or Rule 144A holders of
Landlord's Debt be permitted to receive such information on an individual
Leased Property basis.
(vii) Survival. The obligations of Tenant and Landlord contained in
this Section 3.1 shall survive the expiration or earlier termination of
this Lease.
(c) Additional Charges. In addition to the Minimum Rent and
Percentage Rent payable with respect to the Leased Property, Tenant shall pay
and discharge as and when due and payable the following (collectively,
"Additional Charges"):
(1) Taxes and Other Charges. Tenant shall pay all Taxes and Other
Charges as set forth in Section 6.1(b) herein.
(2) Utility Charges. Tenant shall pay all charges for electricity,
power, gas, oil, water, sanitary and storm sewer, refuse collection and
other utilities used or consumed in connection with the applicable Leased
Property during the Term.
(3) Insurance Premiums. Tenant shall pay, as Additional Charges, all
premiums for the insurance coverage required to be maintained pursuant to
Article VIII hereof.
(4) Other Charges. Tenant shall pay, as Additional Charges, all
other amounts, liabilities and obligations that Tenant assumes or agrees
to pay under this Lease, including all of its indemnification obligations
set forth herein.
(5) Late Payment of Rent. If any installment of Minimum Rent,
Percentage Rent or Additional Charges (but only as to those Additional
Charges which are payable directly to Landlord, if any) shall not be paid
within five (5)
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Business Days after its due date, Tenant will pay to Landlord on demand,
as Additional Charges, a late charge (to the extent permitted by law)
computed at the Overdue Rate (or at the maximum rate permitted by law,
whichever is the lesser) on the amount of such installment, from the due
date of such installment to the date of payment thereof.
To the extent that Tenant timely pays any Additional Charges to Landlord
pursuant to any requirement of this Lease, Tenant shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due. If Landlord's Loan Documents shall so require, or if any
Additional Charges shall not be paid to a third party payee within five (5)
Business Days after its due date, Landlord may at any time thereafter, at
Landlord's option, require Tenant to deposit into an escrow account under the
sole dominion and control of Landlord (or the applicable Landlord's Lender), on
the first day of each month (or such other day(s) as Landlord shall reasonably
specify), an amount which, together with similar escrow deposits on succeeding
deposit dates, is sufficient to ensure that such escrow account shall contain an
amount sufficient to make such payment on its next due date, in which event
Landlord shall make all future payments for such expense from the escrow
account. In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost that may be added for non-payment or late
payment of such items. Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Lease or by statute or
otherwise in the case of non-payment of the Rent. Landlord shall have the right
to have such escrows held with a Depositary.
3.2 Net Lease. The Minimum Rent and Percentage Rent, as well as such
Additional Charges as are due and payable to Landlord, shall be paid absolutely
net to Landlord, so that this Lease shall throughout the Term yield to Landlord
the full amount of the installments of Minimum Rent and Percentage Rent, as well
as any payments of Additional Charges payable to Landlord, subject to any other
provisions of this Lease which expressly provide for adjustment or abatement of
Rent or other charges.
ARTICLE IV
4.1 No Termination, Abatement, etc. Except as otherwise specifically
provided herein, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any
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abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent, nor shall the respective obligations of Landlord and Tenant be otherwise
affected by reason of (a) any damage to, or destruction of, any Leased Property
from whatever cause or any taking of the Leased Property, (b) the interruption
or discontinuance of any service or utility servicing the applicable Leased
Property, (c) the lawful or unlawful prohibition of, or restriction upon,
Tenant's use of the Leased Property, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title, (d) any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties, (e) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee or transferee of Landlord, or (f)
for any other cause whether similar or dissimilar to any of the foregoing other
than a discharge of Tenant from any such obligations as a matter of law. Tenant
hereby specifically waives all rights, arising from any occurrence whatsoever,
which may now or hereafter be conferred upon it by law to (i) modify, surrender
or terminate this Lease or quit or surrender the Leased Property, or (ii)
entitle Tenant to any abatement, reduction, suspension or deferment of the Rent
or other sums payable by Tenant hereunder, except as otherwise specifically
provided in this Lease. The obligations of Landlord and Tenant hereunder shall
be separate and independent covenants and agreements and the Rent and all other
sums payable by Tenant hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions this Lease. In any instance where, after the occurrence of an
Event of Default, Landlord retains funds which, but for the occurrence of such
Event of Default, would be payable to Tenant, Landlord shall refund such funds
to Tenant to the extent the amount thereof exceeds the amount necessary to
compensate Landlord for any cost, loss or damage incurred in connection with
such Event of Default.
4.2 Abatement Procedures. In the event of a partial taking or temporary
taking, which taking does not render the Leased Property Unsuitable for its
Primary Intended Use, this Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord. If Landlord and Tenant are unable to agree upon the amount
of such abatement within thirty (30) days after such taking, the matter may be
submitted by either party to a court of competent jurisdiction for resolution.
Pending such resolution, Tenant shall remain bound to pay Rent based upon the
amounts asserted by Landlord to be due and payable, provided Landlord shall
remain liable for the repayment to Tenant of amounts ultimately determined to be
overpaid to Landlord.
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ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease, provided that, until the expiration or earlier
termination of this Lease, all capital improvements and additions made by
Tenant, at Tenant's expense, to any Leased Property shall be the property of
Tenant and, upon the expiration or earlier termination of this Lease, title to
such improvements, additions and replacements shall vest in Landlord.
5.2 Tenant's Personal Property. Tenant may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements any items of Tenant's Personal
Property, and Tenant may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Tenant shall
provide and maintain during the entire Lease Term all such Tenant's Personal
Property as shall be necessary to operate each Leased Property in compliance
with all applicable Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Primary Intended
Use. All of Tenant's Personal Property not removed by Tenant within thirty (30)
days following the expiration or earlier termination of this Lease with respect
to such Leased Property where such Tenant's Personal Property is located shall
be considered abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account
therefor.
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ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants. Tenant hereby covenants and agrees with Landlord
that:
(a) Existence; Use of Leased Property; Legal Compliance; Insurance.
(i) Tenant shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with
all Legal Requirements applicable to it and the Leased Property. Tenant
shall at all times maintain and preserve the Leased Property and shall
keep the Leased Property in good working order and repair, reasonable wear
and tear excepted, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto; provided that Tenant shall, without the consent of
Landlord, make no Alteration to any Leased Property which constitutes
"Nonseverable Improvements" as such term is used in Section 4(4).03 of IRS
Revenue Procedure 75-21, as modified by IRS Revenue Procedure 79-48,
unless the conditions of Section 4(4).03(B) are satisfied and the
alteration is described in at least one of the subparagraphs of Section
4(4).03(C). Tenant will operate, maintain, repair and improve the Leased
Property in material compliance with all Legal Requirements, and will not
cause or allow the same to be misused or wasted or to deteriorate,
reasonable wear and tear excepted.
(ii) After the Commencement Date and throughout the entire Term,
Tenant shall use the applicable Leased Property and the Leased
Improvements thereof as a dry and cold storage warehousing facility and
for such other uses as may be necessary or incidental to such use,
including the provision of distribution services (such use, the "Primary
Intended Use") and, notwithstanding any restrictions on subletting
contained herein, Landlord hereby agrees that Tenant shall have the right
to enter into Warehouse Agreements. Tenant shall not use the applicable
Leased Property or any portion thereof for any other use without the prior
written consent of Landlord, which consent shall not be unreasonably
withheld or delayed (taking into account, among other things, the
provisions hereof relating to Percentage Rent). No use shall be made or
permitted to be made of a Leased Property, and no acts shall be done, that
will cause the cancellation of any insurance policy covering such Leased
Property, nor shall Tenant sell or
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otherwise provide, or permit to be kept, used or sold in or about such
Leased Property any article which may be prohibited by law or by Insurance
Requirements. Tenant shall, at its sole cost, comply with all of the
requirements pertaining to the Leased Property or other improvements of
any insurance board, association, organization or company necessary for
the maintenance of insurance, as herein provided, covering the Leased
Property and Tenant's Personal Property. Absent force majeure and any
other event beyond the reasonable control of Tenant, and except during a
period following a Casualty or Condemnation or in which an Alteration is
being performed, Tenant shall continuously operate the Leased Property for
its Primary Intended Use.
(b) Taxes and Other Charges; Contest for Taxes and Other Charges, Legal
Requirements and Liens.
(i) Subject to the provisions of Section 6.1(b)(ii), Tenant shall
pay all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Leased Property prior to the date on which such sums
become delinquent. Tenant will deliver to Landlord, upon request, receipts
for payment or other evidence satisfactory to Landlord that the Taxes and
Other Charges have been so paid (provided Tenant shall not be required to
furnish such receipts for payment of Taxes in the event such Taxes have
been (or were to have been) paid by Landlord's Lender pursuant to
Landlord's Loan Documents). Subject to the provisions of Section
6.1(b)(ii) and other than Permitted Encumbrances, Tenant shall not suffer
and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Leased
Property, and shall promptly pay for all utility services provided to the
Leased Property. Subject to Section 6.1(b)(ii), Tenant shall pay, bond or
otherwise discharge, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers and others that, if
unpaid, might result in, or permit the creation of, a lien or encumbrance
on any Leased Property, or on the rents arising therefrom.
(ii) After prior written notice to Landlord, Tenant, at its own
expense, may contest by appropriate legal, administrative or other
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges or Lien therefor or any Legal Requirement or
Insurance Requirement or the application of any instrument of record
affecting the Leased Property (other than this Lease or Landlord's Loan
Documents) or any claims or judgments of mechanics,
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materialmen, suppliers, vendors or other Persons or any Lien therefor, and
may withhold payment of the same pending such proceedings if permitted by
law; provided that (A) no Event of Default has occurred and remains
uncured, except for an Event of Default caused by the matter being
contested, (B) such proceeding shall suspend any collection of the
contested Taxes, Other Charges or Liens from the Leased Property, Tenant
or Landlord, or adequate time shall at all times remain prior to such
collection, (C) such proceeding shall be permitted under and be conducted
in accordance with the provisions of any other instrument to which Tenant
is subject and shall not constitute a default thereunder, (D) neither any
Leased Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost, (E) to the extent
not already reserved with Landlord (or Landlord's Lender) or bonded or
otherwise deposited or paid in connection with such proceedings, Tenant
shall have furnished Landlord with security (in an amount reasonably
approved by Landlord) to insure the payment of any such Taxes or Other
Charges, or the cost of the contested Legal Requirement or Insurance
Requirement or the removal of the Lien, in each case together with all
reasonably anticipated interest and penalties thereon, (F) in the case of
an Insurance Requirement, the failure of Tenant to comply therewith shall
not impair the validity of any insurance required to be maintained by
Tenant hereunder or the right to full payment of any claims thereunder,
(G) in the case of any essential or significant service with respect to
any Leased Property, any contest or failure to pay will not result in a
discontinuance of any such service, (H) in the case of any instrument of
record affecting any Leased Property or any part thereof, the contest or
failure to perform under any such instrument shall not result in the
placing of any Lien on any Leased Property or any part thereof (except if
such Lien would be removed upon completion of such proceedings and the
compliance by the parties with the terms of the resulting order, decision
or determination and the removal costs for such Lien have been escrowed
with Landlord or in the proceeding or bonded or otherwise deposited or
paid in connection with such proceedings), (I) except to the extent Tenant
has provided sufficient Eligible Collateral therefor or bonded or
otherwise deposited or paid in connection with such proceedings, neither
the failure to pay or perform any obligation which Tenant is permitted to
contest under this Section nor an adverse determination of any such
contest shall result in a material adverse effect on the utility, value or
operation of the applicable Leased Property, and (J) Tenant shall promptly
upon final determination thereof pay the amount of any such Taxes, Other
Charges or Liens, together with all costs, interest and penalties which
may be payable in connection therewith. Landlord may pay over any such
cash deposit or part thereof held by or on behalf of Landlord to the
claimant entitled thereto at any time when, in the
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judgment of Landlord, the entitlement of such claimant is finally
established, and Landlord shall otherwise remit any remaining such amounts
to Tenant. Landlord shall give Tenant written notice of any such payments
promptly following the making thereof. Subject to the foregoing, at
Tenant's timely request, Landlord shall not pay and shall not cause to be
paid from any tax or insurance escrow account that may be maintained in
connection with Landlord's Debt the contested Taxes or Other Charges being
contested.
(c) Litigation. Tenant shall give prompt written notice to Landlord of any
litigation or governmental proceedings pending or threatened in writing against
Landlord, Tenant or against or affecting the Leased Property which, if
determined adversely to Landlord, Tenant or the Leased Property, might
reasonably be expected to materially adversely affect Landlord, or Tenant's
condition (financial or otherwise) or business or the operation or value of the
Leased Property.
(d) Inspection. Tenant shall permit agents, representatives and employees
of Landlord and/or Landlord's Lender (including any servicer or special servicer
on behalf of Landlord's Lender) to inspect the Leased Property on any Business
Day at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Tenant shall promptly advise Landlord of any
material adverse change in Tenant's condition (financial or otherwise) that
could reasonably be expected to materially impair the ability of Tenant to
comply with its obligations hereunder, or of the occurrence of any Default or
Event of Default under this Lease of which Tenant has knowledge.
(f) Cooperate in Legal Proceedings. Tenant shall cooperate fully with
Landlord (and with Landlord's Lender) with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the
rights of Landlord (or Landlord's Lender, as the case may be) hereunder or in
respect of the Leased Property and, in connection therewith, permit Landlord
(and Landlord's Lender, as applicable), at its election, to participate in any
such proceedings.
(g) Insurance Benefits. Tenant shall cooperate with Landlord (and
Landlord's Lender) in obtaining for Landlord (and Landlord's Lender, as
applicable) the benefits of any insurance proceeds lawfully or equitably payable
in connection with the Leased Property, and Landlord (and Landlord's Lender, as
applicable) shall be reimbursed for any out-of-pocket expenses reasonably
incurred in connection therewith (including attorneys' fees and disbursements,
and, if reasonably necessary to collect such proceeds,
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the expense of an appraisal on behalf of Landlord in case of a fire or other
casualty affecting any Leased Property) out of such insurance proceeds.
(h) Financial Reporting and Other Information.
1. Generally. Tenant will keep and maintain or will cause to be kept
and maintained on a Fiscal Year basis proper and accurate books, records and
accounts reflecting all of the financial affairs of Tenant and all items of
Operating Income, Operating Expenses and capital expenditures. Landlord and/or
Landlord's Lender shall have the right from time to time at all times during
normal business hours upon reasonable notice to examine such books, records and
accounts at the office of Tenant set forth in Article XXIII or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof, at Landlord's expense, as Landlord and/or Landlord's Lender shall
desire, provided, after the occurrence of an Event of Default, Tenant shall pay
any reasonable out-of-pocket costs and expenses incurred by Landlord and/or
Landlord's Lender in any such examination and copying (or extraction).
2. Annual Reports. Tenant will use reasonable efforts to furnish to
Landlord within sixty (60) days (and in no event later than seventy-five (75)
days) following the end of each Fiscal Year of Tenant, a complete copy of
Tenant's annual financial statements, audited by an Approved Accounting Firm, in
accordance with GAAP, covering the Properties (and, to the extent prepared by
Tenant, each Property individually) for such Fiscal Year and containing balance
sheets for Tenant and statements of profit and loss for Tenant and the
Properties in such detail as Landlord may reasonably request. Tenant's annual
financial statements shall be accompanied by a certificate signed by an
authorized officer of tenant certifying that such annual financial statement
presents fairly, in all material respects, the financial condition of the
Properties and has been prepared in accordance with GAAP. Together with Tenant's
annual financial statements, Tenant shall furnish to Landlord (A) a certificate
signed by an authorized officer of the Tenant certifying as of the date thereof
whether, to Tenant's knowledge, there exists a Default or Event of Default, and
if such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same, and (B)
an annual report for the most recently completed fiscal year, which report shall
contain (y) a summary of capital expenditures made by or on behalf of Tenant
with respect to each Property during such fiscal year, and (z) a description of
anticipated capital expenditures during the subsequent fiscal year. Reports with
respect to the operations of a particular Property that are delivered to
Landlord pursuant to this Section, or pursuant to any other provision in this
Lease, shall be kept
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confidential, and shall not be disclosed in any Securities Exchange Commission
or similar filings.
3. Monthly Reports. Tenant will furnish, or cause to be furnished,
to Landlord on or before the fifteenth (15th) day after the end of each calendar
month, a monthly operating statement, including a comparison of the actual
income, expense and net cash flow to the Annual Budget. The reports delivered to
Landlord pursuant to this Section need not include such statements or
comparisons with respect to the operations of individual Properties.
4. Quarterly Reports. Tenant will furnish, or cause to be furnished,
to Landlord on or before the fifteenth (15th) day after the end of each calendar
quarter, the following items, accompanied by a certificate signed by an
authorized officer of Tenant, certifying that such items are true, correct,
accurate and complete, in all material respects, and fairly present, in all
material respects, the financial condition and results of the operations of
Tenant and the Properties (and, to the extent prepared by Tenant, each Property
individually) in a manner consistent with GAAP (subject to normal year-end
adjustments): (y) quarterly and year-to-date statements prepared for such
calendar quarter with respect to Tenant, including a comparison of the actual
income, expense and net cash flow to the Annual Budget, together with a balance
sheet for such quarter and (z) a summary of capital expenditures made by or on
behalf of Tenant with respect to each Property during such calendar quarter. To
the extent that such reports are available and in final form prior to the date
set forth above, Tenant shall use good faith efforts to deliver such statements
to Landlord within forty (40) days after the end of the applicable calendar
quarter. Reports with respect to the operations of a particular Property that
are delivered to Landlord pursuant to this Section, or pursuant to any other
provision in this Lease, shall be kept confidential, and shall not be disclosed
in any Securities Exchange Commission or similar filings.
5. Supplemental Information. Tenant shall furnish to Landlord,
within seven (7) days after request, such further detailed information with
respect to the operation of the Properties (or any of them) and the financial
affairs of Tenant as may be reasonably requested by Landlord.
6. Governmental Notices. Tenant shall furnish to Landlord, promptly
after receipt, a copy of any notice received by or on behalf of Tenant from any
Governmental Authority having jurisdiction over any Property with respect to any
material violation of Legal Requirements or any condition existing or alleged to
exist or emanate therefrom or thereat involving Hazardous Substances.
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7. Landlord's Lender. Tenant agrees to furnish to Landlord, at such
time as may be required pursuant to any Landlord's Loan Documents or as may
reasonably be requested by Landlord, such financial reports (including annual
and quarterly financial statements and monthly operating statements, including a
comparison of the actual income, expense and Net Cash Flow to the Annual
Budget), and other information relating in each case to Tenant or the Leased
Properties as may reasonably be requested by Landlord.
8. Annual Budget. Tenant shall prepare and deliver to Landlord, for
Landlord's approval, which approval shall not be unreasonably withheld or
delayed, forty-five (45) days prior to the commencement of each year, a proposed
Annual Budget in respect of the Leased Property (and, to the extent otherwise
prepared by Tenant, each Leased Property individually) for the ensuing Fiscal
Year.
(i) Business and Operations. Tenant will continue to engage in the
businesses currently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management, subleasing and operation of the
Leased Property. Tenant will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the conduct of its business (including the operation and management
of the Leased Property as refrigerated warehousing facilities and related uses).
(j) Intentionally Omitted.
(k) Intentionally Omitted.
(l) Material Agreements. Tenant shall:
(i) promptly perform and/or observe all of the material covenants
and agreements required to be performed and observed by it under any
Material Agreement, and do all things necessary to preserve and to keep
unimpaired its material rights thereunder;
(ii) promptly notify Landlord of the giving of any notice of any
material default by any party under any Material Agreement of which it is
aware; and
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(iii) promptly enforce the performance and observance of all of the
material covenants and agreements required to be performed and/or observed
by the other party under each Material Agreement.
(m) Ground Leased Property. With respect to the Ground Leased Property,
Tenant shall observe and perform all of the obligations of Landlord under each
Ground Lease.
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants. Tenant covenants and agrees with Landlord
that it will not do, directly or indirectly, any of the following:
(a) Operation of Property. Tenant shall not, without Landlord's prior
consent, which consent shall not be unreasonably withheld or delayed (except as
elsewhere herein expressly provided): (i) surrender or terminate any Material
Agreement (unless the other party thereto is in material default and the
termination of such agreement would be commercially reasonable), (ii) increase
or consent to the increase of the amount of any charges payable by Tenant or
Landlord under any Material Agreement, except as provided therein or on an
arms'-length basis and commercially reasonable terms; or (iii) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under any Material Agreement in any material respect that is materially
adverse to the interests of Landlord, except on an arms'-length basis and
commercially reasonable terms.
(b) Liens. Subject to Section 6.1(b)(ii), Tenant shall not, without the
prior written consent of Landlord, create, incur, assume, permit or suffer to
exist any Lien on any portion of the Leased Property (or any of them), except
(i) Permitted Encumbrances, (ii) Liens created by or permitted pursuant to
Landlord's Loan Documents and (iii) Liens for Taxes or Other Charges not yet
delinquent.
(c) Affiliate Transactions. Tenant shall not enter into, or be a party to,
any transaction with an Affiliate of Tenant except in the ordinary course of
business and on terms which are fully disclosed to Landlord in advance and are
no less favorable to Tenant or such Affiliate than would be obtained in a
comparable arms'-length transaction with an unrelated third party.
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(d) Zoning and Uses. Tenant shall not (i) initiate or support any limiting
change in the permitted uses of any Leased Property (or to the extent
applicable, limiting zoning reclassification of any Leased Property), (ii) seek
any variance under existing land use restrictions, laws, rules or regulations
(or, to the extent applicable, zoning ordinances) applicable to any Leased
Property or use or permit the use of any Leased Property in each case in a
manner that would result in the existing use becoming a non-conforming use under
applicable land-use restrictions (and, if any, zoning ordinances) with any
materially adverse effect on the value of the Leased Property or that would
violate the terms of any Lease, Operating Agreement, Legal Requirements or any
Permitted Encumbrance, (iii) modify, amend or supplement any of the terms of any
Permitted Encumbrance in a manner adverse in any material respect to the
interests of Landlord, (iv) impose or permit or suffer the imposition of any
restrictive covenants, easements or encumbrances upon the Leased Property in any
manner that adversely affects in any material respect the value or utility of
the Leased Property, (v) execute or file any subdivision plat affecting any
Leased Property, institute, or permit the institution of, proceedings to alter
any tax lot comprising any Leased Property or (vi) permit or suffer any Leased
Property to be used by the public or any Person in such manner as might make
possible a claim of adverse usage or possession or of any implied dedication or
easement.
(e) Nonexempt ERISA Transactions. Tenant shall not engage in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Tenant, or in any transaction that would cause
any obligation or action taken or to be taken hereunder (or the exercise by
Landlord's Lender of any of its rights under the Lender's Loan Documents (if
applicable)) to be a non-exempt prohibited transaction under ERISA.
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations. Tenant will not make any demolition, alteration,
installation, improvement, expansion, reduction or decoration (each, an
"Alteration") of or to any Leased Property or any part thereof, except in
accordance with the following terms and conditions:
(a) The Alteration shall be undertaken in accordance with the applicable
provisions of this Lease, Landlord's Loan Documents, the Operating Agreements,
the Leases and all Legal Requirements.
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(b) No Event of Default shall have occurred and be continuing and no
Default shall occur as a result of such action.
(c) The Alteration shall not materially adversely affect the (i) Primary
Intended Use or (ii) fair market value of the Leased Property in question.
(d) A Material Alteration shall be conducted under the supervision of a
Qualified Architect or Engineer and shall not be undertaken until ten (10)
Business Days after there shall have been delivered to Landlord, for information
purposes only and not for approval by Landlord, detailed plans and
specifications and cost estimates therefor, prepared and approved in writing by
such Qualified Architect or Engineer. Such plans and specifications may be
revised at any time and from time to time, provided that material revisions of
such plans and specifications shall be delivered to Landlord for information
purposes only.
(e) Other than in connection with any Restoration, the Alteration may not,
in and of itself, either during the Alteration or upon completion, materially
adversely affect the Receipts derived from the Leased Property in question,
taking into account the Percentage Rent requirements hereunder; provided that
if, as reasonably determined by Landlord, such Alteration would materially
adversely affect the Net Operating Income at such Leased Property (taking into
account any amount then in any reserve account funded pursuant to any Cash
Management Procedures and permitted to be used in connection with such Material
Alteration), then in order to proceed with the Alteration, Tenant shall deliver
to a Depositary Eligible Collateral in the total amount of the estimated
reduction in Net Operating Income resulting from the Alteration, which Eligible
Collateral shall be returned to Tenant after substantial completion of the
Alteration if the reduction in Net Operating Income has been restored and no
Event of Default has occurred and is continuing.
(f) All work done in connection with any Alteration shall be performed
with due diligence in a good and workmanlike manner, all materials used in
connection with any Alteration shall be not less than the standard of quality of
the materials generally used at the applicable Leased Property as of the date
hereof (or, if greater, the then-current customary quality in the submarket in
which such Leased Property is located) and all work shall be performed and all
materials used in accordance with all applicable Legal Requirements and
Insurance Requirements.
(g) The cost of any Alteration shall be promptly and fully paid for by
Tenant, subject to the next succeeding sentence. No payment made prior to the
Final Completion
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of an Alteration or Restoration to any contractor, subcontractor, materialman,
supplier, engineer, architect, project manager or other Person who renders
services or furnishes materials in connection with such Alteration shall exceed
ninety five percent (95%) of the value of the work performed from time to time
and materials furnished and incorporated into the Improvements.
(h) All items (other than Eligible Collateral) to be delivered to the
Depositary hereunder shall also be delivered to Landlord (if Landlord is not the
Depositary), and, if required under Section 15.5, Landlord's Lender (if
Landlord's Lender is not the Depositary).
(i) For any Material Alteration (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner), Tenant shall be obligated to deliver to a Depositary Eligible
Collateral in an amount that, when taken together with any amount then in any
reserve account funded pursuant to any Cash Management Procedures and permitted
to be used in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant as such work progresses in accordance with Section 8.1(j). In
addition, if all Material Alterations (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner) then being performed exceeds $10,000,000 (the "Aggregate Threshold
Amount"), Tenant shall be obligated to deliver to the Depositary Eligible
Collateral in amount that, when taken together with (x) any Eligible Collateral
previously delivered under this subsection (i) and (y) any amounts then in any
reserve funded pursuant to any Cash Management Procedures and permitted to be
used in connection with such Material Alteration, shall be sufficient to pay all
of the costs of the Material Alteration in excess of the Aggregate Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant at such time as the remaining costs of the Material Alteration are
less than the Aggregate Threshold Amount.
(j) With respect to any Material Alteration as to which Tenant shall have
delivered Eligible Collateral in accordance with Section 8.1(i):
(i) Tenant shall deliver to the Depositary a schedule (which shall
be concurred in by the Qualified Architect or Engineer) setting forth the
projected stages of completion of such Alteration(s) and the corresponding
amounts
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expected to be due and payable by or on behalf of Tenant in connection
with such completion, such schedule to be updated quarterly by Tenant (and
concurred with by a Qualified Architect or Engineer) during the
performance of such Alteration(s).
(ii) Any Eligible Collateral that Tenant delivers to the Depositary
pursuant hereto (and the proceeds of any such Eligible Collateral) shall
be invested (to the extent such Eligible Collateral can be invested) by
the Depositary in Permitted Investments for a period of time consistent
with the date on which Tenant notifies the Depositary that Tenant expects
to request a release of such Eligible Collateral in accordance with the
next succeeding sentence. From time to time as the Alteration progresses,
the amount of any Eligible Collateral so furnished may, upon the written
request of Tenant to the Depositary, be withdrawn by Tenant and paid or
otherwise applied by or returned to Tenant in an amount equal to the
amount Tenant would be entitled to so withdraw if Section 10.2(d) hereof
were applicable, and any Eligible Collateral so furnished which is a
Credit Facility may be reduced by Tenant in an amount equal to the amount
Tenant would be entitled to so reduce if Section 10.2(d) hereof were
applicable, subject, in each case, to the satisfaction of the conditions
precedent to withdrawal of funds or reduction of the Credit Facility set
forth in said Section 10.2(d). In connection with the above-described
quarterly update of the projected stages of completion of the Material
Alteration (as concurred with by an Qualified Architect or Engineer),
Tenant shall increase (or be permitted to decrease, as applicable) the
Eligible Collateral then deposited with the Depositary as necessary to
comply with Section 8.1(i) hereof.
(iii) At any time after final completion of such Alterations, the
whole balance of any Cash deposited with the Depositary pursuant to
Section 8.1(j) then remaining on deposit may be withdrawn by Tenant and
shall be paid by the Depositary to Tenant, and any Eligible Collateral so
deposited shall, to the extent it has not been called upon, reduced or
theretofore released, be released by the Depositary to Tenant, within ten
(10) days after receipt by the Depositary of an application for such
withdrawal and/or release together with an Officer's Certificate, and as
to the following clauses (A) and (B) of this clause also a certificate of
the Qualified Architect or Engineer, setting forth in substance as
follows:
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(A) that such Alteration(s) has been completed substantially
in accordance with any plans and specifications therefor previously
filed with Landlord under Section 8.1(d) hereof;
(B) that, to the knowledge of the certifying Person, (x) such
Alteration(s) has been completed in compliance, in all material
respects, with all Legal Requirements, and (y) to the extent
required for the legal use or occupancy of the portion of the Leased
Property affected by such Alteration(s), Tenant has obtained a
temporary or permanent certificate of occupancy (or similar
certificate) or, if no such certificate is required, a statement to
that effect;
(C) that to the knowledge of the certifying Person, all
amounts that Tenant is or may become liable to pay in respect of
such Alteration(s) through the date of the certification have been
paid in full or adequately provided for and, to the extent that such
are customary and reasonably obtainable by prudent property owners
in the area where the Leased Property is located, that Lien waivers
have been obtained from the general contractor and major
subcontractors performing such Alteration or, at its sole cost and
expense, Tenant shall cause a nationally recognized title insurance
company to deliver to Landlord either (x) an endorsement or other
affirmative coverage with respect to the then-current loan policy in
favor of Landlord's Lender, updating such policy and insuring over
such Liens without further exceptions to such policy other than
Permitted Encumbrances, or (y) owner's and loan title insurance
policies, in such form, in such amounts and with such endorsements
as shall be reasonably satisfactory to Landlord and Landlord's
Lender, which policies shall be dated the date of completion of the
Material Alteration and shall contain no exceptions other than
Permitted Encumbrances; and
(D) that to the knowledge of the certifying Person, no Event
of Default has occurred and is continuing;
provided that if, for any reason, Tenant is unable to deliver the
certification required by clause (C) above with respect to any costs or
expenses relating to the Alteration, then, assuming Tenant is able to
satisfy each of the other requirements set forth in clauses (A), (B), (C)
and (D) above, Tenant shall be entitled to the release of the difference
between the whole balance of such Eligible Collateral and the total of all
costs and expenses to which Tenant is unable to certify.
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8.2 Subletting and Assignment; Warehouse Agreements.
8.2.1 Generally. Except as expressly provided herein, Tenant shall
not, without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion, assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer this Lease or sublease all or any part of the Leased Property
or suffer or permit this Lease or the leasehold estate created hereby or thereby
or any other rights arising under this Lease to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily or involuntarily or by operation of law, or permit the use or
occupancy of the applicable Leased Property to be offered or advertised for
assignment or subletting except as hereinafter provided. For purpose of this
Section 8.2, an assignment of this Lease shall be deemed to include any change
in control of Tenant, as if such change in control or transaction were an
assignment of this Lease.
8.2.2 Certain Sublettings and Assignments. Subject to the provisions
of Section 8.2.3 and any other express conditions or limitations set forth
herein,
(a) without the consent of Landlord, Tenant may (i) assign
this Lease (in whole but not in part) to any of its Affiliates and (ii)
sublet all or any part of the Leased Property to any Affiliates; provided,
in each case, that after giving effect to such assignment or sublease, the
Leased Properties shall continue at all times to be operated and managed
by substantially the same individuals responsible for the same immediately
prior to the applicable assignment or sublease; and
(b) without the consent of Landlord, Tenant may sublet all or
any part of any one or more Leased Property (i) in the normal course of
the Primary Intended Use and (ii) to concessionaires or other third party
users or operators of portions of the Leased Property in furtherance of
the Primary Intended Use.
8.2.3 Landlord's Right to Collect from Assignees and Subtenants. If
this Lease is assigned or if the applicable Leased Property or any part thereof
is sublet (or occupied by any entity other than Tenant and its employees),
Landlord, after an Event of Default occurs and so long as it is continuing, may
collect the rents from such assignee, Subtenant or occupant, as the case may be,
and apply the net amount collected to the Rent herein reserved, but no such
collection shall be deemed (i) a waiver of the provisions set forth in Section
8.2.1, (ii) the acceptance by Landlord of such assignee, Subtenant or
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occupant, as the case may be, as a tenant or (iii) release of Tenant from the
future performance of its covenants, agreements or obligations contained in this
Lease.
8.2.4 No Release. No subletting or assignment shall in any way
impair the continuing primary liability hereunder of the Tenant named herein, as
well as of each subsequent Tenant, and no consent to any subletting or
assignment in any particular instance shall be deemed a waiver of the
prohibition set forth in this Section 8.2. No assignment, subletting or
occupancy shall affect the obligation to use the Leased Property in accordance
with Section 6.1(a)(ii). Any subletting, assignment or other transfer of
Tenant's interest in this Lease in contravention of this Section 8.2 shall be
void at Landlord's option.
8.2.5 Required Assignment and Subletting Provisions. Any assignment
and/or Sublease must provide that:
(a) it shall be subject and subordinate to all of the terms
and conditions of this Lease,
(b) the use of the applicable Leased Property shall be
restricted to the uses and purposes expressly permitted by this Lease and
shall not conflict with any Legal Requirement, Insurance Requirement or
any other provision of this Lease,
(c) no Subtenant or assignee shall be permitted to further
sublet all or any part of the applicable Leased Property or assign this
Lease or its sublease except as expressly provided in this Lease,
(d) in the event of cancellation or termination of this Lease
for any reason whatsoever or of the surrender of this Lease (whether
voluntary, involuntary or by operation of law) prior to the expiration
date of such Sublease, including extensions and renewals granted
thereunder, then, at Landlord's option, the Subtenant shall make full and
complete attornment to Landlord for the balance of the term of the
Sublease, which attornment shall be evidenced by an agreement in form and
substance satisfactory to Landlord and which the Subtenant shall execute
and deliver within five (5) days after request by Landlord and the
Subtenant shall waive the provisions of any law now or hereafter in effect
which may give the Subtenant any right of election to terminate the
Sublease or to surrender possession in the event any proceeding is brought
by Landlord to terminate this Lease, and
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(e) in the event the Subtenant receives a written notice from
Landlord stating that Tenant is in Default under this Lease, the Subtenant
shall thereafter be obligated to pay all rentals accruing under said
sublease directly to Landlord or as such party may direct; all rentals
received from the Subtenant by Landlord shall be credited against the
amounts owing by Tenant under this Lease.
8.2.6 Reimbursement of Landlord's Costs. Tenant shall pay to
Landlord, within ten (10) business days after request therefore, all costs and
expenses, including reasonable attorneys' fees, incurred by Landlord (including,
to the extent Landlord is liable for the same, by Landlord's Lender) in
connection with any request made by Tenant to Landlord to assign this Lease or
sublet the applicable Leased Property.
8.2.7 Warehouse Agreements. The above provisions of this Section 8.2
shall not be applicable to Warehouse Agreements, provided that Tenant shall use
commercially reasonable efforts to include in any Warehouse Agreement entered
into from and after the date hereof that the other party thereto shall permit
the collateral assignment described in Section 8.4 hereof, and the collateral
assignment by Landlord to Landlord's Lender of Landlord's security interests in
respect of each Sublease and Warehouse Agreement and such amounts to secure
Landlord's obligations under Landlord's Loan Documents.
8.2.8 Certain Leases Senior. With respect to those leases listed on
Exhibit 8.2.8, hereto, the parties acknowledge that Landlord is, as of the
Commencement Date, the lessor thereunder (whether by operation of law or
otherwise) and that such leases are, by operation of law, senior to this Lease.
Tenant shall perform and comply with all obligations of lessor under such leases
and, provided no Event of Default shall have occurred and be continuing, Tenant
shall be entitled to the receipt of all amounts payable by the lessees under
such leases.
8.3 REIT Related Limitations on Subleasing and Warehouse Agreement.
Anything contained in this Lease to the contrary notwithstanding, Tenant shall
not sublet the Leased Property, or enter into Warehouse Agreements, on any basis
such that (i) the rental or other consideration to be paid by the Subtenant or
other party thereunder would be based, in whole or in part, on the income or
profits derived by the business activities of the Subtenant or such other Party,
or (ii) any portion of the amounts received or accrued by Landlord hereunder
would fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto.
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8.4 Collateral Assignment of Subleases and Warehouse Agreements to
Landlord. As security for Tenant's obligations under this Lease and not
otherwise, but subject to any limitations pursuant to applicable law or
contracts (including the terms of any existing or future Subleases and Warehouse
Agreements), Tenant hereby assigns, transfers and sets over unto Landlord all of
Tenant's right, title and interest in and to all Subleases and Warehouse
Agreements, and Tenant hereby confers upon Landlord, its agents and
representatives, a right of entry in, and sufficient possession of, the Leased
Property to permit and assure the collection by Landlord of all sums payable to
Tenant, if any, under the Subleases and all sums payable to Tenant pursuant to
the Warehouse Agreements. The exercise of this right of entry and qualified
possession by Landlord shall not constitute an eviction of Tenant from the
Leased Property. Further, Tenant acknowledges that Landlord may collaterally
assign its rights under this Section 8.4 to Landlord's Lender, to secure
Landlord's obligations in respect of Landlord's Debt. This assignment, although
presently effective, is operative only upon the occurrence of an Event of
Default hereunder and not before. Nothing in this Section 8.4, however, shall be
deemed to limit or qualify the rights of any Leasehold Mortgagee pursuant to
Section 8.5 below.
8.5 Leasehold Mortgages.
8.5.1 Landlord's Estate. No Leasehold Mortgage or any extension
thereof made by Tenant shall be a lien or encumbrance upon the estate or
interest of Landlord in and to the Leased Property or any part thereof.
8.5.2 Certain Leasehold Mortgage Requirements. No Leasehold Mortgage
shall be valid or of any force or effect, or be deemed for purposes of this
Lease to be a Leasehold Mortgage, unless and until (a) a true copy of the
original of each instrument creating and effecting such Leasehold Mortgage,
certified by the Leasehold Mortgagee to be a true copy of such instrument, and
written notice containing the name and post office address of the Leasehold
Mortgagee, shall have been delivered to Landlord, (b) any consent required
hereunder by Landlord shall have been given, and (c) the Leasehold Mortgage
shall contain in substance the following provisions:
"This mortgage is executed upon the condition that no purchaser at
any foreclosure sale or assignee under an assignment in lieu of
foreclosure shall acquire any right, title or interest in or to the
lease hereby mortgaged, unless the said purchaser or assignee, or
the person, firm or corporation to whom or to which such purchaser's
or assignee's right has been assigned, shall in the instrument
transferring to such purchaser or to such assignee
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the interest of tenant under the lease hereby mortgaged, assume and
agree to perform all of the terms, covenants and conditions of that
lease thereafter to be observed or performed on the part of such
tenant (subject to the terms of Section 8.5.3(d) and/or Section
8.5.6 thereof, to the extent applicable), that no further or
additional mortgage or assignment of the lease hereby mortgaged
shall be made except in accordance with the provisions contained in
Article VIII of that lease, and that a duplicate original of said
instrument containing such assumption agreement, duly executed and
acknowledged by such purchaser or such assignee and in recordable
form, shall be delivered to the landlord under the hereby mortgaged
lease immediately after the consummation of such sale, or in any
event, prior to taking possession of the premises demised thereby as
"Tenant" under the lease."
8.5.3 Leasehold Mortgagee Provisions.
(a) If Tenant shall enter into a Leasehold Mortgage and complies, in
connection therewith, with the provisions of Section 8.5.1 and 8.5.2, Landlord
shall give to such Leasehold Mortgagee, at the address of such Leasehold
Mortgagee set forth in the notice mentioned in Section 8.5.2, a copy of each
notice of Default by Tenant and each notice of termination of this Lease at the
same time as, and whenever, any such notice of Default or termination shall be
given to Tenant, and no such notice shall be deemed to have been duly given to
Tenant unless and until a copy thereof shall have been so given to each such
Leasehold Mortgagee. Each Leasehold Mortgagee (i) shall thereupon have a period
of ten (10) days more in the case of a monetary Default and twenty (20) days
more in the case of any non-monetary Default, after notice of such Default is
given to the Leasehold Mortgagee, for curing the Default, or causing the same to
be cured by Tenant or otherwise, than is given Tenant after such notice is given
to Tenant, and (ii) shall, within such period and otherwise as herein provided,
have the right to cure such Default, cause the same to be cured by Tenant or
otherwise. Landlord shall accept performance by a Leasehold Mortgagee of any
covenant, condition, or agreement on Tenant's part to be performed hereunder
with the same force and effect as though performed by Tenant.
(b) Notwithstanding the provisions of Section 8.5.3(a) hereof, no
Event of Default shall be deemed to exist as long as a Leasehold Mortgagee, in
good faith, (i) shall have commenced promptly to cure the Default in question
and prosecutes the same to completion with reasonable diligence and continuity,
subject to Unavoidable Delays, which for the purpose of this Section 8.5.3(b)
shall include causes beyond the control of such Leasehold Mortgagee instead of
causes beyond the control of Tenant, or
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(ii) if possession of the Leased Property is required in order to cure the
Default in question, such Leasehold Mortgagee (x) shall have entered into
possession of the Leased Property with the permission of Tenant for such purpose
or (y) shall have notified Landlord of its intention to institute foreclosure
proceedings to obtain possession directly or through a receiver, and within
fourteen (14) days of the giving of such notice commenced such foreclosure
proceedings and thereafter (1) prosecutes such proceedings with reasonable
diligence and continuity (subject to Unavoidable Delays) or (2) receives an
assignment of this Lease in lieu of foreclosure from Tenant, and, upon obtaining
possession pursuant to clause (x) or (y), commences promptly to cure the Default
in question and prosecutes the same to completion with reasonable diligence and
continuity (subject to Unavoidable Delays) or (iii) if the Leasehold Mortgagee
is a collateral assignee or the holder of a security interest in ownership
interests in Tenant and the foreclosure of its collateral assignment or security
interest is required in order to act under (i) or (ii) above, such Leasehold
Mortgagee shall have notified Landlord of its intention to institute proceedings
to foreclose such collateral assignment or pledge and within fourteen (14) days
of the giving of such notice commences such foreclosure proceedings, and
thereafter (1) prosecutes such proceedings with reasonable diligence and
continuity (subject to Unavoidable Delays) or (2) receives a direct and absolute
assignment from the assignor under the collateral assignment of its interest in
the Leasehold Mortgage or of the ownership interest, in lieu of foreclosure, and
upon the completion of such foreclosure, or the obtaining of such assignment,
commences promptly to act under (i) or (ii) above; provided that the Leasehold
Mortgagee shall have delivered to Landlord, in writing, its agreement to take
the action described in clause (i), (ii) or (iii) herein and shall have assumed
the obligation to cure the Default in question and that during the period in
which such action is being taken (and any foreclosure proceedings are pending),
all of the other obligations of Tenant under this Lease, to the extent they are
susceptible of being performed by the Leasehold Mortgagee, are being duly
performed within any applicable grace periods. However, at any time after the
delivery of the aforementioned agreement, the Leasehold Mortgagee may notify
Landlord, in writing, that it has relinquished possession of the Leased Property
or that it will not institute foreclosure proceedings, or if such proceedings
have been commenced, that it has discontinued them, and in such event, the
Leasehold Mortgagee shall have no further liability under such agreement from
and after the date it delivers such notice to Landlord (except for any
obligations assumed by the Leasehold Mortgagee and accruing prior to the date it
delivers such notice), and, thereupon, Landlord shall have the unrestricted
right to terminate this Lease and to take any other action it deems appropriate
by reason of any Default by Tenant, and upon any such termination the provisions
of Section 8.5.4 shall apply. Anything contained in this Section 8.5.3(b) to the
contrary notwithstanding, the provisions of this Section 8.5.3(b) shall not
apply in the case of a Leasehold Mortgagee which is not an Institutional Lender
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unless such Leasehold Mortgagee shall provide Landlord with security for the
performance of the assumed obligation in amount and form reasonably satisfactory
to Landlord, during the period that such Leasehold Mortgagee is taking the
required action to cure the Default in question.
(c) Landlord and Tenant agree that, from and after the date upon
which Landlord receives the notice and documents mentioned in clause (a) of
Section 8.5.2, they shall not modify or amend this Lease in any respect
materially adverse to the right of Tenant or Leasehold Mortgagee or cancel or
terminate this Lease other than as provided herein without the prior written
consent of the Leasehold Mortgagees which have given such notice.
(d) Except as provided in Section 8.5.3(b), no Leasehold Mortgagee
shall become liable under the provisions of this Lease unless and until such
time as it becomes, and then only for as long as it remains, the owner of the
leasehold estate created hereby.
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease.
(a) In case of termination of this Lease by reason of any Event of
Default or for any other reason, Landlord, subject to the provisions of Section
8.5.4(e), shall give prompt notice thereof to each Leasehold Mortgagee under a
mortgage made in compliance with the provisions of Sections 8.5.1 and 8.5.2,
which notice shall be given as provided in Section 8.5.3(a) hereof. Landlord, on
written request of such Leasehold Mortgagee made any time within thirty (30)
days after the giving of such notice by Landlord, shall execute and deliver
within thirty (30) days thereafter a new lease of the Leased Property to the
Leasehold Mortgagee, or its designee or nominee, for the remainder of the Term,
upon all the covenants, conditions, limitations and agreements herein contained,
provided that the Leasehold Mortgagee (i) shall pay to Landlord, simultaneously
with the delivery of such new lease, all unpaid Rent due under this Lease up to
and including the date of the commencement of the term of such new lease and all
expenses including attorneys' fees and disbursements and court costs, incurred
by Landlord in connection with the Default by Tenant, the termination of this
Lease and the preparation of the new lease, and (ii) shall deliver to Landlord a
statement, in writing, acknowledging that Landlord, by entering into a new lease
with the Leasehold Mortgagee or its nominee or designee, shall not have or be
deemed to have waived any rights or remedies with respect to Defaults existing
under this Lease, notwithstanding that any such Defaults existed prior to the
execution of the new lease, and that the breached obligations which gave rise to
the Defaults and which are susceptible of being cured by
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the Leasehold Mortgagee or its nominee or designee are also obligations under
said new lease, but such statement shall be subject to the proviso that the
applicable grace periods, if any, provided under the new lease for curing such
obligations shall begin to run as of the first day of the term of said new
lease.
(b) Any such new lease and the leasehold estate thereby created
shall, subject to the same conditions contained in this Lease, continue to
maintain the same priority as this Lease with regard to any Leasehold Mortgage
or any other lien, charge or encumbrance whether or not the same shall then be
in existence. Concurrently with the execution and delivery of such new lease,
Landlord shall assign to the tenant named therein all of its right, title and
interest in and to moneys received from any Subleases and Warehouse Agreements
that have not been applied to Rent and have not been applied or being held for
application to the costs incurred by Landlord to operate, maintain and repair
the Leased Property.
(c) Upon the execution and delivery of a new lease under this
Section 8.5.4, all Subleases and Warehouse Agreements which theretofore may have
been assigned to Landlord thereupon shall be assigned and transferred, without
recourse, representation or warranty, by Landlord to the tenant named in such
new lease. Between the date of termination of this Lease and the earlier of (i)
the date of execution and delivery of the new lease and (ii) the date of
Leasehold Mortgagee's option to request a new lease pursuant to this Section
8.5.4 expires without the exercise of such option, Landlord shall not enter into
any new Subleases or Warehouse Agreements, cancel or modify any then existing
Subleases or Warehouse Agreements, or accept any cancellation, termination or
surrender thereof (unless such termination shall be effected as a matter of law
on the termination of this Lease) without the written consent of the Leasehold
Mortgagee, except as permitted in the Subleases or Warehouse Agreements.
(d) If there is more than one Leasehold Mortgage, Landlord shall
recognize the Leasehold Mortgagee whose Leasehold Mortgage is junior in lien as
the Leasehold Mortgagee entitled to the rights afforded by Sections 8.5.3, 8.5.4
and 8.5.5 (unless a Leasehold Mortgagee senior in lien requires that the holder
thereof have a superior entitlement to such rights, in which event such
recognition shall be of the holder of that Leasehold Mortgage), provided that
such Leasehold Mortgagee shall have complied with the provision of Sections
8.5.1 and 8.5.2. A security agreement providing for a security interest in the
ownership interests in Tenant and otherwise complying with the terms hereof for
a Leasehold Mortgage shall be treated as a Leasehold Mortgage that is junior in
lien.
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8.5.5 Notice of Arbitration. In any circumstances where arbitration
is provided for under this Lease, Landlord agrees that Landlord shall give any
Leasehold Mortgagee who shall have given Landlord a notice as provided in
Section 8.5.2(a), notice of any demand by Landlord for any arbitration, and
Landlord shall recognize the Leasehold Mortgagee entitled to the rights afforded
hereunder in accordance with Section 8.5.4(d) as the only proper party to
participate in the arbitration. In such case, Tenant agrees not to participate
in such arbitration.
ARTICLE IX
9.1 Maintenance and Repair.
(a) Subject to Landlord's obligation under Section 9.1(b), Tenant,
at its expense, shall keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto and which are under Tenant's control
(and Tenant's Personal Property) in good order and repair, reasonable wear and
tear excepted (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of such Leased Property or
Tenant's Personal Property, or any portion of either) and shall promptly make
all necessary and appropriate repairs and replacements thereto, of every kind
and nature, whether interior or exterior, structural or non-structural, ordinary
or extraordinary, foreseen or unforeseen, arising by reason of a condition
(concealed or otherwise) occurring subsequent or prior to the Commencement Date.
All repairs shall, to the extent reasonably achievable, be made in good,
workmanlike and first-class manner, in accordance with all applicable federal,
state and local statutes, ordinances, by-laws, codes, rules and regulations
relating to such work. Tenant will not take or omit to take any action the
taking or omission of which might materially impair the value or usefulness of
the Leased Property or any part thereof for the Primary Intended Use.
(b) Notwithstanding anything herein to the contrary, Landlord shall
promptly make all necessary and appropriate repairs and replacements to the
Leased Property (other than those repairs and replacements (i) caused by the
negligence or wilfull misconduct of Tenant or any Person claiming by, through or
under Tenant or (ii) required as a result of Casualty or Condemnation to the
Leased Property) the costs of which are required to be depreciated under the
Internal Revenue Code on a 39-year basis (or any successor period of
depreciation for buildings) ("39-Year Property") in an amount not in excess of
the amount specified on Schedule 9.1(b) hereto under the column captioned
"Landlord's Responsibility," provided (x) Landlord's obligation pursuant to the
above terms of the sentence shall be subject to prior reasonable notice from
Tenant as to the
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need to make such repair and replacement, and (y) Landlord may elect that Tenant
perform such repair and replacement, in which event, Landlord shall reimburse or
pay to Tenant, within fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in making such
repairs and replacements. Further,
(1) Tenant shall make all necessary and appropriate repairs
and replacements required in respect of 39-Year Property to the extent the
same exceed the amount specified on said Schedule 9.1(b) under the column
captioned "Landlord's Responsibility", and
(2) Tenant agrees that (A) it shall expend annually for the
repair and replacement of 39-Year Property not less than the amount
specified on Schedule 9.1(b) under the column captioned "Minimum Tenant's
Responsibility", provided that Tenant shall not be deemed to have expended
any amounts in satisfaction of the "Minimum Tenant's Responsibility"
identified on said Schedule 9.1(b) until such time as Tenant shall have
expended all amounts required to be spent by Tenant under Section 2.3 of
the Asset Purchase Agreement in connection with which this Lease is being
executed, to which Tenant (or its Affiliate) is party, (B) to the extent
Tenant shall have spent less than the specified amount in any Lease Year,
such unspent amount shall cumulate and Tenant shall be required to expend
the unspent portion in subsequent Lease Years, and (C) if at the end of
the Term, there shall be any cumulative unspent amounts, Tenant shall pay
such amount to Landlord not later than the end of the Term.
(c) Except as expressly specified in Section 9.1(b), Landlord shall
not under any circumstances be required to build or rebuild any improvements on
the Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or non-structural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, or to
maintain the Leased Property in any way, except as expressly provided herein.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or thereafter enacted.
(d) Nothing contained herein and no action or inaction by Landlord
shall be construed as (i) constituting the consent or request of Landlord,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property
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for the construction, alteration, addition, repair or demolition of or to the
Leased Property, or (ii) giving Tenant any right, power or permission to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against Landlord in respect thereof or to make any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Landlord in the
Leased Property.
(e) Tenant will, upon the expiration or prior termination of the
Term with respect to any Leased Property, vacate and surrender the same to
Landlord in the condition in which the same was originally received from
Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the Term). In addition, Tenant shall
not be permitted to remove any of Tenant's Personal Property from the Leased
Property unless such removal shall not damage the Leased Property in any
material respect.
9.2 Encroachments, Restrictions, etc. If any of the Leased
Improvements shall, at any time, encroach upon any property, street or
right-of-way adjacent to the Leased Property, or shall violate the agreements or
conditions contained in any lawful restrictive covenant or other agreement
affecting the Leased Property, or shall impair the rights of others under any
easement or right-of-way to which the Leased Property is subject, then promptly
upon the request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of any adverse final determination, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment, whether
the same shall affect Landlord or Tenant or (ii) make such changes in the Leased
Improvements, and take such other actions, as Tenant in good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment, and to
end such violation or impairment, including, if necessary, the alteration of any
of the Leased Improvements, and in any event take all such actions as may be
necessary in order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article VIII. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under
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any policy of title or other insurance, and Tenant shall be entitled to a credit
for any sums recovered by Landlord under any such policy of title or other
insurance.
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance. Tenant shall at all times keep the applicable Leased
Property, and all property located in or on the applicable Leased Property,
including Tenant's Personal Property, insured with the kinds and amounts of
insurance described below or with such other insurance as may be reasonably
requested by Landlord (taking into consideration any insurance requirements that
may be required in respect of any Landlord's Debt).
(a) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall keep all of the Leased Property insured and
obtain and maintain policies of insurance insuring against loss or damage
by standard perils included within the classification "All Risks of
Physical Loss", which policy or policies shall cover (by endorsement or
otherwise) warehouse legal liability. Such insurance (i) shall be in an
aggregate amount equal to the then full replacement cost of the Leased
Property and the Equipment (without deduction for physical depreciation)
and (ii) shall have deductibles no greater than $100,000 (as escalated by
the CPI Increase) (with such higher deductibles for wind and earthquake
coverage as the applicable issuer may require). The policies of insurance
carried in accordance with this paragraph shall be paid in accordance with
the agreed upon payment schedule incorporated into such policies and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation.
(b) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall also obtain and maintain the following policies
of insurance:
(i) Flood insurance with respect a Leased Property, if any
part of such Leased Property is located in an area identified by the
Federal Emergency Management Agency as an area federally designated
a "100 year flood plain" and (A) flood insurance is generally
available at reasonable premiums and in such amount as generally
required by institutional lenders for similar properties or (B) if
not so available from a
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private carrier, from the federal government at commercially
reasonable premiums to the extent available. In either case, the
flood insurance shall be in an amount at least equal to the
Termination Amount with respect to such Leased Property or the
maximum limit of coverage available with respect to such Leased
Property under said program, whichever is less;
(ii) Commercial general liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing
minimum limits per occurrence of $1,000,000 for any policy year. In
addition, at least $25,000,000 excess and/or umbrella liability
insurance shall be obtained, and at all times at least $10,000,000
excess and/or umbrella liability insurance shall be available (such
that, at all times, such coverage shall be maintained against which
no claim shall have been asserted) and maintained for any and all
claims, including legal liability imposed upon Tenant and related
court costs and attorneys' fees generally covered by such insurance
policies; provided that if there are one or more claims in
connection with a property other than the Leased Property that
results in the amount of excess and/or umbrella liability insurance
coverage to be less than $25,000,000, Tenant shall give notice to
Landlord that such coverage has so decreased and Tenant shall cause
such coverage to be increased to $25,000,000.
(iii) Rental loss and/or business interruption insurance in an
amount sufficient to avoid any co-insurance penalty and equal to the
greater of (A) the estimated Receipts from the operation of the
Leased Property (including (x) the total payable under the Subleases
and the Warehouse Agreements, and (y) the total amount of all other
amounts to be received by Tenant or third parties that are the legal
obligation of the Subtenants), less non-continuing Operating
Expenses (i.e., Operating Expenses which were incurred in connection
with the ownership, operation and/or maintenance of the Leased
Property prior to the insured event, but which are not incurred
during the period covered by the insurance required pursuant to this
Section 10.1(b)(iii)), for a period of up to the next succeeding
eighteen (18) months, or (B) the projected Operating Expenses
(including debt service) for the maintenance and operation of the
Leased Property for a period of up to the next succeeding eighteen
(18) months as the same may be reduced or increased from time to
time due to changes in such Operating Expenses. The amount of such
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insurance shall be increased from time to time as and when the rents
increase or the estimate of (or the actual) Receipts, as may be
applicable, increases or decreases to the extent rents or the
estimates of gross revenue decrease;
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter
installed in any of the Improvements (without exclusion for
explosions) and insurance against loss of occupancy or use arising
from any breakdown, in such amounts as are generally available at
reasonable premiums and are generally required by institutional
lenders for properties comparable to the Leased Property;
(v) Worker's compensation insurance with respect to all
employees of Tenant, as and to the extent required by any
Governmental Authority or Legal Requirement;
(vi) During any period of repair or restoration costing in
excess of $5,000,000, builder's "all risk" insurance in an amount
equal to not less than the full insurable value of the related
Leased Property against such risks (including fire and extended
coverage and collapse of the Improve ments to agreed limits) as
Landlord may reasonably request, in form and substance reasonably
acceptable to Landlord;
(vii) Coverage to compensate for the cost of demolition and
the increased cost of construction for the Leased Property in an
amount satisfactory to Landlord, which amount shall not exceed
$10,000,000;
(viii) If required by Landlord's Lender, in the event any
Leased Property is located in a federal earthquake zone, earthquake
insurance with respect to such Leased Property in an amount equal to
probable maximum loss with respect to such Leased Property, with a
maximum deductible of five percent (5%) of the replacement cost of
such Leased Property; and
(ix) Such other insurance as may from time to time be
reasonably required by Landlord in order to protect its interests,
provided such insurance is generally available at commercially
reasonable premiums.
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(c) All policies of insurance (the "Policies") required pursuant to
Section 10.1 with respect to any Leased Property shall be issued by companies
licensed to do business in the state where such Leased Property is located.
Further, unless otherwise approved by Landlord in writing, the issuer(s) of the
Policies required under Section 10.1(a) for all risk coverage shall have a
claims paying ability rating of "AA" or better by Standard & Poor's and Moody's
or (unless objected to by Landlord's Lender) "A-X" or better by Best's, and (b)
Policies for all other coverage shall have a claims paying ability rating of "A"
or better by Standard & Poor's and Moody's or (unless objected to by Landlord's
Lender) "A-X" or better by Best's. The Policies (i) shall name Landlord and
Landlord's Lender (if any) and its successors and/or assigns, as their interest
may appear, as additional insureds or loss payees (except that in the case of
general liability insurance, Landlord and Landlord's Lender shall be named as
additional insureds and not a loss payee); (ii) shall contain, for the benefit
of Landlord's Lender, a Non-Contributory Standard Lender Clause and, except with
respect to general liability insurance, a Lender's Loss Payable Endorsement, or
their equivalents, naming Landlord's Lender as the person to which all payments
made by such insurance company shall be paid; (iii) shall include effective
waivers by the insurer of all claims for insurance premiums against all loss
payees, additional insureds and named insureds (other than Tenant) and all
rights of subrogation against any loss payee, additional insured or named
insured; (iv) if directed by Landlord, shall be assigned to Landlord's Lender;
(v) except as otherwise provided above, shall be subject to a deductible, if
any, not greater in any material respect, in proportion to the coverage
maintained, than the deductible for such coverage on the date hereof; (vi) shall
contain such provisions as Landlord deems reasonably necessary or desirable to
protect its interest (and that of Landlord's Lender, to the extent so requested
by Landlord on behalf of Landlord's Lender), including endorsements providing
that: none of Tenant, Landlord, Landlord's Lender or any other party shall be a
co-insurer under said Policies and that no modification that would result in
non-compliance with the provisions of this Section 10.1, cancellation,
termination or non-renewal of any of the Policies shall be effective until at
least thirty (30) days after receipt by each named insured, additional insured
and loss payee of written notice thereof or ten (10) days after receipt of such
notice with respect to nonpayment of premium; (vii) shall permit Landlord or
Landlord's Lender to pay the premiums and continue any insurance upon failure of
Tenant to pay premiums when due, upon the insolvency of Tenant or through
foreclosure or other transfer of title to the Leased Property (or any of them)
(it being understood that Tenant's rights to coverage under such policies may
not be assignable without the consent of the insurer); and (viii) shall provide
that the insurance shall not be impaired or invalidated by virtue of (A) any
act, failure to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by Tenant, Landlord,
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Landlord's Lender or any other named insured, additional insured or loss payee,
except for the willful misconduct of Landlord or Landlord's Lender knowingly in
violation of the conditions of such policy, (B) the occupation, use, operation
or maintenance of the Leased Property for purposes more hazardous than permitted
by the terms of the Policy, (C) any foreclosure or other proceeding or notice of
sale relating to the Leased Property or (D) any change in the possession of the
Leased Property without a change in the identity of the holder of actual title
thereto (provided that with respect to items (C) and (D), any notice
requirements of the applicable Policies are satisfied).
(d) Insurance Premiums; Certificates of Insurance.
(i) Tenant shall pay the premiums for such Policies (the "Insurance
Premiums") as the same become due and payable and shall furnish to
Landlord the receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Landlord (provided
Tenant is not required to furnish such evidence of payment if such
Insurance Premiums are to be paid pursuant to the Cash Management
Procedures relating to any Landlord's Debt). Within thirty (30) days after
request by Landlord, Tenant shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested by Landlord,
taking into consideration changes in liability laws, changes in prudent
customs and practices, and the like. In the event Tenant satisfies the
requirements under this Section 10.1 through the use of a Policy covering
properties in addition to the Leased Property, then, at Landlord's
request, Tenant shall provide to Landlord evidence satisfactory to it that
the Insurance Premiums for the Leased Property are separately allocated
under such Policy to the Leased Property and that payment of such
allocated amount shall maintain the effectiveness of such Policy as to the
Leased Property notwithstanding the failure of payment of any other
portion of premiums. If such allocation is required by the immediately
preceding sentence, but such allocation is not available, Landlord shall
have the right to increase any tax and insurance escrow account required
in connection with Landlord's Debt in an amount sufficient to purchase a
non-blanket Policy covering the Leased Property covered by such Policy
from insurance companies which qualify under this Lease.
(ii) Tenant shall deliver to Landlord on or prior to the Closing
Date certificates setting forth in reasonable detail the material terms
(including any applicable notice requirements) of all Policies from the
respective insurance companies (or their authorized agents) that issued
the Policies, including that such Policies may not be modified in a manner
that would result in such Policies not
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complying with the provisions of this Section 10.1, canceled, terminated
or not renewed without thirty (30) days' prior notice to Landlord, or ten
(10) days' notice with respect to nonpayment of premium. Tenant shall
deliver to Landlord, concurrently with each material change in any Policy,
a certificate with respect to such changed Policy certified by the
insurance company issuing that Policy, in substantially the same form and
containing substantially the same information as the certificates required
to be delivered by Tenant pursuant to the first sentence of this clause
(d)(ii) and stating that all premiums then due thereon have been paid to
the applicable insurers and that the same are in full force and effect (or
if such certificate and report shall not be obtainable by Tenant, Tenant
may deliver an Officer's Certificate to such effect in lieu thereof).
(e) Renewal and Replacement of Policies.
(i) Not less than four (4) Business Days prior to the expiration,
termination or cancellation of any Policy, Tenant shall renew such policy
or obtain a replacement policy or policies (or a binding commitment for
such replacement policy or policies), which shall be effective no later
than the date of the expiration, termination or cancellation of the
previous policy, and shall deliver to Landlord (and, if requested by
Landlord, to Landlord's Lender) a certificate in respect of such policy or
policies (A) containing the same information as the certificates required
to be delivered by Tenant pursuant to clause (d)(ii) above, or a copy of
the binding commitment for such policy or policies and (B) confirming that
such policy complies with all requirements hereof.
(ii) If Tenant does not furnish the certificates as required under
clause (e)(i), Landlord may procure, but shall not be obligated to
procure, such replacement policy or policies and pay the Insurance
Premiums therefor, and Tenant agrees to reimburse Landlord for the cost of
such Insurance Premiums promptly on demand.
(iii) Concurrently with the delivery of each replacement policy or a
binding commitment for the same pursuant to this clause (e), Tenant shall
deliver to Landlord a report from a reputable and experienced insurance
broker or from the insurer, setting forth the particulars as to all
insurance obtained by Tenant pursuant to this Section 10.1 and then in
effect and stating that all Insurance Premiums then due thereon have been
paid in full to the applicable insurers and that such insurance policies
are in full force and effect (or if such report shall not be available
after Tenant shall have used its reasonable efforts to provide the
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same, Tenant will deliver to Landlord an Officer's Certificate containing
the information to be provided in such report) and Tenant shall deliver to
Landlord an Officer's Certificate stating that such insurance otherwise
complies in all material respects with the requirements of this Section
10.1.
(f) Separate Insurance. Tenant will not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 10.1 unless such insurance complies with
clause (c) above.
(g) Tenant shall name any Person holding, servicing or administering
Landlord's Debt and reasonably designated by Landlord (including any trustee,
servicer or special servicer) as a loss payee or additional insured with respect
to any Policy under which Landlord's Lender is to be so named hereunder.
10.2 Casualty; Application of Proceeds.
(a) Right to Adjust.
(i) If any Leased Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Tenant shall give prompt
written notice thereof to Landlord generally describing the nature and
extent of such Casualty. Subject to Section 10.2(b), following the
occurrence of a Casualty, Tenant, regardless of whether proceeds are
available, shall in a reasonably prompt manner proceed to restore, repair,
replace or rebuild the affected Leased Property to the extent practicable
to be of at least equal value and of substantially the same character and
quality as prior to the Casualty, all in accordance with the terms hereof
applicable to Alterations.
(ii) Subject to clause (v) below, in the event of a Casualty that
does not exceed $1,000,000, Tenant may settle and adjust such claim;
provided that such adjustment is carried out in a competent and timely
manner.
(iii) Subject to clause (v) below, in the event a Casualty shall
exceed $1,000,000, Tenant may settle and adjust such claim only with the
consent of Landlord (and, if required under the terms of Landlord's Loan
Documents, Landlord's Lender), which consent shall not be unreasonably
withheld or delayed, and Landlord (and Landlord's Lender) shall have the
opportunity to participate, at Tenant's cost, in any such adjustments.
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(iv) The proceeds of any Policy shall be due and payable solely to a
Depositary.
(v) Notwithstanding the terms of clauses (ii) and (iii) above,
Landlord shall have the sole discretion to adjust any claim with respect
to a Casualty and to collect all Proceeds if an Event of Default shall
have occurred and is continuing.
The provisions of this Section 10.2(a) are subject to the terms of any lease
that would be considered a "Superior Interest" (as defined herein) to the
contrary.
(b) Tenant's Right to Proceeds for Certain Casualty. In the event either
of (i) a Casualty that involves a loss of less than thirty percent (30%) of the
Termination Amount with respect to the affected Leased Property or (ii) a
Condemnation where the loss is in an aggregate amount less than twenty percent
(20%) of the Termination Amount with respect to the affected Leased Property,
Tenant be entitled to apply the Proceeds (after reimbursement of any expenses
incurred by Landlord and Landlord's Lender) to reimburse Tenant for the cost of
restoring, repairing, replacing or rebuilding the affected Leased Property (the
"Restoration"), in the manner required hereby, provided and on the condition
that, no Event of Default shall have occurred and be then continuing and, in the
reasonable judgment of Landlord:
(i) the Restoration can be completed by the earliest to occur
of:
(A) the 365th day following the receipt of the Proceeds,
or, with Landlord's written consent, such longer period as may
reasonably be required,
(B) the scheduled maturity date of Landlord's Debt, and
(C) with respect to a Casualty, the expiration of the
payment period on the rental-loss insurance or business interruption
insurance coverage in respect of such Casualty, and
(ii) after receiving reasonably satisfactory evidence to such
effect, during the period of the Restoration, the sum of (A) income
derived from the Leased Properties (taken as a whole), plus (B) proceeds
of rental-loss insurance or business interruption insurance, if any,
payable together with such other monies as Tenant may irrevocably make
available for the Restoration, will equal or exceed the sum required for
Tenant to pay the Minimum Rent, Taxes, Other Charges and
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all other Operating Expenses and required capital expenditures for all of
the Leased Properties (taken as a whole).
Notwithstanding the foregoing, if any of the conditions set forth in the proviso
in this clause (b) is not satisfied, then, notwithstanding anything herein to
the contrary, unless Landlord shall otherwise elect, at its sole option, (w) the
Proceeds shall be paid to Landlord up to the Termination Amount, and the balance
thereof, after payment of all Landlord's and Landlord's Lender's reasonable
expenses in connection therewith, shall be paid to Tenant, (x) this Lease shall
terminate in respect of the affected Leased Property (except for such terms as
are expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set forth on
Exhibit 3.1(a) shall be adjusted to reflect the portion of Minimum Rent
allocated to each Leased Property remaining subject to the terms of this Lease.
Notwithstanding any of the foregoing, in the event of a Casualty or Condemnation
where an Operating Agreement, a Warehouse Agreement with respect to all or
substantially all of a Leased Property, or a Sublease with a Major Subtenant
requires that Tenant restore the affected Leased Property or any affected
portion thereof, Landlord shall permit the application of the Proceeds (after
reimbursement of any expenses incurred by Landlord and Landlord's Lender) to
reimburse Tenant for the cost of Restoration provided no Event of Default shall
have occurred and then be continuing.
(c) Termination of Lease in Certain Circumstances. In any case in which
Tenant is not entitled to the Proceeds for Restoration pursuant to Section
10.2(b), then:
(i) if Landlord's Lender does not permit, pursuant to
Landlord's Loan Documents, the application of the Proceeds to the
Restoration (which Landlord's Lender shall notify Landlord and Tenant
within a reasonable time after the Casualty or Condemnation, and in no
event later than the 40th day after the receipt of Proceeds), then (x)
Landlord shall be entitled to the Proceeds up to the Termination Amount
(and Tenant shall be entitled to any balance, after payment of all
Landlord's and Landlord's Lender's reasonable expenses in connection
therewith), (y) this Lease shall terminate as to the affected Leased
Property (except with respect to those matters that are expressly intended
to survive the expiration or earlier termination of this Lease) and (z)
the Minimum Rent shall be reduced by the portion thereof allocable
thereto, as determined by reference to Exhibit 3.1(a), or
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(ii) if Landlord's Lender is required or elects under the terms of
the Landlord's Loan Documents to permit the application of Proceeds to
Restoration, then the Proceeds shall be so applied provided that Landlord
is reasonably satisfied that, upon the completion of the Restoration,
Tenant shall be able to satisfy its obligations hereunder in respect of
the affected Leased Property (assuming for these purposes a pro rata
Minimum Rent obligation.
(d) Manner of Reimbursement of Restoration Expenses. If Tenant is entitled
pursuant to Section 10.2(b) or (c) hereof to reimbursement of Restoration costs
from Proceeds, such Proceeds shall be disbursed on a monthly basis upon the
Depositary being furnished with (i) such architect's certificates, Lien waivers,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as the
Depositary may reasonably require and approve, and (ii) all plans and
specifications for such Restoration, such plans and specifications to be
approved by Landlord prior to commencement of any work (such approval not to be
unreasonably withheld or delayed). In addition, no payment made prior to the
Final Completion of the Restoration shall exceed ninety-five percent (95%) of
the value of the work performed from time to time; funds other than Proceeds
shall be disbursed prior to disbursement of such Proceeds; and at all times, the
undisbursed balance of such Proceeds remaining in the hands of the Depositary,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Landlord by or on behalf of Tenant for that purpose, shall be at
least sufficient in the reasonable judgment of Landlord to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Prior to any disbursement, Landlord shall have received evidence reasonably
satisfactory to it of the estimated cost of completion of the Restoration (such
estimate to be made by Tenant's architect or contractor and approved by Landlord
in its reasonable discretion), and Tenant shall have deposited with the
Depositary Eligible Collateral in an amount equal to the excess (if any) of such
estimated cost of completion over the net Proceeds. Any surplus which may remain
out of Proceeds received pursuant to a Casualty shall be paid to Tenant after
payment of such costs of Restoration. Any surplus which may remain out of
Proceeds received pursuant to a Condemnation after payment of such costs of
Restoration shall be paid over to and belong to Landlord.
10.3 Condemnation.
(a) Tenant shall promptly give Landlord written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting any Leased Property (a "Condemnation") and shall deliver to Landlord
copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a
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Condemnation, Tenant, regardless of whether Proceeds are available, shall
promptly proceed to restore, repair, replace or rebuild the same to the extent
practicable to be of at least equal value and of substantially the same
character as prior to such Condemnation, all to be effected in accordance with
the terms hereof applicable to Alterations.
(b) Landlord is hereby irrevocably appointed as Tenant's attorney-in-fact,
coupled with an interest, with exclusive power to collect, receive and retain
any Proceeds in respect of a Condemnation and to make any compromise or
settlement in connection with such Condemnation, subject to the provisions of
this Section, and such power shall include the power to substitute Landlord's
Lender in Landlord's discretion. Provided no Event of Default has occurred and
is continuing, (x) in the event of a Condemnation where the loss does not exceed
$1,000,000, Tenant may settle and compromise such Proceeds; provided that the
same is effected in a competent and timely manner, and (y) in the event a
Condemnation, where the loss exceeds $1,000,000, Tenant may settle and
compromise the Proceeds only with the consent of Landlord (and, if required
under the terms of Landlord's Loan Documents, Landlord's Lender), which consent
shall not be unreasonably withheld or delayed, and Landlord shall have the
opportunity to participate, at Tenant's cost, in any litigation and settlement
discussions in respect thereof. Tenant shall cause any Proceeds that are payable
to Tenant to be paid directly to a Depositary to be held and applied in
accordance with the terms hereof.
(c) The Rent shall be subject to adjustment in the manner provided for in
Section 4.2.
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures. Tenant hereby agrees to cooperate with
Landlord and to execute any and all instruments reasonably requested by Landlord
(including, if necessary, the execution of an amendment to this Lease), in the
establishment and maintenance of escrow and/or reserve accounts and cash
management procedures reasonably requested by any Landlord's Lender in
connection with Landlord's Loan Documents (the "Cash Management Procedures");
provided, however, that the Cash Management Procedures shall be no more onerous
than the "Cash Management Procedures" relating to that certain Master Lease
Agreement, dated as of April 22, 1998, between Americold Real Estate, L.P., as
landlord, and Americold Corporation, as tenant.
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ARTICLE XII
12.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) if Tenant shall fail to pay the Minimum Rent when due and
payable hereunder, or
(b) if Tenant shall fail to pay when due any amount (other than
Minimum Rent) when due and payable and such default shall continue for ten
(10) days after notice thereof to Tenant, or
(c) if Tenant shall fail to observe or perform any term, covenant or
condition of this Lease not specifically provided for in this Section 12.1
and such failure is not cured within a period of thirty (30) days after
receipt of notice from Landlord, unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
period of time shall be extended to such period of time as may be
necessary to cure such default with all due diligence, or
(d) if Tenant shall admit in writing its inability to pay its debts
generally as they become due; file a petition in bankruptcy or a petition
to take advantage of any insolvency act; make an assignment for the
benefit of its creditors; consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; or file a
petition or answer seeking reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any State thereof, or
(e) any petition shall be filed by or against Tenant under Federal
bankruptcy laws, or any other proceeding shall be instituted by or against
Tenant or such subsidiary seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian
or other similar official for Tenant, or for any substantial part of the
property of Tenant, and such proceeding is not dismissed within ninety
(90) days after institution thereof, or Tenant shall take any action to
authorize or effect any of the actions set forth above in this paragraph
(e), or
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(f) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding any
the same shall not be vacated or discharged within the later of ninety
(90) days after commencement thereof or thirty (30) days after receipt by
Tenant of notice thereof from Landlord, (unless Tenant shall be contesting
such lien or attachment in good faith in accordance with the terms of this
Lease), or
(g) if an event of default under any of the Other Leases shall have
occurred and be continuing,
then, and in any such event, Landlord may terminate this Lease by giving not
less than ten (10) days' notice of such termination and upon the expiration of
the time fixed in such notice, if any, and the failure of the applicable Event
of Default to be cured within such ten-day period, the Term shall terminate and
all rights of Tenant under this Lease shall cease. Landlord shall have all
rights at law and in equity available to Landlord as a result of Tenant's breach
of this Lease.
Tenant shall, to the maximum extent permitted by law, pay as Additional Charges
all Litigation Costs as a result of any Event of Default hereunder.
12.2 Certain Remedies. Landlord shall have the right to terminate this
Lease, and otherwise exercise remedies, at any time and from time to time, with
respect to one or more, or all, of the Leased Properties, and the termination of
this Lease or other exercise of remedies with respect to one or more Leased
Properties shall in no way constitute a waiver on the part of Landlord to
terminate this Lease on account of such Event of Default, or otherwise exercise
remedies, at any time and from time to time, in one or more other instances,
with respect to the balance of the Leased Properties.
12.3 Damages. Neither (a) the termination of this Lease pursuant to
Section 12.1 with respect to any or all of the Leased Property, (b) the
repossession of the applicable Leased Property or any portion thereof, (c) the
failure of Landlord, notwithstanding reasonable good faith efforts to relet the
applicable Leased Property or any portion thereof, (d) the reletting of all or
any portion thereof, nor (e) the failure of Landlord to collect or receive any
rentals due upon any such reletting, shall relieve Tenant of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event of any such termination, Tenant shall
forthwith pay to Landlord all Rent due and payable with respect to the Leased
Property to and including the date of such termination. Thereafter, Tenant,
until the end of what would have been the Term in the absence of such
termination, and whether or not the
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applicable Leased Property or any portion thereof shall have been re-let, shall
be liable to Landlord for, and shall pay to Landlord, as current damages, the
Rent and other charges which would be payable hereunder for the remainder of the
Term had such termination not occurred, less the net proceeds, if any, of any
reletting of the applicable Leased Property, after deducting all expenses in
connection with such re-letting, including all repossession costs, brokerage
commissions, legal expenses, attorneys' fees, advertising costs, expenses of
employees, alteration costs and expenses of preparation for such reletting.
Tenant shall pay such current damages to Landlord monthly on the days on which
the Minimum Rent would have been payable hereunder if this Lease had not been
terminated.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages and in lieu of
all such current damages beyond the date of such termination, at Landlord's
election, Tenant shall pay to Landlord either, at Landlord's election, (a) an
amount equal to the excess, if any, of the Rent and other charges which would be
payable hereunder from the date of such termination (assuming that, for the
purposes of this paragraph, annual payments by Tenant on account of Taxes and
Other Charges would be the same as payments required for the immediately
preceding twelve calendar months, or if less than twelve calendar months have
expired since the Commencement Date, the payments required for such lesser
period projected to an annual amount) for what would be the then unexpired term
of this Lease if the same remained in effect (with respect to the applicable
Leased Property), over the Fair Market Rental for the same period, or (b) an
amount equal to the lesser of (i) the Rent and other charges that would have
been payable for the balance of the Term had it not been terminated, or (ii) the
aggregate of the Minimum Rent, Additional Charges and other charges accrued in
the twelve (12) months ended next prior to such termination (without reduction
for any free rent or other concession or abatement). In the event this Lease is
so terminated prior the expiration of the first full year of the Term, the
liquidated damages which Landlord may elect to recover pursuant to this Section
shall be calculated as if such termination had occurred on the first anniversary
of the Commencement Date. Nothing contained herein shall, however, limit or
prejudice the right of Landlord to prove and obtain in proceedings for
bankruptcy or insolvency an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater than,
equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet the applicable Leased
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Property or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may, at Landlord's option, be equal to,
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant concessions or free rent to the extent that
Landlord considers advisable and necessary to relet the same, and (b) make such
alterations, repairs and decorations in the applicable Leased Property or any
portion thereof as Landlord, in its sole judgment, considers advisable and
necessary for the purpose of reletting the applicable Leased Property; and the
making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure to relet the
applicable Leased Property, or, in the event that the applicable Leased Property
is relet, for failure to collect the rent under such reletting. To the fullest
extent permitted by law, Tenant hereby expressly waives any and all rights of
redemption granted under any present or future laws in the event of Tenant's
being evicted or dispossessed, or in the event of Landlord's obtaining
possession of the applicable Leased Property, by reason of the violation by
Tenant of any of the covenants and conditions of this Lease.
12.4 Waiver. If this Lease is terminated pursuant to Section 12.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XII, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt (provided nothing herein shall be construed to
limit Tenant's liability hereunder, which is intended to be fully recourse to
Tenant, to its interest in the Leased Property).
12.5 Application of Funds. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State where the applicable Leased Property is located.
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ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, without waiving or releasing
any obligation or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and at
the expense of Tenant, and may, to the extent permitted by law, enter upon the
applicable Leased Property or any portion thereof for such purpose and take all
such action thereon as, in Landlord's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
sums so paid by Landlord and all costs and expenses (including attorneys' fees
and expenses, in each a case, to the extent permitted by law) so incurred,
together with interest thereon (to the extent permitted by law) at the Overdue
Rate from the date on which such sums or expenses are paid or incurred by
Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XIV
14.1 Holding Over. If Tenant shall for any reason remain in possession of
the applicable Leased Property after the expiration of the Term or earlier
termination of the Term, such possession shall be as a month-to-month tenant
during which time Tenant shall pay as rental each month, one and one-half times
the aggregate of (i) one-twelfth of the aggregate Minimum Rent payable with
respect to the last Lease Year of the Term; (ii) all Additional Charges accruing
during the month and (iii) all other sums, if any, payable by Tenant pursuant to
the provisions of this Lease with respect to the applicable Leased Property.
During such period of month-to-month tenancy, Tenant shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to month-to-month tenancies to continue its occupancy and use of the
applicable Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Lease.
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ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance. This Lease and all rights of Tenant
hereunder are subject and subordinate to the Lien affecting the Leased
Properties created pursuant to Lender's Loan Documents, whether now or hereafter
existing, or the interest of any landlord under a lease senior in title to this
Lease, whether now or hereafter existing (all such Liens and interests,
collectively, the "Superior Interests"), and to all renewals, modifications,
consolidations, replacements and extensions of Superior Interests, provided that
the holder of such Superior Interest shall have executed and delivered to Tenant
a "non-disturbance" agreement in favor of Tenant substantially on the same terms
and conditions as are contained in the form attached hereto as Exhibit 15.1.
Subject to the foregoing proviso, this Section shall be self-operative and no
further instrument of subordination shall be required, but in confirmation of
such subordination, Tenant agrees to execute and deliver promptly any
commercially reasonable form of instrument (in recordable form, if requested)
that Landlord or the holder of any Superior Interest (each, a "Superior Party")
may request to evidence such subordination.
15.2 Attornment. If the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of any such Superior Interest, then Tenant shall, at
the option of such purchaser, assignee or any Superior Party, as the case may
be, (x) attorn to such party and perform for its benefit all the terms,
covenants and conditions of this Lease on Tenant's part to be performed with the
same force and effect as if such party were the Landlord originally named in
this Lease, or (y) enter into a new lease with such party, as Landlord, for the
remaining Term and otherwise on the same terms and conditions of this Lease
except that such successor Landlord shall not be (i) liable for any previous
act, omission or negligence of Landlord under this Lease; (ii) subject to any
counterclaim, defense or offset which theretofore shall have accrued to Tenant
against Landlord; (iii) bound by any previous modification or amendment of this
Lease or by any previous prepayment of more than one month's rent in advance of
its due date, unless such modification, amendment or prepayment shall have been
approved in writing by the Superior Party through or by reason of which such
successor Landlord shall have succeeded to the rights of Landlord under this
Lease; or (iv) liable for any security (if any) deposited pursuant to this Lease
unless such security has actually been delivered to such successor Landlord.
Nothing contained in this Section shall be construed to impair any right
otherwise exercisable by any such owner, holder or Tenant.
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15.3 Notice of Default to Landlord's Lender. In the event of any act or
omission by Landlord which would give Tenant the right, either immediately or
after the lapse of a period of time, to terminate this Lease, or to claim a
partial or total eviction, Tenant will not exercise any such right (A) until it
has given written notice of such act or omission to Landlord's Lender, and (B)
until a reasonable period of time (not less than thirty (30) days) for remedying
such act or omission shall have elapsed following giving of such notice and
following the time when Lender shall have become entitled under the Landlord's
Loan Documents to remedy the same, provided Lender, with reasonable diligence,
shall (i) have pursued such remedies as are available to it under Landlord's
Loan Documents so as to be able to remedy the act or omission, and (ii)
thereafter shall have commenced and continued to remedy such act or omission or
cause the same to be remedied. Tenant's agreement herein shall not apply to
those situations specifically set forth herein wherein Tenant has an express
option to cancel and terminate this Lease.
15.4 Modifications to Secure Financing. If any Superior Party or
prospective Superior Party shall request modifications of this Lease as a
condition to the provision, continuance or renewal of any such financing, Tenant
will not unreasonably withhold, delay or defer its consent thereto, provided
that (i) either such modifications do not materially increase the obligations of
Tenant hereunder or materially adversely affect Tenant's rights under this Lease
or (ii) if such modifications would materially increase the obligations of
Tenant hereunder or materially adversely affect Tenant's rights under this
Lease, then Landlord shall compensate Tenant for the same. Disputes as between
Landlord and Tenant regarding whether a proposed modification would materially
increase the obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, and the compensation that would be payable to
Tenant as a result thereof shall be determined by arbitration in accordance with
the terms of Schedule 15.4 hereto.
15.5 Delivery of Notices to Landlord's Lender. Subsequent to the receipt
by Tenant of Notice from Landlord as to the identity and address of any Superior
Party (which Notice shall be accompanied by a copy of the instrument creating
such Superior Interest), no Notice from Tenant to Landlord shall be effective
unless and until a duplicate original of such Notice shall be given to such
Superior Party at the address set forth in the above described Notice. The
curing of any of Landlord's defaults by such Superior Party shall be treated as
performance by Landlord.
15.6 Right of Landlord's Lender to Enforce Lease. To the extent permitted
under the Landlord's Loan Documents, Landlord's Lender may exercise the
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rights of Landlord hereunder, including the right on the part of Landlord to
obtain insurance in the circumstances set forth in Section 10.1(e)(ii) hereof.
15.7 Exercise of Landlord's Discretion. In any instance hereunder in which
Landlord must be reasonable in making a request or granting or withholding an
approval or consent, Tenant acknowledges and agrees that Landlord may take into
account the reasonable objections of Landlord's Lender to the extent Landlord is
required to take such objections into account under Landlord's Loan Documents.
In any instance hereunder in which Landlord may make a request or grant or
withhold an approval in its discretion, Landlord may take into account the views
of Landlord's Lender to the extent Landlord is required to take such views into
account under Landlord's Loan Documents.
ARTICLE XVI
16.1 Indemnification. Notwithstanding the existence of any insurance
required to be provided hereunder, and without regard to the policy limits of
any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord and Landlord's Lender and their respective partners, shareholders,
officers, directors and employees (each, an "Indemnitee") from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and reasonable expenses (including Litigation Costs), to the maximum extent
permitted by law, imposed upon or incurred by or asserted against such
Indemnitee by reason of: (a) any accident, injury to or death of persons or loss
of or damage to property occurring on or about the Leased Property or adjoining
sidewalks, including any claims made by employees at the Leased Property, (b)
any use, misuse, non-use, condition, maintenance or repair by Tenant or anyone
claiming by, through or under Tenant, including agents, contractors, invitees or
visitors of the applicable Leased Property or Tenant's Personal Property, (c)
any Taxes or Other Charges, (d) any failure on the part of Tenant or anyone
claiming by, through or under Tenant to perform or comply with any of the terms
of this Lease, (e) any failure by Tenant to perform its obligations under any
Sublease or Warehouse Agreement and any claims made thereunder, (f) any contest
of any Legal Requirement or Insurance Requirement, regardless whether the same
is conducted in accordance with the terms hereof. Any amounts which become
payable by Tenant under this Section shall be paid within ten (10) days after
liability therefor on the part of Tenant is determined by litigation or
otherwise, and if not timely paid, shall bear interest (to the extent permitted
by law) at the Overdue Rate from the date of such determination to the date of
payment. Tenant, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or
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instituted against Indemnitee or may compromise or otherwise dispose of the same
as Tenant sees fit. Nothing herein shall be construed as indemnifying an
Indemnitee against its own grossly negligent acts or omissions or willful
misconduct. If at any time an Indemnitee shall have notice of a claim, such
Indemnitee shall give reasonably prompt written notice of such claim to Tenant;
provided that (i) such Indemnitee shall have no liability for a failure to give
notice of any claim of which Tenant has otherwise been notified or has knowledge
and (ii) the failure of such Indemnitee to give such a notice to Tenant shall
not limit the rights of such Indemnitee or the obligations of Tenant with
respect to such claim except to the extent that Tenant incurs actual expenses or
suffers actual monetary loss as a result of such failure. Tenant shall have the
right to control the defense or settlement of any Claim, provided that (A)
Tenant shall first confirm in writing to such Indemnitee that such claim is
within the scope of this indemnity and that Tenant shall pay any and all amounts
required to be paid in respect of such claim, (B) if the compromise or
settlement of any such claim shall not result in the complete release of such
Indemnitee from the claim so compromised or settled, the compromise or
settlement shall require the prior written approval of such Indemnitee and (C)
no such compromise or settlement shall include any admission of wrongdoing on
the part of such Indemnitee. An Indemnitee shall have the right to approve
counsel engaged to defend such claim and, at its election and sole cost and
expense, shall have the right, but not the obligation, to participate in the
defense of any claim. Tenant's liability under this Article with respect to
matters arising or accruing during the Term hereof shall survive any termination
of this Lease.
The parties hereto agree that this Article XVI shall not apply to those matters
specifically covered by the provisions of Article XXVI hereof.
ARTICLE XVII
17.1 No Waiver. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
ARTICLE XVIII
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18.1 Remedies Cumulative. Except as otherwise expressly provided herein,
to the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord or Tenant now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Landlord or Tenant or any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord or Tenant of any or all of such other rights, powers and remedies.
ARTICLE XIX
19.1 Acceptance of Surrender. No surrender to Landlord of this Lease or of
any Leased Property, or of any interest therein, shall be valid or effective
unless agreed to and accepted in writing by Landlord and Landlord's Lender (if
any) and no act by Landlord or any representative or agent of Landlord, other
than such a written acceptance by Landlord and Landlord's Lender (if any), shall
constitute an acceptance of any such surrender.
ARTICLE XX
20.1 No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same Person may
acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold
estate created thereby or any interest herein or in such leasehold estate and
(b) the fee estate in the applicable Leased Property.
ARTICLE XXI
21.1 Conveyance by Landlord. If Landlord or any successor owner of the
applicable Leased Property shall convey such Leased Property in accordance with
the terms hereof other than as security for a debt, and the grantee or
transferee of the Leased Property shall expressly assume all obligations of
Landlord hereunder arising or accruing from and after the date of such
conveyance or transfer, Landlord or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and obligations of
Landlord under this Lease arising or accruing from and after the date of such
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conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
ARTICLE XXII
22.1 Quiet Enjoyment. So long as Tenant shall pay all Rent as the same
becomes due and no Event of Default shall have occurred and be continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Landlord or anyone
claiming by, through or under Landlord, but subject to all liens and
encumbrances of record as of the date hereof or otherwise permitted to be
created by Landlord hereunder, liens as to the obligations of Landlord that are
either not yet due or which are being contested in good faith and by proper
proceedings, and liens hereafter consented to by Tenant. No failure by Landlord
to comply with the foregoing covenant shall give Tenant any right to cancel or
terminate this Lease or abate, reduce or make a deduction from or offset against
the Rent or any other sum payable under this Lease, or to fail to perform any
other obligation of Tenant hereunder or thereunder. Notwithstanding the
foregoing, Tenant shall have the right, by separate and independent action to
pursue any claim it may have against Landlord as a result of a breach by
Landlord of the covenant of quiet enjoyment contained in this Section.
ARTICLE XXIII
23.1 Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
AmeriCold Logistics II, LLC
10 Glenlake Parkway
9th Floor
Atlanta, Georgia 30328
Attention: Chief Financial Officer
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(b) if to Landlord:
URS Logistics, Inc.
c/o Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
Attention: Chief Financial Officer
(c) if required pursuant to Section 15.5 hereof, to Landlord's Lender,
in accordance with the terms of said Section.
or to such other address as either party may hereunder designate, and shall be
effective upon receipt.
ARTICLE XXIV
24.1 Appraisers. In the event that it becomes necessary to determine the
Fair Market Value or Fair Market Rental of any property for any purpose of this
Lease, and the parties cannot agree amongst themselves on such value within
twenty (20) days after the first request made by one of the parties to do so,
then either party may notify the other of a person selected to act as appraiser
on its behalf. Within fifteen (15) days after receipt of any such notice, the
other party shall by notice to the first party appoint a second person as
appraiser on its behalf. The appraisers thus appointed, each of whom must be a
member of The Appraisal Institute/American Institute of Real Estate Appraisers
(or any successor organization thereto), shall, within 45 days after the date of
the notice appointing the first appraiser, proceed to appraise the applicable
Leased Property to determine the Fair Market Value or Fair Market Rental thereof
as of the relevant date; provided that if one appraiser shall have been so
appointed, or if two appraisers shall have been so appointed but only one such
appraiser shall have made such determination within 50 days after the making of
the initial appointment, then the determination of such appraiser shall be final
and binding upon the parties. If two appraisers shall have been appointed and
shall have made their determinations within the respective requisite periods set
forth above and if the difference between the amounts so determined shall not
exceed ten percent (10%) of the lesser of such amounts, then the Fair Market
Value or Fair Market Rental shall be an amount equal to 50% of the sum of the
amounts so determined. If the difference between the amounts so determined shall
exceed ten percent (10%) of the lesser of such amounts, then such two appraisers
shall have 20 days to appoint a third appraiser, but if such appraisers fail to
do so, then either party may
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request the American Arbitration Association or any successor organization
thereto to appoint an appraiser within 20 days of such request, and both parties
shall be bound by any appointment so made within such 20 day period. If no such
appraiser shall have been appointed within such 20 days or within 90 days of the
original request for a determination of Fair Market Value or Fair Market Rental,
whichever is earlier, either Landlord or Tenant may apply to any court having
jurisdiction to have such appointment made by such court. Any appraiser
appointed by the original appraisers, by the American Arbitration Association or
by such court shall be instructed to determine the Fair Market Value or Fair
Market Rental within 30 days after appointment of such Appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determination of the other two appraisers shall be excluded, and 50% of the
sum of the remaining two determinations shall be final and binding upon Landlord
and Tenant as the Fair Market Value or Fair Market Rental for such interest.
This provision for determination by appraisal shall be specifically enforceable
to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties except as
otherwise provided by applicable law. Landlord and Tenant shall each pay the
fees and expenses of the appraiser appointed by it and their own legal fees, and
each shall pay one-half of the fees and expenses of the third appraiser and
one-half of all other cost and expenses incurred in connection with each
appraisal.
ARTICLE XXV
25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or an
Affiliate of Landlord intends to elect to qualify as a real estate investment
trust ("REIT"). Accordingly, unless otherwise notified by Landlord, the
following requirements (the "REIT Requirements") must be satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or
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<PAGE> 86
a portion of the amounts paid by Tenant to Landlord hereunder to fail to
qualify as "rents from real property" within the meaning of Section 856(d)
of the Code.
(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and agrees
to use reasonable efforts to cause its Affiliates, to permit the REIT
Requirements to be satisfied. Tenant agrees, and agrees to use reasonable
efforts to cause its Affiliates, to cooperate in good faith with Landlord to
ensure that the REIT Requirements are satisfied, including providing Landlord
with information about the ownership of Tenant and its Affiliates to the extent
that such information is reasonably available. In addition, Tenant agrees, and
agrees to cause its Affiliates, to cooperate with Landlord in connection with
any additional requirements relating to Landlord's qualification as a REIT
arising from and after the date of this Lease. Immediately after becoming aware
that the REIT Requirements are not, or will not be, satisfied, Tenant shall
notify Landlord of such noncompliance.
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions. Tenant hereby agrees to hold
harmless Landlord and Landlord's Lender, any successors to their respective
interests in this Lease, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Landlord or
any other indemnitee or assessed against the Leased Property by virtue of any
claim or lien by any governmental or quasi-governmental unit, body, or agency,
or any third party, for cleanup costs or other costs pursuant to any
Environmental Laws, but only to the extent that the same relate to the period
from and after the date hereof. Tenant's indemnity shall survive the termination
of this Lease, provided, however, Tenant shall have no indemnity obligation with
respect to (i) Hazardous Substances first introduced to the Leased Property
subsequent to the date that Tenant's occupancy of the Leased
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<PAGE> 87
Property shall have fully terminated or (ii) Hazardous Substances introduced to
the Leased Property by Landlord, its successors and assigns. Landlord hereby
agrees to hold harmless Tenant and any successors to its interest in this Lease,
and the respective directors, officers, employees and agents of any of the
foregoing from and against any losses, claims, damages (including consequential
damages), penalties, fines, liabilities (including strict liability), costs
(including cleanup and recovery costs), and expenses (including expenses of
litigation and attorneys' fees) incurred by Tenant or any other indemnitee or
assessed against the Leased Property by virtue of any claim or lien by any
governmental or quasi-governmental unit, body, or agency, or any third party,
for cleanup costs or other costs pursuant to any Environmental Laws, but only to
the extent that the same relate to the period prior to the date hereof.
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination.
27.2 Severability. If any term or provision of this Lease or any
application thereof shall be invalid or unenforceable, the remainder of this
Lease and any other application of such term or provision shall not be affected
thereby.
27.3 Maximum Permissible Rate. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be
determined at the maximum permissible rate.
27.4 Headings. The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
27.5 Exculpation. Landlord's liability hereunder shall be limited solely
to its interest in the Leased Property, and no recourse under or in respect of
this Lease shall be had against any other assets of Landlord whatsoever.
Furthermore, except as otherwise expressly provided herein, in no event shall
Landlord (original or successor) ever be liable to Tenant for any indirect or
consequential damages suffered by Tenant from whatever cause.
-80-
<PAGE> 88
27.6 Transfer of Licenses. Upon the expiration or earlier termination of
the Term, Tenant shall use its best efforts to transfer to Landlord or
Landlord's nominee or to cooperate with Landlord or Landlord's nominee in
connection with the processing by Landlord or Landlord's nominee of any
applications for all licenses, operating permits and other governmental
authorization and all contracts, including contracts with governmental or
quasi-governmental entities which may be necessary for the operation of the
Leased Property; provided that the costs and expenses of any such transfer or
the processing of any such application shall be paid by Landlord or Landlord's
nominee.
27.7 Exhibition of Leased Property. Landlord and Landlord's agent shall
have the right to enter the applicable Leased Property at all reasonable times
for the purpose of exhibiting the Leased Property to others.
27.8 Entire Agreement. This Lease contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof.
27.9 Governing Law. This Lease shall be construed with respect to each
Leased Property under the substantive laws of the State of in which such Leased
Property is situated.
27.10 No Waiver. No waiver of any condition or covenant herein contained,
or of any breach of any such condition or covenant, shall be held or taken to be
a waiver of any subsequent breach of such covenant or condition, or to permit or
excuse its continuance or any future breach thereof or of any condition or
covenant herein construed as a waiver of such default, or of Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing default.
27.11 Successors and Assigns. This Lease shall be binding upon and shall
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
27.12 Modifications in Writing. This Lease may only be modified by a
writing signed by both Landlord and Tenant and, if otherwise required by the
terms hereof, Leasehold Mortgagee and/or Landlord's Lender.
27.13 No Waiver. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
-81-
<PAGE> 89
27.14 Claims Against Landlord. In the event that a claim or adjudication
is made that Landlord or its agents have acted unreasonably or unreasonably
delayed (or refrained from), acting in any case where by law or under this
Lease, Landlord or such agent, as the case may be, has an obligation to act
reasonably or promptly, Tenant agrees that neither Landlord nor its agents shall
be liable for any monetary damages, and Tenant's sole remedies shall be limited
to commencing an action seeking injunctive relief or declaratory judgment,
except in any instance in which it has been finally determined that Landlord's
action, delay or inaction has constituted gross negligence, fraud, willful
misconduct or an illegal act. The parties hereto agree that any action or
proceeding to determine whether Landlord has acted reasonably shall be
determined by an action seeking declaratory judgment.
ARTICLE XXVIII
28.1 Memorandum of Lease. Landlord and Tenant shall, promptly upon the
request of either enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the state in which the applicable
Leased Property is located, in which reference to this Lease, and all options
contained therein, shall be made. Tenant shall pay all costs and expenses of
recording such Memorandum of Lease.
ARTICLE XXIX
29.1 Landlord's Option to Purchase Tenant's Personal Property. Tenant
hereby grants Landlord the option to purchase all of the equipment and personal
property (tangible and intangible) that is employed by Tenant in connection with
the use and operation of each of the Properties, and the business conducted
thereat, including any interest of Tenant in the warehousing and customer
contracts (to the extent the same is assignable) and the interest of Tenant in
any equipment leases and the like. Such option shall be exercisable by Landlord
at any time prior to the date of expiration or earlier termination of this Lease
in respect of a Property and the conveyance in respect thereof shall be
consummated (and the payment of the purchase price therefor made) concurrently
with such expiration or earlier termination. The purchase price payable for
Tenant's Personalty shall be the Fair Market Value thereof, determined in
accordance with the terms of Article XXIV hereof (as adjusted to the extent
required to reflect that the subject of the appraisal is Tenant's Personalty
rather than a Leased Property). Tenant agrees to cooperate with Landlord in
effecting the smooth and orderly transfer of Tenant's Personalty in the event of
Landlord's exercise of the Purchase Option. Tenant's
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<PAGE> 90
Personalty shall be conveyed free and clear of all liens, encumbrances or rights
of other parties, except as may have been disclosed to the appraisers in the
process of establishing the Fair Market Value thereof.
[remainder of page intentionally left blank]
-83-
<PAGE> 91
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
duly executed as of March 11, 1999.
LANDLORD
URS LOGISTICS, INC.
By: /s/ Daniel F. McNamara
-----------------------------------
Name: Daniel F. McNamara
Title: President
TENANT
AMERICOLD LOGISTICS II, LLC
By: /s/ Frederick B. Beilstein III
-----------------------------------
Name: Frederick B. Beilstein III
Title: Senior Vice President
-84-
<PAGE> 92
Exhibit A
Legal Description of the Land
[omitted: legal descriptions of parcels in Ontario, California and Montgomery,
Alabama]
-85-
<PAGE> 93
Exhibit 1.5(b)
List of Ground Leases and Expiration Dates
Ontario, CA
1) Ground Lease, dated October 5, 1990, between Velma B. Davis and Lois Ann
Fincher and URS Logistics, Inc., for lease of property in Ontario, California.
Expires 9/30/2010. Option to purchase, which is exercisable on October 1, 2000
and on the first day of every month thereafter to and including September 1,
2010.
Montgomery, AL
1) Ground lease, dated August 6, 1997, by and between Central of Georgia
Railroad Company and URS Logistics, Inc. for lease of property in Montgomery,
Alabama. Expires 10/31/99, plus two options to extend for 3 years each.
-86-
<PAGE> 94
Exhibit 2.1(a)
<TABLE>
<CAPTION>
Property Release Amount
- -------- --------------
<S> <C>
Ontario $16,062,282
Montgomery $0
</TABLE>
-87-
<PAGE> 95
Exhibit 3.1(a)
<TABLE>
<CAPTION>
Pro-Rata
Reduction
in Fixed Rent &
Property % Rent Breakpoint
- -------- -----------------
<S> <C>
Ontario ` 100.00%
Montgomery 0.00%
</TABLE>
-88-
<PAGE> 96
Exhibit 3.1(b)
CALCULATION OF PERCENTAGE RENT
Percentage Rent, with respect to each Lease, year shall becalculoated annually
as follows:
(a) for the period from Commencement Date through December 31, 2003, the
product of (i) 7% times (ii) all Receipts for the applicable Lease
Year in excess of the Breakpoint;
(b) for the period from January 1, 2004 through December 31, 2008, the
product of (i) 26.35% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint; and
(c) for the period from January 1, 2009 through February 28, 2014, the
product of (i) 32.5% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint.
As used herein, the "Breakpoint" with respect to any Lease Year shall be
$12,894,000. The Breakpoint shall be adjusted to account for the termination of
this Lease with respect to any one or more of the Leased Properties in
accordance with the terms of this Lease on a pro rata basis among each Leased
Property based on the percentages set forth next to each Leased Property in
Exhibit 3.1(a) attached to this Lease.
-89-
<PAGE> 97
Exhibit 8.2.8
CERTAIN SUPERIOR LEASES
None.
-90-
<PAGE> 98
Schedule 9.1(b)
<TABLE>
<CAPTION>
Landlord's Responsibility Minimum Tenant's Responsibility
- ------------------------- -------------------------------
<S> <C>
None $262,500 per annum increasing by 5%
annually
</TABLE>
-91-
<PAGE> 99
Exhibit 15.1
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of _________, ________ is made by and among
[____________] ("Landlord"), AmeriCold Logistics [II], LLC., a Delaware limited
liability company ("Tenant"), and [LANDLORD'S LENDER], a [___________] (together
with its successors and assigns "Lender") pursuant to that certain Loan
Agreement (the "Loan Agreement"), dated as of [_______________], by and between
Lender and Landlord.
W I T N E S S E T H
WHEREAS, under a certain master lease dated ________ __, 1999 (hereinafter
referred to as the "Lease"), Landlord did lease, let and demise the property
(hereinafter called the "Leased Property"), as described in the Lease to Tenant
for the period of time and upon the covenants, terms and conditions therein
stated; and
WHEREAS, the Lease has not been further amended or modified; and
WHEREAS, by making a mortgage loan, Lender became the owner of an
indebtedness and holder of a certain Note or Notes, secured by first priority
mortgages, deeds of trust and deeds to secure debt (collectively, the
"Mortgages"), which shall constitute liens upon the property described in said
Mortgages and as described in Exhibit A attached hereto (the "Mortgaged
Premises"), and is secured by an assignment of Landlord's interest in the Lease
as more particularly set forth in the Mortgage; and
WHEREAS, Landlord and Tenant acknowledge and agree to the aforesaid
assignment of Landlord's interest in the Lease; and
WHEREAS, Lender desires the Lease and all rights of the Tenant thereunder
to be subordinate to the Mortgage and all rights of Lender thereunder, and the
Tenant desires Lender's assurance not to disturb Tenant's rights of possession
of the Leased Property under the Lease in the event that Lender exercises its
remedies as a Lender under the Mortgages;
NOW THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
<PAGE> 100
Section 1.
The Lease, as the same may heretofore and hereafter be modified, amended
or extended, is and shall be subject and subordinate to the Mortgages on the
Mortgaged Premises, to each and every advance made or hereafter made under the
Loan Agreement, and to all renewals, modifications, consolidations, replacements
and extensions of the Mortgages.
Lender agrees that it shall make available to Tenant the insurance policy
proceeds and condemnation awards (or payments made in anticipation thereof or in
connection therewith) in accordance with the terms of Section 10.2(b) and
10.2(d) of the Lease.
Section 2.
So long as no default by Tenant has occurred and has continued to exist
for such period of time (after notice, if any, required by the Lease) as would
entitle Landlord to terminate the Lease (hereinafter called an "Event of
Default"), (A) Lender shall not, in any foreclosure action or proceeding which
may be instituted or taken by Lender under any Mortgage by reason of any default
thereunder, evict Tenant from the Leased Premises by the Lease, or terminate or
disturb Tenant's leasehold estate under the Lease, and (B) none of Tenant's
rights under the Lease shall be disturbed by reason of any default under any of
the Mortgages.
Section 3.
Tenant shall give Lender copies of all notices and other communications
given by Tenant to the Landlord under the Lease relating to defaults on the part
of the Landlord under the Lease.
Section 4.
In the event of any act or omission by Landlord which would give Tenant
the right, either immediately or after the lapse of a period of time, to
terminate the Lease, or to claim a partial or total eviction, Tenant will not
exercise any such right (A) until it has given written notice of such act or
omission to Lender by delivering such notice of such act or omission by
certified mail, return receipt requested, addressed to Lender at the address
specified under Section 7 hereof, and (B) until a reasonable period of time (not
less than thirty (30) days) for remedying such act or omission shall have
elapsed following giving of such notice and following the time when Lender shall
have become
<PAGE> 101
entitled under the Mortgages or any additional mortgage to remedy the same,
provided Lender, with reasonable diligence, shall (i) have pursued such remedies
as are available to it under the Mortgages so as to be able to remedy the act or
omission, and (ii) thereafter shall have commenced and continued to remedy such
act or omission or cause the same to be remedied.
Section 5.
Without limitation of any of the provisions of the Lease, in the event
that, by reason of any default on the part of the Landlord, Lender or its
assigns shall succeed to the interest of Landlord or any successor to Landlord,
then subject to the provisions of this Agreement the Lease shall nevertheless
continue in full force and effect and Tenant shall attorn to Lender or its
assigns and shall recognize Lender or its assigns as its landlord. Upon request
of Lender, Tenant shall execute and deliver to Lender or its assigns an
agreement of attornment. If Lender or its assigns shall succeed to the interest
of Landlord or any successor to Landlord, in no event shall Lender be obligated
to remedy and default, nor shall Lender or its assigns have any liability under
the Lease prior to the date Lender or its assigns shall succeed to the rights of
Landlord or any successor to Landlord under the Lease, nor any liability for
offsets or defenses which Tenant might have had against Landlord or any
successor to Landlord. Lender and its assigns shall have no personal liability
as successor to Landlord, and Tenant shall look only to the estate and property
of Lender or its assigns (as applicable) in the Mortgaged Premises or the
proceeds thereof for the satisfaction of Tenant's remedies for the collection of
a judgment (or other judicial process) requiring the payment of money in the
event of any default by Lender and its assigns as Landlord under the Lease. No
other property or assets of Lender or its assigns shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to the Lease, the relationship of Landlord and
Tenant thereunder or Tenant's use or occupancy of the Leased Property.
Section 6.
Tenant has not subordinated the Lease or any of its rights under the Lease
to any lien or mortgage other than the Mortgage prior to the date hereof, and it
will not subordinate the Lease or the rights of the Tenant thereunder to any
lien or mortgage other than the Mortgage without the prior written consent of
Lender, unless otherwise permitted under the Lease. If Tenant at any time
acquires the interest of the Landlord under the Lease, the Lease will remain in
full force and effect and the interests of the Tenant and the Landlord under the
Lease will not merge.
<PAGE> 102
Section 7.
All notices, demands, requests, consents, approvals and other
communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
AmeriCold Logistics [II], LLC
10 Glenlake Parkway
9th Floor
Atlanta, Georgia 30328
Attention: Chief Executive Officer
(b) if to Lender:
________________________
________________________
________________________
Attn:___________________
or as to each party, to such other address as the party may designate by a
notice given in accordance with the requirements contained in this Section 7.
Section 8.
No prepayment of rent or additional rent due under the Lease of more than
one month in advance, and no amendment, modification, surrender or cancellation
of the Lease, shall be binding upon Lender, as holder of the Mortgages or as
Landlord under the Lease if it succeeds to that position, unless consented to in
writing by Lender. In addition, Lender as holder of the Mortgages or as Landlord
under the Lease if it succeeds to that position shall in no event have any
liability for the performance or completion of any work or to make improvements
to the Mortgaged Premises.
Section 9.
<PAGE> 103
If at any time Lender shall notify Tenant that an Event of Default has
occurred under the Mortgage and shall demand that any then unpaid rent or
additional rent and any rent or additional rent thereafter payable under the
Lease be paid directly to Lender, then Tenant shall thenceforth and until
notified by Lender that the matter in default has been paid or remedied pay such
rent or additional rent to Lender as the same becomes due under the Lease,
without the necessity for further notice and without obligation on the part of
Tenant to inquire whether or not default under the Mortgage occurred or has been
remedied. Any such payment made by the Tenant to Lender shall discharge in full
Tenant's obligation to make that payment to Landlord.
Section 10.
This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall apply to, bind and inure to the benefit of the parties hereto
and their respective successors and assigns. As used herein "Lender" shall
include any subsequent holder of the Mortgage. This Agreement shall supersede
and replace any agreement entered into prior to the date hereof by Tenant (or
any predecessor in interest of Tenant under the Lease) with any previous holder
of a mortgage covering the Mortgaged premises, which has been assigned to
Lender.
Section 11.
This Agreement shall be construed in accordance with the laws of the State
in which the Leased Property is situate.
[remainder of page intentionally left blank]
<PAGE> 104
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed, sealed and delivered in their respective names and in their behalf;
and if a corporation, by its officers duly authorized, as of the date first
hereinabove set forth.
Landlord:
[______________________________]
By: ___________________________
Tenant:
AMERICOLD LOGISTICS [II], LLC, a Delaware
limited liability company
By: _______________________________
Name:
Title:
Lender:
[__________________________________]
By: [______________________________]
By:____________________________
<PAGE> 105
STATE OF )
) SS.:
COUNTY OF )
On this day of , 1999, before me
personally came to me known, who being by me duly sworn, did
depose and say that he resides at , that he is the of
, the trust described in and which executed the foregoing as
authorized signatory and on behalf of ; that he knows the seal
of said trust, that the seal affixed to said instrument is such trust seal, that
it was so affixed by order of the board of trustees of said trust, and that he
signed his name thereto by like order.
In witness whereof I hereunto set my hand and official seal.
-------------
Notary Public
(Notarial Seal)
STATE OF )
) SS.:
COUNTY OF )
On this day of , 1999, before me
personally came to me known, who by me being duly sworn, did
depose and say that he resides at , that he is the of
., the of , the limited partnership
described in and which executed the foregoing instrument; that it was executed
by authority of the board of directors of said corporation and that he signed
his name thereto by like authority; and he acknowledged to me that said
instrument was executed by said corporation for and on behalf of said limited
partnership for the purposes therein mentioned.
<PAGE> 106
-------------
Notary Public
(Notarial Seal)
STATE OF )
) SS.:
COUNTY OF )
On this day of , 1999, before me personally
came to me known, who being by me duly sworn, did depose and say
that he resides at , that he is the of
, the corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation, that such corporate seal
was affixed to the foregoing instrument; that it was so affixed by order of the
Board of Directors of said Corporation, and who thereupon signed his name
thereto by like order.
In witness whereof I hereunto set my hand and official seal.
-------------
Notary Public
(Notarial Seal)
<PAGE> 107
Schedule 15.4
Arbitration Procedures
Arbitration shall be held in the city of Atlanta, Georgia in accordance with the
rules of the American Arbitration Association then in effect. There shall be one
arbitrator appointed in accordance with those rules. As part of the award, the
arbitrator shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. The arbitration
shall commence within thirty (30) days after demand for arbitration is made by a
party hereto. The arbitrator shall render his/her award within thirty (30) days
after the completion of the arbitration and the arbitration shall be held on
consecutive Business Days. Failure by either party to submit to arbitration as
required under this Lease shall result in the arbitrator ruling in favor of the
other party is such other party has submitted to arbitration under this Lease.
Judgement may be entered on the arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction of the
Georgia courts for that purpose. The arbitrator may grant injunctive or other
equitable relief.
<PAGE> 1
Exhibit 10.9
================================================================================
MASTER LEASE AGREEMENT
Dated as of February 28, 1999
Between
AMERICOLD CORPORATION,
as Landlord,
and
AMERICOLD LOGISTICS, LLC,
as Tenant
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
1.1 Leased Property ........................................................1
1.2 Release of Unimproved Parcels ..........................................2
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties .......3
1.4 Initial Term ...........................................................5
1.5 Renewal Terms ..........................................................5
1.6 Limitation of Term as a Result of Ground Lease Terms ...................6
1.7 Condition of the Leased Property .......................................7
ARTICLE II
2.1 Definitions ............................................................7
ARTICLE III
3.1 Rent ..................................................................23
3.2 Net Lease .............................................................28
ARTICLE IV
4.1 No Termination, Abatement, etc ........................................28
4.2 Abatement Procedures ..................................................29
ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property ......................................30
5.2 Tenant's Personal Property ............................................30
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants ......................................................31
-i-
<PAGE> 3
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants ...........................................38
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations ...........................................................39
8.2 Subletting and Assignment; Warehouse Agreements .......................44
8.2.1 Generally .....................................................44
8.2.2 Certain Sublettings and Assignments ...........................44
8.2.3 Landlord's Right to Collect from Assignees and Subtenants .....44
8.2.4 No Release ....................................................45
8.2.5 Required Assignment and Subletting Provisions .................45
8.2.6 Reimbursement of Landlord's Costs .............................46
8.2.7 Warehouse Agreements ..........................................46
8.2.8 Certain Leases Senior .........................................46
8.3 REIT Related Limitations on Subleasing and Warehouse Agreement ........46
8.4 Collateral Assignment of Subleases and Warehouse Agreements to
Landlord ..............................................................47
8.5 Leasehold Mortgages ...................................................47
8.5.1 Landlord's Estate .............................................47
8.5.2 Certain Leasehold Mortgage Requirements .......................47
8.5.3 Leasehold Mortgagee Provisions ................................48
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease ...50
8.5.5 Notice of Arbitration .........................................52
ARTICLE IX
9.1 Maintenance and Repair ................................................52
9.2 Encroachments, Restrictions, etc. .....................................54
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance .............................................................55
10.2 Casualty; Application of Proceeds .....................................61
10.3 Condemnation ..........................................................64
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ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures ............................................65
ARTICLE XII
12.1 Events of Default .....................................................66
12.2 Certain Remedies ......................................................67
12.3 Damages ...............................................................67
12.4 Waiver ................................................................69
12.5 Application of Funds ..................................................69
ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default .............................70
ARTICLE XIV
14.1 Holding Over ..........................................................70
ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance ......................................71
15.2 Attornment ............................................................71
15.3 Notice of Default to Landlord's Lender ................................72
15.4 Modifications to Secure Financing .....................................72
15.5 Delivery of Notices to Landlord's Lender ..............................72
15.6 Right of Landlord's Lender to Enforce Lease ...........................72
15.7 Exercise of Landlord's Discretion .....................................73
ARTICLE XVI
16.1 Indemnification .......................................................73
ARTICLE XVII
17.1 No Waiver .............................................................74
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ARTICLE XVIII
18.1 Remedies Cumulative ...................................................75
ARTICLE XIX
19.1 Acceptance of Surrender ...............................................75
ARTICLE XX
20.1 No Merger of Title ....................................................75
ARTICLE XXI
21.1 Conveyance by Landlord ................................................75
ARTICLE XXII
22.1 Quiet Enjoyment .......................................................76
ARTICLE XXIII
23.1 Notices ...............................................................76
ARTICLE XXIV
24.1 Appraisers ............................................................77
ARTICLE XXV
25.1 General REIT Provisions ...............................................78
25.1.1 REIT Requirements .............................................78
25.1.2 Satisfaction of REIT Requirements .............................79
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions ....................................79
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ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims ....................................................80
27.2 Severability ..........................................................80
27.3 Maximum Permissible Rate ..............................................80
27.4 Headings ..............................................................80
27.5 Exculpation ...........................................................80
27.6 Transfer of Licenses ..................................................81
27.7 Exhibition of Leased Property .........................................81
27.8 Entire Agreement ......................................................81
27.9 Governing Law .........................................................81
27.10 No Waiver .............................................................81
27.11 Successors and Assigns ................................................81
27.12 Modifications in Writing ..............................................81
27.13 No Waiver .............................................................81
27.14 Claims Against Landlord ...............................................82
ARTICLE XXVIII
28.1 Memorandum of Lease ...................................................82
ARTICLE XXIX
29.1 Landlord's Option to Purchase Tenant's Personal Property ..............82
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LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A-1 - Legal Description of the Land
EXHIBIT 1.5(b) - List of Ground Leases and Expiration Dates
EXHIBIT 2.1(a) - Release Amounts
EXHIBIT 3.1(a) - Minimum Rent Allocations
EXHIBIT 3.1(b) - Calculation of Percentage Rent
EXHIBIT 8.2.8 - Certain Superior Leases
SCHEDULE 9.1(b) - Capital Expenditure Responsibilities
EXHIBIT 15.1 - Form of Non-Disturbance Agreement
SCHEDULE 15.4 - Arbitration Procedures
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MASTER LEASE AGREEMENT (this "Lease"), dated as of the 28th day of
February, 1999, between AMERICOLD CORPORATION, an Oregon corporation
("Landlord"), having offices c/o Vornado Realty Trust, Park 80 West, Plaza II,
Saddle Brook, New Jersey 07663 Attention: Chief Financial Officer, and AMERICOLD
LOGISTICS, LLC, a Delaware limited liability company ("Tenant"), having its
principal offices at 10 Glenlake Parkway, 9th Floor, Atlanta, Georgia 30328,
Attention: Chief Executive Officer.
RECITALS
WHEREAS, Landlord has agreed to let to Tenant, and Tenant has agreed to
lease from Landlord, certain parcels of real property and improvements each for
use and operation as dry and cold warehousing facilities and related uses,
defined hereinbelow as the "Leased Property" (all capitalized terms used but not
elsewhere defined herein shall have the meaning provided therefor in Article II
hereof).
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE I
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following
(collectively, the "Leased Property"):
(i) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit A attached hereto and made a part hereof
(collectively, the "Land");
(ii) all buildings, structures, Fixtures and other improvements of
every kind, including alleyways and connecting tunnels, sidewalks, utility
pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased
Improvements");
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(iii) all easements, rights and appurtenances relating to the Land
and the Leased Improvements; and
(iv) all permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components
thereof, now and hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air- and
water-pollution-control, waste-disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire- and theft-protection
equipment, and built-in oxygen and vacuum systems, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto
to constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but excluding all items included within
Tenant's Personal Property (collectively the "Fixtures").
1.2 Release of Unimproved Parcels. Notwithstanding anything herein to the
contrary, Landlord shall have the right from time to time to terminate this
Lease, with respect to any Unimproved Parcels located at the Leased Property as
well as grant in connection therewith in respect of the Leased Property
remaining subject to this Lease reasonable easements, restrictions, covenants,
reservations and rights of way for, among other things, traffic circulation,
ingress, egress, parking, access, water and sewer lines, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes at no
cost to Landlord and with no adjustment in Rent; provided, in each such case,
(x) such Unimproved Parcel shall be used either for the purpose of erecting,
maintaining and operating cold or dry storage warehouses or other structures and
improvements not inconsistent with the use of the related Leased Property, and
(y) such termination will not materially adversely affect either the value of
the remaining portion of the related Leased Property (as distinguished from the
value of the entire Leased Property) or the net operating income of the
remaining portion of the Leased Property (taking into account, to the extent
applicable, any potential loss of revenue resulting if the transfer and
development of the Unimproved Parcel by Landlord were not to occur), as
supported by the Officer's Certificate of Landlord described below. As used
herein, "Unimproved Parcel" shall mean, with respect to a Leased Property, one
or more land areas comprising such Leased Property on which no improvements
generating Receipts are situate, and not materially required for the generation
of Receipts. In connection with any termination permitted pursuant to this
Section, Tenant agrees to execute and deliver any instrument reasonably
necessary or appropriate to facilitate said action, subject to Tenant's receipt
of:
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1. a plot plan identifying the location of the applicable Unimproved
Parcel;
2. a metes and bounds description of the portion of such Unimproved
Parcel; and
3. an amendment to the legal description attached as an exhibit to this
Lease implementing the proposed release, including a metes and
bounds description of the portion of the Land at the relevant Leased
Property that will continue to be subject to this Lease after the
proposed termination.
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.
(a) Subject to the terms of this Section, if, at any time during the Term,
in the good faith judgment of Tenant (as evidenced by an Officer's Certificate
on behalf of Tenant which describes the basis for such judgment), (x) any Leased
Property becomes or imminently will become uneconomic or unsuitable for its
Primary Intended Use, and will remain uneconomic or unsuitable for such use for
the foreseeable future, and Tenant undertakes to cease its operation of such
Leased Property for its Primary Intended Use as soon as is reasonably
practicable or (y) a Default hereunder relating to a particular Leased Property
has occurred and is continuing and Tenant, notwithstanding the exercise of
reasonable diligence, is unable to cure such Event of Default other than by
terminating this Lease with respect to the Leased Property in question (in each
case, any such Leased Property, an "Uneconomic Property"), then, unless
otherwise prohibited by the terms of any Landlord's Debt, Tenant shall have the
right, so long as (i) no Event of Default shall have occurred and be continuing
(other than one arising from the Default described in clause (y) above), and
(ii) any other requirements relating to the substitution of such Uneconomic
Property under any applicable Landlord's Loan Document have been satisfied, to
purchase such Uneconomic Property described in clause (x) above in accordance
with the terms of this Section. Tenant shall signify its election to exercise
such purchase option by giving notice of the election to Landlord, accompanied
by the Officer's Certificate described in the immediately preceding sentence.
Tenant's restoration of the operations at any Uneconomic Property as a result of
events which are not within the control of Tenant and were not foreseeable by
Tenant at the time such Officer's Certificate was delivered shall not be deemed
to evidence Tenant's bad faith in making the determination which is the subject
of such Officer's Certificate.
(b) In the event Tenant elects to exercise its right to purchase a Leased
Property pursuant to this Section, Tenant shall, as described in clause (x)
above, either:
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<PAGE> 11
(i) offer to Landlord a property owned by Tenant of like kind and
quality to the Leased Property proposed to be purchased by Tenant (each a
"New Leased Property"), which New Leased Property, if accepted by Landlord
(in Landlord's reasonable discretion), would serve as consideration for
Tenant's purchase of the Leased Property in question (each a "New Property
Purchase"); or
(ii) offer to pay Landlord the Termination Amount for the Uneconomic
Property in question (each a "Cash Purchase"). Landlord shall have sixty
days from the date of such offer to either accept or reject Tenant's offer
to make a Cash Purchase. Upon the closing of the Cash Purchase or
Landlord's rejection thereof, (x) this Lease shall terminate in respect of
the Uneconomic Property in question (except for such terms as are
expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set
forth on Exhibit 3.1(a) shall be adjusted to reflect the portion of
Minimum Rent allocated to each Leased Property remaining subject to the
terms of this Lease (except to the extent otherwise indicated on said
Exhibit 3.1(a)).
(c) As a condition to any New Property Purchase, Tenant shall deliver to
Landlord (i) a deed evidencing the transfer of the fee interest in the New
Leased Property to Landlord, (ii) a Title Policy with respect to the New Leased
Property, (iii) a survey of the New Leased Property, (iv) environmental reports
relating to the New Leased Property, (iv) an amendment to this Lease (x)
terminating this Lease with respect to the Uneconomic Property and (y) causing
the New Leased Property to become a Leased Property hereunder and (v) any and
all other documents, reports, legal opinions or other items reasonably requested
by Landlord. Upon any such purchase, the Uneconomic Property removed will no
longer be a Leased Property hereunder and this Lease, as such relates to the
Uneconomic Property in question, will be terminated. Upon any New Property
Purchase, the applicable New Leased Property shall be a Leased Property
hereunder and the percentage of Minimum Rent (as set forth on Exhibit 3.1(a)
hereto) assigned to the applicable Uneconomic Property shall be assigned to such
New Leased Property.
(d) As a condition to any Cash Purchase, Tenant shall pay to Landlord (in
immediately available federal funds) the applicable Termination Amount and shall
deliver to Landlord (i) an amendment to this Lease terminating this Lease with
respect to the Uneconomic Property (ii) any and all other documents, reports,
legal opinions or other items reasonably requested by Landlord. Upon any such
purchase, the Uneconomic Property removed will no longer be a Leased Property
hereunder and this Lease, as such
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relates to the Uneconomic Property in question, will be terminated in accordance
with the last sentence of Section 1.3(b)(ii) herein.
(e) Tenant hereby covenants and agrees that any purchase of an Uneconomic
Property pursuant to this Section shall not in any way impair the obligations of
Tenant to make payments of Rent hereunder.
(f) Tenant hereby agrees to pay all expenses in connection with any
actions taken pursuant to this Section, including all out-of-pocket expenses and
costs incurred by Landlord or Landlord's Lender (or any of their respective
affiliates), regardless whether a substitution is ultimately effected, including
fees and costs of: audits; travel; accounting services; environmental and
engineering reports; credit reports; appraisals; property evaluations;
preparation, negotiation, execution and delivery of any amendments of or
documents supplemental to this Lease or Landlord's Loan Documents; attorneys'
fees and expenses of Landlord and Landlord's Lender; transfer, transfer gains,
intangibles, deed and mortgage recording taxes; title insurance; survey; and
document recordings and filings.
1.4 Initial Term. The initial term of this Lease (the "Initial Term")
shall commence on the Commencement Date and shall expire on February 28, 2014,
unless otherwise terminated as provided herein, subject to the terms of Section
1.6.
1.5 Renewal Terms. (a) Subject to Section 1.6, provided (i) no Event of
Default shall have occurred and be continuing hereunder or under the Other
Leases and (ii) the tenant under each of the Other Leases shall have exercised
its respective renewal option under the applicable Other Lease to the extent the
same is available, Tenant shall have the right to renew this Lease (as to all,
but not less than all, the Leased Property subject to this Lease at such time)
for two (2) successive five (5) year terms ("Extended Terms") upon giving
written notice to Landlord of each such renewal at least eighteen (18) months
prior to the termination of the then current Term. During each such Extended
Term, all of the terms and conditions of this Lease shall continue in full force
and effect, except that the Minimum Rent for and during each Extended Term shall
be the greater of (i) the then current fair market rental ("Fair Market
Rental"), which unless otherwise mutually agreed to by Landlord and Tenant shall
be determined by the appraisal procedure set forth in Article XXIV and (ii) the
Minimum Rent for the Lease Year immediately preceding the Extended Term plus
five percent (5%). Tenant's failure to exercise its renewal option as to the
first Extended Term shall result in the loss of its renewal option as to the
second Extended Term.
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(b) Subject to Section 1.6, Landlord shall exercise renewal rights (if
any) that are available under each Ground Lease so as to provide Tenant, to the
greatest extent possible, with an Extended Term described in Section 1.5(a),
provided that (without waiving Landlord's rights under Section 1.6) Landlord
shall not be required to exercise any renewal option in respect of any Ground
Lease unless prior to such time Tenant shall have duly exercised its renewal
option hereunder.
(c) If Landlord or any Affiliate of Landlord shall purchase any fee or
other interest in a Leased Property that is superior to the interest of
Landlord, such as the ground lessor's interest in a Ground Leased Property, then
the estate of Landlord and such superior interest shall not merge and, without
limiting the foregoing, Tenant shall continue to be liable hereunder to pay any
ground rent and perform any other obligations of the lessee under such Ground
Lease. Further, in the event Landlord or any Affiliate of Landlord acquires a
ground lessor's interest in a Ground Leased Property and the term of the related
Ground Lease shall have expired, then Landlord or such Affiliate shall have the
right to enter into a new Ground Lease and receive from Tenant reimbursement (or
payment) of ground rent in an amount equal to the same ground rent as was
payable under the expired Ground Lease, increased by 5 percent, and increased
again by 5 percent every fifth anniversary of the commencement of the new Ground
Lease.
1.6 Limitation of Term as a Result of Ground Lease Terms. With respect to
any Ground Leased Property the Ground Lease for which has an expiration date
(taking into account any renewal options thereunder as of the date hereof or
hereafter exercised) prior to the expiration of Term (taking into account any
exercised renewal options hereunder), (i) this Lease shall expire with respect
to such Ground Leased Property on the business day immediately preceding such
Ground Lease expiration date (taking into account the terms of the following
clause (ii)), and (ii) if a Ground Lease renewal option is not exercised as of
the date hereof and Landlord has not (in its sole discretion) determined to
exercise such renewal option, then Tenant may require Landlord to exercise such
renewal term on the following terms and conditions: (1) no default on the part
of Tenant hereunder or Event of Default shall have occurred and be continuing,
(2) Tenant shall notify Landlord, on a date reasonably prior to the date on
which such renewal option must be exercised, that Tenant wishes Landlord to
exercise such renewal option, and (3) such notice shall constitute Tenant's
agreement to pay to Landlord (as and when the same become due and payable) all
base and additional rent and other sums due and payable under the affected
Ground Lease during such renewal term (including the portion thereof extending
beyond the Term), provided that Landlord shall credit against amounts due under
this clause (3), in respect of the portion of the Ground Lease renewal term,
extending beyond the Term any rent and similar payments Landlord receives from
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<PAGE> 14
any third party in consideration for the lease of the premises in respect of
such portion of the Ground Lease renewal term.
1.7 Condition of the Leased Property. Tenant acknowledges (a) receipt and
delivery of possession of the Leased Property, (b) that Tenant has inspected and
otherwise has knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease and (c) that Tenant has found the same to
be in good order and repair and satisfactory for its purposes hereunder. Tenant
is leasing the Leased Property "AS IS" in its present condition. Tenant waives
any claim or action against Landlord in respect of the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, AS TO ACCESS TO THE LEASED
PROPERTY OR AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, OR AS TO THE ABSENCE OF ANY DEFECT, LATENT OR PATENT, IT BEING AGREED
THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
ARTICLE II
2.1 Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, (iv) the words "herein," hereof" and "hereunder" and other words of
similar import refer to this Lease as a whole and not to any particular Article,
Section or other subdivision, (v) the term "including" and words of similar
import shall be deemed to be followed by the phrase "without limitation," (vi)
the term "attorneys' fees" and "attorneys' fees and expenses" and words of
similar import shall be deemed preceded with the word "reasonable," and (vii)
the phrase "Leased Property" shall be deemed to mean a specific Leased Property
or all of the Leased Property, as the context may require, and shall be deemed
to be followed by the phrase "or any portion thereof".
Additional Charges: As defined in Article III.
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Affiliate: A Person or Persons directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with the
Person or Persons in question. The term "control", as used in the immediately
preceding sentence, shall mean, with respect to a Person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting
rights attributable to the shares of the controlled corporation and, with
respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled Person.
Aggregate Threshold Amount: As defined in Article VIII.
Alteration: As defined in Section 8.1.
Annual Budget: Tenant's annual budget setting forth, in reasonable detail,
Tenant's good faith estimates of the anticipated results of operations of the
Leased Property (taken as a whole), including Receipts, all Operating Expenses,
management fees and capital expenditures, approved by Landlord in accordance
with Section 6.1(h)(4) hereof.
Business Day: Any day other than a Saturday, Sunday or any other day on
which national banks in New York, New York are not open for business.
Cash: Coin or currency of the United States of America or immediately
available federal funds, including such funds delivered by wire transfer.
Cash Management Procedures: As defined in Article XI.
Casualty: As defined in Section 10.2.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: The date of this Lease.
Condemnation: As defined in Section 10.3.
CPI Increase: When used to qualify a fixed dollar amount set forth herein
at the date in question, such fixed dollar amount, as increased by the
percentage by which the Consumer Price Index for All Items, Urban Consumers
published by the United States Department of Labor, applicable to the United
States (all items) (base year 1982-84 =
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<PAGE> 16
100) (the "Consumer Price Index"), or any successor index thereof as such
successor index may be appropriately adjusted to establish substantial
equivalence with the Consumer Price Index, shall have increased over such
Consumer Price Index (or successor, equivalent or comparable index, as
applicable) for the month in 1998 in which the Commencement Date occurs. If the
Consumer Price Index is converted to a different standard reference base or
otherwise revised, then whenever the determination of a CPI Increase figure is
called for herein, the Consumer Price Index shall be converted in accordance
with the conversion factors published by the United States Department of Labor,
Bureau of Labor Statistics, or, if said Bureau shall not publish the same, as
the same may be published by Prentice-Hall, Inc. or any other nationally
recognized publisher of similar statistical information selected by Landlord. If
the Consumer Price Index ceases to be published and there is no successor
thereto, such other index as Landlord shall reasonably select shall be
substituted for the Consumer Price Index.
Credit Facility: Shall mean a clean, irrevocable, unconditional
transferable letter of credit, payable on sight draft only, which shall not be
secured by any Leased Property, for the benefit of Landlord (or, at Landlord's
option, Landlord's Lender) and entitling such beneficiary to draw thereon in New
York, New York or in such other city as Landlord's office may be located (or, at
Landlord's option, the corporate trust office of Landlord's Lender) may be
located at the time of the issuance of such letter of credit, issued by a
domestic bank or the U.S. agency or branch of a foreign bank the long-term
unsecured debt rating of which at the time such letter of credit is delivered
and throughout the term of such letter of credit is not less than the then
Required Rating, or, if the Required Rating is "AAA" and there are no domestic
banks or U.S. agencies or branches of a foreign bank having such long-term
unsecured debt rating then issuing letters of credit, then such letter of credit
may be issued by a domestic bank the long-term unsecured debt rating of which is
not lower than "AA" by the Rating Agencies. Such Credit Facility shall provide
that (i) it will automatically renew unless the issuer of such Credit Facility
delivers written notice to the beneficiary (and to Landlord, if Landlord is not
the beneficiary) at least thirty (30) days prior to its expiration that such
Credit Facility will not be renewed and (ii) if not so renewed, the beneficiary
shall be entitled to draw upon the full amount thereof. Without in any way
limiting the generality of the foregoing, if any Credit Facility is not renewed
or replaced with another Credit Facility prior to the date that is thirty (30)
days prior to its expiration, the beneficiary shall be entitled to draw upon the
full amount thereof.
Crescent Realty: Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership.
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Crescent Trust: Crescent Real Estate Equities Company, a Texas real estate
investment trust.
Default: The occurrence of any event hereunder which, but for the giving
of notice or passage of time, or both, would be an Event of Default hereunder.
Depositary: Landlord or, at Landlord's election, Landlord's Lender or a
depositary selected by Landlord, it being agreed that different Persons may
serve as Depositary at any one time and from time to time.
Eligible Collateral: U.S. Government Securities, Debt Securities, a Credit
Facility, Cash and Cash Equivalents, and a guaranty of payment and performance
(in form and substance reasonably satisfactory to Landlord) by Vornado Trust or
Vornado Realty (provided Vornado Trust or Vornado Realty, as applicable, has a
long-term unsecured debt rating at least equal to the Investment Grade rating)
and/or Crescent Trust or Crescent Realty (provided Crescent Trust or Crescent
Realty, as applicable, has a long-term unsecured debt rating at least equal to
the Investment Grade rating), or any combination of the foregoing.
Environmental Laws: Any and all of the following as applicable to Tenant
and/or the Leased Property: present and future federal, state and local laws
(whether under common law, statute, ordinance, rule, regulation or otherwise),
court or administrative orders or decrees, requirements of permits issued with
respect thereto, and other requirements of governmental authorities relating to
any Hazardous Substances or Hazardous Substances Activity (including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss.ss.9601, et seq.) as heretofore or hereafter amended from time to
time).
Event of Default: As defined in Article XII.
Extended Term: As defined in Article I.
Fair Market Rental: With respect to a particular Leased Property, the
rental that a willing tenant not compelled to rent would pay a willing landlord
not compelled to let for such Leased Property, excluding all capital
improvements (as distinguished from necessary repairs and replacements) paid for
by Tenant, determined in accordance with the appraisal procedures set forth in
Article XXIV or in such other manner as shall be mutually acceptable to Landlord
and Tenant.
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Fair Market Value: With respect to a particular Leased Property, the price
that a willing buyer not compelled to buy would pay a willing seller not
compelled to sell for such Leased Property, excluding all capital improvements
(as distinguished from necessary repairs and replacements) paid for by Tenant,
and (a) assuming the same is unencumbered by this Lease, (b) determined in
accordance with the appraisal procedures set forth in Article XXIV or in such
other manner as shall be mutually acceptable to Landlord and Tenant, and (c) not
taking into account any reduction in value resulting from any indebtedness to
which such Leased Property is subject except as expressly provided hereinbelow.
In determining such Fair Market Value, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions of
any encumbrance which is not removed at or prior to the closing of the
transaction as to which such Fair Market Value determination is being made shall
be taken into account.
Fiscal Year: Each twelve (12) month period from January 1 to December 31.
Fixtures: As defined in Article I.
Governmental Authority: Any court, board, agency, commission, office or
authority of any nature whatsoever of or for any governmental unit (federal,
state, county, district, municipal, city or otherwise), whether now or hereafter
in existence.
Ground Lease: Each of the ground leases identified on Exhibit 1.5(b)
hereto.
Ground Leased Property: Collectively, the Leased Property identified on
Exhibit 1.5(b) hereto.
Hazardous Substances: Any of the following: (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance", "hazardous material", "hazardous waste", "extremely hazardous
waste", "infectious waste", "toxic substance", "toxic pollutant" or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity" and (ii) any
petroleum, natural gas, natural gas liquid, liquefied natural gas, synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas), ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters, and other wastes associated with
the exploration, development or reduction of crude oil, natural gas, or
geothermal resources. Without limiting the foregoing, Hazardous
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Substances shall also include asbestos and asbestos-containing materials and
polychlorinated biphenyls.
Initial Term: As defined in Article I.
Institutional Lender: Any one or more of the following: a bank, investment
bank, trust company, broker-dealer, insurance company, separate account, pension
fund, retirement plan, governmental agency, real estate investment trust,
investment company, investment company adviser or pension fund adviser, or any
Affiliate of any of the foregoing, in each case, whether acting for its own
account or as a trustee, fiduciary or agent of others.
Insurance Premiums: As defined in Section 10.1(d).
Interest Rate: A rate equal to 90-day U.S. Treasuries plus 2.00%.
Insurance Requirements: All terms of any insurance policy required
hereunder covering or applicable to the Leased Property, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Leased Property or
any use of the Leased Property.
Land: As defined in Article I with respect to the Leased Property.
Landlord: Americold Corporation, an Oregon corporation, and its successors
and assigns.
Landlord Liens: Liens on or against the Leased Property or this Lease or
any payment of Rent (i) in favor of any taxing authority by reason of any tax
excluded from the definition of "Taxes" hereunder owed by Landlord or (ii)
securing Landlord's Debt.
Landlord's Debt: The outstanding principal amount borrowed by Landlord
from time to time, together with all interest accrued and unpaid thereon, and
all other sums due in connection therewith, including any yield-maintenance
payments or other prepayment premium or penalty, the payment of which may be
secured by Landlord's interest in the Leased Property and the Rent and other
amounts payable hereunder.
Landlord's Lender: The holder of Landlord's Debt from time to time,
provided that if Landlord's Debt shall be held legally or beneficially by more
than one Person, then
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Landlord's Lender shall be deemed to refer to only one such Person as selected
by Landlord in a notice to Tenant or, failing such selection, as selected by
Tenant.
Landlord's Loan Documents: The instrument(s) and agreement(s) evidencing,
establishing and securing Landlord's Debt, including (to the extent applicable)
a promissory note, loan agreement, a mortgage, deed of trust or deed to secure
debt and assignment of leases and rents.
Lease Year: Any Fiscal Year or portion thereof during the Term, commencing
with the 1999 Fiscal Year.
Leased Improvements; Leased Property: Each as defined in Article I.
Leasehold Mortgage: Any mortgage, deed of trust or other security interest
encumbering Tenant's leasehold estate hereunder, or direct or indirect ownership
interests in Tenant, which has been granted to secure repayment of debt of
Tenant or the holders of such ownership interests.
Leasehold Mortgagee: The holder of a Leasehold Mortgage from time to time.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Landlord, Tenant
or the Leased Property, or the construction, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Tenant, at any time in force affecting the Leased Property
(other than any subleases, this Lease, and service contracts and other similar
agreements now in effect or hereafter entered into in the ordinary course of
Tenant's business), including any which may (i) require repairs, modifications
or alterations in or to the Leased Property, or (ii) in any way limit the use
and enjoyment thereof.
Litigation Costs: All costs reasonably incurred by Landlord in connection
with the enforcement of any provision of this Lease, including attorneys' fees
and expenses, court costs and reasonable consultants' fees and expenses.
Lien: Any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting the Leased Property or Tenant, or any interest therein,
including any conditional sale or other
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title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
notice or other instrument and mechanics', materialmen's and other similar liens
and encumbrances.
Major Subtenant: A tenant under a Sublease for all or substantially all of
a Leased Property.
Material Agreement: Operating Agreements and agreements (i) requiring
payment by Tenant of more than $2,000,000 per annum and not cancellable without
a penalty of $500,000 or more, or (ii) pursuant to which Tenant is entitled to
receive more than $2,000,000 per year, relating, in each case, to the ownership,
development, use, operation, leasing, maintenance or repair of the Leased
Property, provided "Material Agreements" shall not include agreements pursuant
to which either party thereto may discontinue the provision of, or request for,
services, or the delivery of goods to Tenant for storage, without payment of any
penalty or without notice to the other party (regardless whether the agreement
is formally terminated) .
Material Alteration: Any Alteration to be performed by or on behalf of
Tenant at a Leased Property (other than an Alteration the cost of which a
Subtenant is obligated to reimburse to Tenant and which Tenant reasonably
believes will be so reimbursed), the cost of which as reasonably estimated by a
Qualified Architect or Engineer exceeds the Threshold Amount.
Material Casualty: As defined in Section 10.2.
Material Condemnation: As defined in Section 10.2.
Minimum Rent: As defined in Article III.
Net Operating Income: Operating Income less Operating Expenses.
New Leased Property: As defined in Article I.
Notice: As defined in Article XXIII (regardless whether the same is
capitalized herein).
Officer's Certificate: A certificate made by an individual authorized to
act on behalf of Tenant and, to the extent applicable, any constituent Person
with respect to Tenant. Without limiting the foregoing, if the individual
signing the certificate is doing
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so on behalf of a corporation, then such individual shall hold the office of
President, Vice President or Chief Financial Officer (or the equivalent) with
respect to such corporation.
Operating Agreements: Reciprocal easement and/or operating agreements;
covenants, conditions and restrictions; and similar agreements affecting any
Leased Property and binding upon and/or benefitting Landlord or Tenant and other
third parties. Without limiting the foregoing, "Operating Agreements" shall not
include any Warehouse Agreements.
Operating Expenses: For any specified period, on an accrual basis, all
expenses paid (or due and payable, except to the extent that the same constitute
Trade Payables that are not more than 60 days outstanding) by Tenant during such
period in connection with the operation of the Leased Property, as well as
bookkeeping, accounting, insurance costs, wages and other costs and expenses
incurred for the Leased Property and legal expenses incurred in connection with
the operation of the Leased Property, determined, in each case, consistently
with GAAP. "Operating Expenses" shall not include (1) depreciation or
amortization or other noncash items (other than expenses that are due and
payable but not yet paid), (2) the principal of and interest on any indebtedness
(except for any payments required under any Permitted Equipment Leases), (3)
income taxes or other taxes in the nature of income taxes, (4) any expenses
(including legal, accounting and other professional fees, expenses and
disbursements) incurred in connection with and allocable to any indebtedness
(except for any of the same in connection with any Permitted Equipment Leases),
(5) the cost of any capital expenditures (except for any payments required under
any Permitted Equipment Leases), (6) distributions to the shareholders, members
or partners in Tenant or any asset management fees or similar compensation
payable to any Affiliate of Tenant, and (7) any item of expense which otherwise
would be considered within Operating Expenses but is paid directly by any
Subtenant. Expenses that are accrued as Operating Expenses during any period
shall not be included in Operating Expenses when paid during any subsequent
period.
Operating Income: For any specified period, on an accrual basis, all
income received or accrued by Tenant during such period in connection with the
operation of the Leased Property, determined consistent with GAAP, including the
following, but without duplication:
(i) all rents, rent equivalents, moneys payable as damages pursuant
to a Lease or in lieu of rent or rent equivalents, royalties (including
all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and
other deposits), accounts, cash, issues,
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profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or
benefit of Tenant or its agents or employees from any and all sources
arising from or attributable to the Leased Property, including any
obligations now existing or hereafter arising or created out of the lease,
sublease, license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Tenant;
(ii) charges received by Tenant for electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any other energy,
telecommunications, telephone, utility or similar items, including
overtime usage, HVAC equipment charges, sprinkler charges, escalation
charges, license fees, maintenance fees, charges for improvements, Taxes
and other amounts payable to Tenant, under any Lease or other agreement
relating to the Leased Property pursuant to which any portion of the
Leased Property, utilities, facilities, equipment, parking facilities or
other services are furnished by Tenant, but excluding any security
deposits received;
(iii) condemnation awards to the extent that such awards are
compensation for lost rent;
(iv) business interruption and loss of "rental value" insurance
proceeds;
(v) income from cash holdings and interest from notes in lieu of
rent; and
(vi) all other amounts received by Tenant during such period in
respect of items which in accordance with GAAP would be included in
Tenant's annual financial statements for such period or any other period
as operating income of the Leased Property and which are reasonably
expected to recur during the next two (2) years following the date on
which Net Cash Flow or Net Operating Income is being calculated.
Notwithstanding the foregoing clauses (i) through (vi), Operating Income shall
not include (A) any condemnation or insurance proceeds (other than of the types
described in clauses (i), (ii) and (iii) above), (B) any proceeds resulting from
the sale, exchange, transfer, financing or refinancing of all or any part of the
Tenant's interest in the Leased Property or any interest therein (other than of
the types described in clause (iii) above), (C) any repayments received from
Subtenants of principal loaned or advanced to Subtenants by Tenant, or (D) any
type of income that would otherwise be considered
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Operating Income pursuant to the provisions above but is paid directly by any
Subtenant to a Person other than Tenant or its agent.
Other Charges: All ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including vault charges and license fees for
the use of vaults, chutes and similar areas adjoining a Leased Property, now or
hereafter levied or assessed or imposed against any Leased Property or any part
thereof (subject to the same exclusion set forth in the proviso in the
definition of "Taxes").
Other Leases: Collectively, (i) that certain Master Lease Agreement, dated
as of April 22, 1998, between URS Real Estate, L.P., as Landlord, and URS
Logistic, Inc., as amended, (ii) that certain Master Lease Agreement, dated as
of April 22, 1998, between Americold Real Estate, L.P., as landlord, and
Americold Corporation, as tenant, as amended, and (iii) such other Master Lease
Agreements as may be entered into from time to time between Landlord or its
Affiliates and Tenant or its Affiliates.
Overdue Rate: On any date, a rate equal to the Interest Rate plus 2%, but
in no event greater than the maximum rate then permitted under applicable law.
Percentage Rent: As set forth in Exhibit 3.1(b) attached hereto.
Permitted Encumbrances: Collectively, (a) all Liens disclosed in the Title
Policy, (b) Liens, if any, for Taxes or Other Charges not yet payable or
delinquent or which are being diligently contested in good faith in accordance
with this Lease, (c) Liens in respect of property or assets imposed by law which
were incurred in the ordinary course of business, such as carriers',
warehousemen's, landlord's, mechanics', materialmen's, repairmen's and other
similar Liens arising in the ordinary course of business, and Liens for workers'
compensation, unemployment insurance and similar programs, in each case arising
in the ordinary course of business which are being diligently contested in good
faith in accordance with the terms hereof, (d) Subleases, (e) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances (including any of such matters incurred or
entered into by Tenant in the ordinary course of business) which in each case do
not diminish in any material respect the value of the affected Leased Property
or affect in any material respect the validity, enforceability or priority of
this Lease or the Liens created by Landlord's Loan Documents, and (f) such other
title and survey exceptions as Landlord has approved or may approve in writing.
In addition, "Permitted Encumbrances" shall include any Landlord Liens.
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Permitted Equipment Leases means capital and/or operating lease
obligations in respect of equipment used at the Leased Property with an
aggregate annual rent obligation reasonable and customary for facilities such as
the Leased Properties, as mutually agreed upon by Landlord and Tenant.
Permitted Investments: The following, subject to qualifications
hereinafter set forth:
1. Obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or instrumentality
thereof, when such obligations are backed by the full faith and
credit of the U.S. These obligations include, but are not limited
to:
o U.S. Treasury obligations All direct or fully guaranteed
obligations
o Farmers Home Administration Certificates of beneficial
ownership
o General Services Administration Participation
certificates
o U.S. Maritime Administration Guaranteed Title XI
financing
o Small Business Administration Guaranteed participation
certificates Guaranteed pool certificates
o U.S. Department of Housing and Urban Development Local
authority bonds
o Washington Metropolitan Area Transit Authority
Guaranteed transit bonds
2. Federal Housing Administration debentures.
3. Obligations of government-sponsored agencies that are not backed by
the full faith and credit of the U.S., where the obligation is
limited to those instruments that have a predetermined fixed dollar
amount of principal due at maturity that cannot vary or change.
These obligations are limited to:
o Federal Home Loan Mortgage Corp. (FHLMC) Debt
obligations
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o Farm Credit System (formerly: Federal land Banks,
Federal Intermediate Credit Banks, and Banks for
Cooperatives) Consolidated systemwide bonds and notes
o Federal Home Loan Banks (FHL Banks) Consolidated debt
obligations
o Federal National Mortgage Association (FNMA) Debt
obligations
o Student Loan Marketing Association (SLMA) Debt
obligations
o Financing Corp. (FICO) Debt obligations
o Resolution Funding Corp. (REFCORP) Debt obligations.
4. Federal funds, unsecured certificates of deposit, time deposits,
banker's acceptances, and repurchase agreements having maturities of
not more than 365 days of any bank, the short-term debt obligations
of which are rated "A-1+" (or the equivalent) by the Rating Agencies
or secured by U.S. Treasury obligations (as described in Paragraph 1
above).
5. Deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC).
6. Debt obligations maturing in 365 days or less that are rated AAA or
higher (or the equivalent) by the Rating Agencies.
7. Commercial paper rated "A-1+" (or the equivalent) by the Rating
Agencies and maturing in 365 days or less.
8. Investments in certain short-term debt of issuers rated "A-1" (or
the equivalent) by the Rating Agencies may be permitted with certain
restrictions. The total amount of debt from "A-1" issuers must be
limited to the investment of an amount equal to Monthly Debt Service
Payment Amount. The total amount of "A-1" investments should not
represent more than 20% of the rated issue's outstanding principal
amount and each investment should not mature beyond 30 days.
Investment in "A-1" (or the equivalent) rated securities are not
eligible for reserve accounts, cash collateral accounts, or other
forms of credit enhancement. Short-term debt for purposes of this
definition includes: commercial paper, federal funds, repurchase
agreements, unsecured certificates of deposit, time deposits, and
banker's acceptances.
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9. Investment in money market funds rated "AAAm" or "AAm-G" (or the
equivalent) by the Rating Agencies.
10. Such other investments as shall be approved in writing by Landlord.
Notwithstanding the foregoing, "Permitted Investments": (i) shall exclude any
security with the Standard & Poor's "r" symbol (or any other Rating Agency's
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
"strips"; (ii) shall not have maturities in excess of one year; (iii) as to the
investments described in (1), (3), (4), (5), (6), (7) and (8): the obligations
shall be limited to those instruments that have a predetermined fixed dollar of
principal due at maturity that cannot vary or change; interest may either be
fixed or variable; and any variable interest should be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index; and (iv) shall exclude any investment where the right to receive
principal and interest derived from the underlying investment provide a yield to
maturity in excess of 120 percent of the yield to maturity at par of such
underlying investment. No investment shall be made which requires a payment
above par for an obligation if the obligation may be prepaid at the option of
the issuer thereof prior to its maturity. All investments shall mature or be
redeemable upon the option of the holder thereof on or prior to the earlier of
(x) three (3) months from the date of their purchase or (y) the Business Day
preceding the day before the date such amounts are required to be applied
hereunder.
Person: Any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.
Policies: As defined in Section 10.1.
Primary Intended Use: As defined in Section 6.1.
Qualified Architect or Engineer: Any experienced architect, engineer or
construction manager licensed or registered in the jurisdiction where the
applicable Leased Property is located, if required by the laws of such
jurisdiction.
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Rating Agencies: Any one or more of the following designated by Landlord:
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA, Inc. or
any other nationally-recognized statistical rating agency selected by Landlord.
Receipts: The items described in Operating Income, determined, however, on
a cash basis.
REIT: As defined in Article XXV.
REIT Requirements: As defined in Article XXV.
Release Amount: With respect to each Leased Property, shall refer to the
applicable "Release Amount" as set forth on Exhibit 2.1(a) hereto. Tenant hereby
agrees that in connection with any new Landlord's Debt, the Release Amount in
respect of any Leased Property shall be the greater of the amount set forth on
Exhibit 2.1(a) and the amount required to be paid by Landlord to Lender to
obtain the release of the lien affecting such Leased Property.
Rent: Collectively, (i) the Minimum Rent, (ii) Percentage Rent and (iii)
Additional Charges.
Rental Period. As defined in Article III.
Rent Payment Date. As defined in Article III.
Restoration: As defined in Section 10.2.
State: The State or Commonwealth in which the particular Leased Property
in located.
Sublease. Any lease, sublease, license agreement or occupancy agreement
entered into by Tenant affecting all or any portion of the Leased Property,
provided that Warehouse Agreements shall not be included within the definition
of Subleases.
Subtenant: A subtenant, licensee, occupant or other party to any Sublease.
Superior Interests: As defined in Article XV.
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Superior Party: As defined in Article XV.
Taxes: All real estate and personal property taxes, assessments, fees,
taxes on rents or rentals, water rates or sewer rents and other governmental
charges now or hereafter levied or assessed or imposed against Landlord, Tenant
or the Leased Property or rents therefrom or which may become Liens, provided
that Taxes shall not include any income, franchise, estate, inheritance or gift
taxes, or any other tax imposed on or measured by the net income of Landlord,
except to the extent that the same is in direct substitution for a tax that
would otherwise be included within the definition of "Taxes" hereunder.
Tenant's Personal Property: All motor vehicles, machinery, equipment,
furniture, furnishings, movable walls or partitions, computers or trade fixtures
or all other personal property, and consumable inventory and supplies, now owned
or hereafter acquired by Tenant and located on the applicable Leased Property or
used or useful in Tenant's business on such Leased Property, including all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, except items, if any, included within the
definition of Fixtures.
Term: Collectively, the Fixed Term and any Extended Terms, to the extent
properly exercised by Tenant pursuant to the provisions of Article I, unless
earlier terminated pursuant to the provisions of this Lease.
Termination Amount: With respect to a specified Leased Property, the
greater of the Fair Market Value thereof and the Release Amount therefor.
Threshold Amount: Two million dollars ($2,000,000).
Title Policy: The ALTA (or equivalent) title insurance policy acquired by
Landlord most recently prior to the date hereof (i) naming Landlord as the
insured and (ii) insuring Landlord's ownership of the Leased Property subject to
the exceptions and exclusions set forth therein.
Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is
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caused by the failure of the other party hereto to perform any obligations of
such party under this Lease.
Uneconomic Property. As defined in Article I.
Unimproved Parcel. As defined in Article I.
Unsuitable for Its Primary Intended Use: A state or condition at a Leased
Property such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Tenant, reasonably exercised, the
Leased Property cannot by operated on a commercially practicable basis for its
Primary Intended Use.
Vornado Realty: Vornado Realty L.P., a Delaware limited partnership.
Vornado Trust: Vornado Realty Trust, a Maryland real estate investment
trust.
Warehouse Agreements: Warehousing agreements, logistics and services
agreements, distribution agreements, handling agreements and other similar
agreements in connection with the Primary Intended Use to the extent (but only
to the extent) the same are for goods stored or services rendered at any Leased
Property, in such forms and on such terms as are customarily entered into by
Tenant, together with any amendments and modifications to such agreements.
ARTICLE III
3.1 Rent. Tenant will pay to Landlord, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, at Landlord's address set forth above or at such other place or
to such other person, firms or corporations as Landlord may designate in writing
from time to time, (i) Minimum Rent (as defined below), and (ii) Percentage
Rent. In addition, Tenant will pay to Landlord or the Person otherwise entitled
thereto all Additional Charges during the Term on or before the same are
delinquent.
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(a) Minimum Rent:
For the period commencing on the Commencement Date through February
28, 2014, the sum of SEVEN MILLION FIVE HUNDRED FIFTY SEVEN THOUSAND
AND 00/100 DOLLARS ($7,757,000.00) per annum.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable:
(x) for the period from the Commencement Date through (and including) the
Rent Payment Date (as defined herein) occurring in September, 2000, in
arrears, and,
(y) for the period from (but excluding) the Rent Payment Date occurring in
September, 2000, through the balance of the Term, in advance,
in either case in twelve (12) equal installments on the eleventh (11th) day of
each calendar month of the Initial Term and each Extended Term (the "Rent
Payment Date"); provided that if such 11th day is not a Business Day, then the
Rent Payment Date shall be the next preceding Business Day; provided further
that the advance Minimum Rent installment otherwise payable on the Rent Payment
Date in September, 2000, shall instead be deferred and paid in six (6) equal
installments on each Rent Payment Date occurring in September, 2000 through
February, 2001. Minimum Rent shall be paid for the period of the eleventh (11th)
of each month (or, if applicable, the Commencement Date) through the tenth
(10th) of the next month (or, if applicable, the expiration of the Term) (each,
a "Rental Period"), provided that the first and last payments of Minimum Rent
shall be prorated as to any partial Rental Period, based on the number of days
within the Term during such Rental Period and the number of days in such Rental
Period. Tenant hereby agrees to make reasonable changes with respect to the
definition of "Rental Period" as may be requested in connection with any
Landlord's Debt. The first installment payment of Minimum Rent shall be payable
on March 11, 1999, for the Rental Period beginning with the Commencement Date
and ending March 10, 1999.
Notwithstanding the foregoing, for the period commencing with the
date hereof and expiring on the third (3rd) anniversary of the date hereof, to
the extent that Available Cash is less than the amount of Fixed Rent and
Percentage Rent, as certified by Tenant (together with reasonable documentation
thereof) and agreed to by Landlord, the Fixed Rent and Percentage Rent shall
accrue, and the payment thereof (together with interest at the Interest Rate)
shall be deferred to, the earlier of (A) the third (3rd) anniversary of the date
hereof and (B) such date as Available Cash shall be available, to the extent of
such Available Cash (and Available Cash shall be applied first to interest, then
to the accrued Fixed Rent and then to the accrued Percentage Rent), provided
that the maximum amount of Fixed Rent that may be deferred under this paragraph
shall be fifteen percent (15%) of the stated Fixed Rent obligation. As used
herein, Available Cash
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shall be Receipts less Operating Expenses. In no event, however, shall the rent
deferral permitted hereunder be such that Landlord will have insufficient cash
flow to service Landlord's Debt.
(b) Percentage Rent:
(i) Generally; Payment in Installments. In addition to the Minimum
Rent payable with respect to the Leased Property, Tenant shall pay
Percentage Rent for each Lease Year. Percentage Rent shall be payable
quarterly in arrears in four (4) installments, on the Rent Payment Date
occurring in April, July, August and January of each Lease Year, in
respect of the quarter ending in the prior month, commencing in 2000. Each
quarterly installment shall be based on, and accompanied by, an Officer's
Certificate setting forth Tenant's current estimated Receipts for the
Leased Property (on a Leased Property-by-Leased Property basis) on a
cumulative basis for the period commencing with the Lease Year through the
end of the quarter in question, and shall take into account previous
installments paid in respect of such Lease Year.
(ii) Presentation of Certificate and Audit. Not later than the 25th
day following the end of each Lease Year, Tenant shall deliver to Landlord
an Officer's Certificate setting forth (x) the Receipts for the Leased
Property (on a Leased Property-by-Leased Property basis) and (y) the
computation made by Tenant in determining Percentage Rent, in each case
(a) for such Lease Year and (b) for each individual calendar quarter
during such Lease Year, together with an audit of such Receipts conducted
by a "Big Six" firm of independent certified public accountants proposed
by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed). Tenant shall utilize, or cause to be
utilized, an accounting system for the Leased Property in accordance with
its usual and customary practices and in accordance with GAAP, which will
accurately record Receipts for the Leased Property. Tenant shall retain
such records, for at least three (3) years after the expiration of each
Lease Year.
(iii) Confirmation of Percentage Rent. Landlord, at its own expense,
except as provided herein below, shall have the right, exercisable by
Notice to Tenant within two (2) years after receipt of the applicable
Officer's Certificate referred to in clause (ii) above, by its accountants
or representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns).
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(iv) Adjustments of Percentage Rent. If the certificate or audit
described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a deficiency in the payment of Percentage Rent and
any differences between the parties are resolved (which, absent the
parties' agreement shall be determined pursuant to arbitration in
accordance with Schedule 15.4), Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as determined or
agreed upon or compromised as aforesaid, is more than four percent (4%) of
the Receipts reported by Tenant for such Lease Year and, as a result,
Landlord did not receive at least ninety-five percent (95%) of the
Percentage Rent payable with respect to such Lease Year, Tenant shall pay
the reasonable cost of such audit and examination. If the certificate or
audit described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a overpayment of Percentage Rent and any
differences between the parties are resolved (which, absent the parties'
agreement shall be determined pursuant to arbitration in accordance with
Schedule 15.4), then (provided no Event of Default has occurred and is
continuing) Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at the
Interest Rate accruing from the date of payment by Tenant until the date
such credit is applied. If such credit cannot be made because the Term has
expired prior to application in full thereof, then (provided no Event of
Default has occurred and is continuing and provided Tenant has paid all
amounts required under this Lease), Landlord shall repay the unapplied
balance of such credit to Tenant.
(v) Maximum Adjustments of Percentage Rent. Notwithstanding the
foregoing, (A) in no event shall Tenant be permitted under Section
3.1(b)(iv) a credit or refund in respect of Percentage Rent in excess of
15 percent of the aggregate installments of Percentage Rent paid in
respect of any Lease Year pursuant to Section 3.1(b)(i) and (B) in no
event shall Tenant be permitted under Section 3.1(b)(i) a credit or refund
in respect of Percentage Rent in excess of 15 percent of the aggregate
installments of Percentage Rent paid in respect of immediately preceding
calendar quarter pursuant to Section 3.1(b)(i).
(vi) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public
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information, (2) disclosed to the extent that Landlord is advised by
counsel that Landlord is required to disclose such information by
subpoena, court order, securities laws and regulations, any other laws or
regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to any Landlord's Debt, provided that,
with respect to the disclosures permitted under clause (4), Landlord shall
obtain the agreement of the Persons to whom disclosure is made to maintain
such information as confidential in accordance with terms of this
Subsection (iv) and in no event shall public or Rule 144A holders of
Landlord's Debt be permitted to receive such information on an individual
Leased Property basis.
(vii) Survival. The obligations of Tenant and Landlord contained in
this Section 3.1 shall survive the expiration or earlier termination of
this Lease.
(c) Additional Charges. In addition to the Minimum Rent and Percentage
Rent payable with respect to the Leased Property, Tenant shall pay and discharge
as and when due and payable the following (collectively, "Additional Charges"):
(1) Taxes and Other Charges. Tenant shall pay all Taxes and Other
Charges as set forth in Section 6.1(b) herein.
(2) Utility Charges. Tenant shall pay all charges for electricity,
power, gas, oil, water, sanitary and storm sewer, refuse collection and
other utilities used or consumed in connection with the applicable Leased
Property during the Term.
(3) Insurance Premiums. Tenant shall pay, as Additional Charges, all
premiums for the insurance coverage required to be maintained pursuant to
Article VIII hereof.
(4) Other Charges. Tenant shall pay, as Additional Charges, all
other amounts, liabilities and obligations that Tenant assumes or agrees
to pay under this Lease, including all of its indemnification obligations
set forth herein.
(5) Late Payment of Rent. If any installment of Minimum Rent,
Percentage Rent or Additional Charges (but only as to those Additional
Charges which are payable directly to Landlord, if any) shall not be paid
within five (5)
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Business Days after its due date, Tenant will pay to Landlord on demand,
as Additional Charges, a late charge (to the extent permitted by law)
computed at the Overdue Rate (or at the maximum rate permitted by law,
whichever is the lesser) on the amount of such installment, from the due
date of such installment to the date of payment thereof.
To the extent that Tenant timely pays any Additional Charges to Landlord
pursuant to any requirement of this Lease, Tenant shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due. If Landlord's Loan Documents shall so require, or if any
Additional Charges shall not be paid to a third party payee within five (5)
Business Days after its due date, Landlord may at any time thereafter, at
Landlord's option, require Tenant to deposit into an escrow account under the
sole dominion and control of Landlord (or the applicable Landlord's Lender), on
the first day of each month (or such other day(s) as Landlord shall reasonably
specify), an amount which, together with similar escrow deposits on succeeding
deposit dates, is sufficient to ensure that such escrow account shall contain an
amount sufficient to make such payment on its next due date, in which event
Landlord shall make all future payments for such expense from the escrow
account. In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost that may be added for non-payment or late
payment of such items. Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Lease or by statute or
otherwise in the case of non-payment of the Rent. Landlord shall have the right
to have such escrows held with a Depositary.
3.2 Net Lease. The Minimum Rent and Percentage Rent, as well as such
Additional Charges as are due and payable to Landlord, shall be paid absolutely
net to Landlord, so that this Lease shall throughout the Term yield to Landlord
the full amount of the installments of Minimum Rent and Percentage Rent, as well
as any payments of Additional Charges payable to Landlord, subject to any other
provisions of this Lease which expressly provide for adjustment or abatement of
Rent or other charges.
ARTICLE IV
4.1 No Termination, Abatement, etc. Except as otherwise specifically
provided herein, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any
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abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent, nor shall the respective obligations of Landlord and Tenant be otherwise
affected by reason of (a) any damage to, or destruction of, any Leased Property
from whatever cause or any taking of the Leased Property, (b) the interruption
or discontinuance of any service or utility servicing the applicable Leased
Property, (c) the lawful or unlawful prohibition of, or restriction upon,
Tenant's use of the Leased Property, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title, (d) any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties, (e) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee or transferee of Landlord, or (f)
for any other cause whether similar or dissimilar to any of the foregoing other
than a discharge of Tenant from any such obligations as a matter of law. Tenant
hereby specifically waives all rights, arising from any occurrence whatsoever,
which may now or hereafter be conferred upon it by law to (i) modify, surrender
or terminate this Lease or quit or surrender the Leased Property, or (ii)
entitle Tenant to any abatement, reduction, suspension or deferment of the Rent
or other sums payable by Tenant hereunder, except as otherwise specifically
provided in this Lease. The obligations of Landlord and Tenant hereunder shall
be separate and independent covenants and agreements and the Rent and all other
sums payable by Tenant hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions this Lease. In any instance where, after the occurrence of an
Event of Default, Landlord retains funds which, but for the occurrence of such
Event of Default, would be payable to Tenant, Landlord shall refund such funds
to Tenant to the extent the amount thereof exceeds the amount necessary to
compensate Landlord for any cost, loss or damage incurred in connection with
such Event of Default.
4.2 Abatement Procedures. In the event of a partial taking or temporary
taking, which taking does not render the Leased Property Unsuitable for its
Primary Intended Use, this Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord. If Landlord and Tenant are unable to agree upon the amount
of such abatement within thirty (30) days after such taking, the matter may be
submitted by either party to a court of competent jurisdiction for resolution.
Pending such resolution, Tenant shall remain bound to pay Rent based upon the
amounts asserted by Landlord to be due and payable, provided Landlord shall
remain liable for the repayment to Tenant of amounts ultimately determined to be
overpaid to Landlord.
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ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease, provided that, until the expiration or earlier
termination of this Lease, all capital improvements and additions made by
Tenant, at Tenant's expense, to any Leased Property shall be the property of
Tenant and, upon the expiration or earlier termination of this Lease, title to
such improvements, additions and replacements shall vest in Landlord.
5.2 Tenant's Personal Property. Tenant may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements any items of Tenant's Personal
Property, and Tenant may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Tenant shall
provide and maintain during the entire Lease Term all such Tenant's Personal
Property as shall be necessary to operate each Leased Property in compliance
with all applicable Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Primary Intended
Use. All of Tenant's Personal Property not removed by Tenant within thirty (30)
days following the expiration or earlier termination of this Lease with respect
to such Leased Property where such Tenant's Personal Property is located shall
be considered abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account
therefor.
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ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants. Tenant hereby covenants and agrees with Landlord
that:
(a) Existence; Use of Leased Property; Legal Compliance; Insurance.
(i) Tenant shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with
all Legal Requirements applicable to it and the Leased Property. Tenant
shall at all times maintain and preserve the Leased Property and shall
keep the Leased Property in good working order and repair, reasonable wear
and tear excepted, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto; provided that Tenant shall, without the consent of
Landlord, make no Alteration to any Leased Property which constitutes
"Nonseverable Improvements" as such term is used in Section 4(4).03 of IRS
Revenue Procedure 75-21, as modified by IRS Revenue Procedure 79-48,
unless the conditions of Section 4(4).03(B) are satisfied and the
alteration is described in at least one of the subparagraphs of Section
4(4).03(C). Tenant will operate, maintain, repair and improve the Leased
Property in material compliance with all Legal Requirements, and will not
cause or allow the same to be misused or wasted or to deteriorate,
reasonable wear and tear excepted.
(ii) After the Commencement Date and throughout the entire Term,
Tenant shall use the applicable Leased Property and the Leased
Improvements thereof as a dry and cold storage warehousing facility and
for such other uses as may be necessary or incidental to such use,
including the provision of distribution services (such use, the "Primary
Intended Use") and, notwithstanding any restrictions on subletting
contained herein, Landlord hereby agrees that Tenant shall have the right
to enter into Warehouse Agreements. Tenant shall not use the applicable
Leased Property or any portion thereof for any other use without the prior
written consent of Landlord, which consent shall not be unreasonably
withheld or delayed (taking into account, among other things, the
provisions hereof relating to Percentage Rent). No use shall be made or
permitted to be made of a Leased Property, and no acts shall be done, that
will cause the cancellation of any insurance policy covering such Leased
Property, nor shall Tenant sell or
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otherwise provide, or permit to be kept, used or sold in or about such
Leased Property any article which may be prohibited by law or by Insurance
Requirements. Tenant shall, at its sole cost, comply with all of the
requirements pertaining to the Leased Property or other improvements of
any insurance board, association, organization or company necessary for
the maintenance of insurance, as herein provided, covering the Leased
Property and Tenant's Personal Property. Absent force majeure and any
other event beyond the reasonable control of Tenant, and except during a
period following a Casualty or Condemnation or in which an Alteration is
being performed, Tenant shall continuously operate the Leased Property for
its Primary Intended Use.
(b) Taxes and Other Charges; Contest for Taxes and Other Charges, Legal
Requirements and Liens.
(i) Subject to the provisions of Section 6.1(b)(ii), Tenant shall
pay all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Leased Property prior to the date on which such sums
become delinquent. Tenant will deliver to Landlord, upon request, receipts
for payment or other evidence satisfactory to Landlord that the Taxes and
Other Charges have been so paid (provided Tenant shall not be required to
furnish such receipts for payment of Taxes in the event such Taxes have
been (or were to have been) paid by Landlord's Lender pursuant to
Landlord's Loan Documents). Subject to the provisions of Section
6.1(b)(ii) and other than Permitted Encumbrances, Tenant shall not suffer
and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Leased
Property, and shall promptly pay for all utility services provided to the
Leased Property. Subject to Section 6.1(b)(ii), Tenant shall pay, bond or
otherwise discharge, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers and others that, if
unpaid, might result in, or permit the creation of, a lien or encumbrance
on any Leased Property, or on the rents arising therefrom.
(ii) After prior written notice to Landlord, Tenant, at its own
expense, may contest by appropriate legal, administrative or other
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges or Lien therefor or any Legal Requirement or
Insurance Requirement or the application of any instrument of record
affecting the Leased Property (other than this Lease or Landlord's Loan
Documents) or any claims or judgments of mechanics,
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materialmen, suppliers, vendors or other Persons or any Lien therefor, and
may withhold payment of the same pending such proceedings if permitted by
law; provided that (A) no Event of Default has occurred and remains
uncured, except for an Event of Default caused by the matter being
contested, (B) such proceeding shall suspend any collection of the
contested Taxes, Other Charges or Liens from the Leased Property, Tenant
or Landlord, or adequate time shall at all times remain prior to such
collection, (C) such proceeding shall be permitted under and be conducted
in accordance with the provisions of any other instrument to which Tenant
is subject and shall not constitute a default thereunder, (D) neither any
Leased Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost, (E) to the extent
not already reserved with Landlord (or Landlord's Lender) or bonded or
otherwise deposited or paid in connection with such proceedings, Tenant
shall have furnished Landlord with security (in an amount reasonably
approved by Landlord) to insure the payment of any such Taxes or Other
Charges, or the cost of the contested Legal Requirement or Insurance
Requirement or the removal of the Lien, in each case together with all
reasonably anticipated interest and penalties thereon, (F) in the case of
an Insurance Requirement, the failure of Tenant to comply therewith shall
not impair the validity of any insurance required to be maintained by
Tenant hereunder or the right to full payment of any claims thereunder,
(G) in the case of any essential or significant service with respect to
any Leased Property, any contest or failure to pay will not result in a
discontinuance of any such service, (H) in the case of any instrument of
record affecting any Leased Property or any part thereof, the contest or
failure to perform under any such instrument shall not result in the
placing of any Lien on any Leased Property or any part thereof (except if
such Lien would be removed upon completion of such proceedings and the
compliance by the parties with the terms of the resulting order, decision
or determination and the removal costs for such Lien have been escrowed
with Landlord or in the proceeding or bonded or otherwise deposited or
paid in connection with such proceedings), (I) except to the extent Tenant
has provided sufficient Eligible Collateral therefor or bonded or
otherwise deposited or paid in connection with such proceedings, neither
the failure to pay or perform any obligation which Tenant is permitted to
contest under this Section nor an adverse determination of any such
contest shall result in a material adverse effect on the utility, value or
operation of the applicable Leased Property, and (J) Tenant shall promptly
upon final determination thereof pay the amount of any such Taxes, Other
Charges or Liens, together with all costs, interest and penalties which
may be payable in connection therewith. Landlord may pay over any such
cash deposit or part thereof held by or on behalf of Landlord to the
claimant entitled thereto at any time when, in the
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judgment of Landlord, the entitlement of such claimant is finally
established, and Landlord shall otherwise remit any remaining such amounts
to Tenant. Landlord shall give Tenant written notice of any such payments
promptly following the making thereof. Subject to the foregoing, at
Tenant's timely request, Landlord shall not pay and shall not cause to be
paid from any tax or insurance escrow account that may be maintained in
connection with Landlord's Debt the contested Taxes or Other Charges being
contested.
(c) Litigation. Tenant shall give prompt written notice to Landlord of any
litigation or governmental proceedings pending or threatened in writing against
Landlord, Tenant or against or affecting the Leased Property which, if
determined adversely to Landlord, Tenant or the Leased Property, might
reasonably be expected to materially adversely affect Landlord, or Tenant's
condition (financial or otherwise) or business or the operation or value of the
Leased Property.
(d) Inspection. Tenant shall permit agents, representatives and employees
of Landlord and/or Landlord's Lender (including any servicer or special servicer
on behalf of Landlord's Lender) to inspect the Leased Property on any Business
Day at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Tenant shall promptly advise Landlord of any
material adverse change in Tenant's condition (financial or otherwise) that
could reasonably be expected to materially impair the ability of Tenant to
comply with its obligations hereunder, or of the occurrence of any Default or
Event of Default under this Lease of which Tenant has knowledge.
(f) Cooperate in Legal Proceedings. Tenant shall cooperate fully with
Landlord (and with Landlord's Lender) with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the
rights of Landlord (or Landlord's Lender, as the case may be) hereunder or in
respect of the Leased Property and, in connection therewith, permit Landlord
(and Landlord's Lender, as applicable), at its election, to participate in any
such proceedings.
(g) Insurance Benefits. Tenant shall cooperate with Landlord (and
Landlord's Lender) in obtaining for Landlord (and Landlord's Lender, as
applicable) the benefits of any insurance proceeds lawfully or equitably payable
in connection with the Leased Property, and Landlord (and Landlord's Lender, as
applicable) shall be reimbursed for any out-of-pocket expenses reasonably
incurred in connection therewith (including attorneys' fees and disbursements,
and, if reasonably necessary to collect such proceeds,
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the expense of an appraisal on behalf of Landlord in case of a fire or other
casualty affecting any Leased Property) out of such insurance proceeds.
(h) Financial Reporting and Other Information.
1. Generally. Tenant will keep and maintain or will cause to be kept
and maintained on a Fiscal Year basis proper and accurate books, records and
accounts reflecting all of the financial affairs of Tenant and all items of
Operating Income, Operating Expenses and capital expenditures. Landlord and/or
Landlord's Lender shall have the right from time to time at all times during
normal business hours upon reason able notice to examine such books, records and
accounts at the office of Tenant set forth in Article XXIII or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof, at Landlord's expense, as Landlord and/or Landlord's Lender shall
desire, provided, after the occurrence of an Event of Default, Tenant shall pay
any reasonable out-of-pocket costs and expenses incurred by Landlord and/or
Landlord's Lender in any such examination and copying (or extraction).
2. Annual Reports. Tenant will use reasonable efforts to furnish to
Landlord within sixty (60) days (and in no event later than seventy-five (75)
days) following the end of each Fiscal Year of Tenant, a complete copy of
Tenant's annual financial statements, audited by an Approved Accounting Firm, in
accordance with GAAP, covering the Properties (and, to the extent prepared by
Tenant, each Property individually) for such Fiscal Year and containing balance
sheets for Tenant and statements of profit and loss for Tenant and the
Properties in such detail as Landlord may reasonably request. Tenant's annual
financial statements shall be accompanied by a certificate signed by an
authorized officer of tenant certifying that such annual financial statement
presents fairly, in all material respects, the financial condition of the
Properties and has been prepared in accordance with GAAP. Together with Tenant's
annual financial statements, Tenant shall furnish to Landlord (A) a certificate
signed by an authorized officer of the Tenant certifying as of the date thereof
whether, to Tenant's knowledge, there exists a Default or Event of Default, and
if such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same, and (B)
an annual report for the most recently completed fiscal year, which report shall
contain (y) a summary of capital expenditures made by or on behalf of Tenant
with respect to each Property during such fiscal year, and (z) a description of
anticipated capital expenditures during the subsequent fiscal year. Reports with
respect to the operations of a particular Property that are delivered to
Landlord pursuant to this Section, or pursuant to any other provision in this
Lease, shall be kept
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confidential, and shall not be disclosed in any Securities Exchange Commission
or similar filings.
3. Monthly Reports. Tenant will furnish, or cause to be furnished,
to Landlord on or before the fifteenth (15th) day after the end of each calendar
month, a monthly operating statement, including a comparison of the actual
income, expense and net cash flow to the Annual Budget. The reports delivered to
Landlord pursuant to this Section need not include such statements or
comparisons with respect to the operations of individual Properties.
4. Quarterly Reports. Tenant will furnish, or cause to be furnished,
to Landlord on or before the fifteenth (15th) day after the end of each calendar
quarter, the following items, accompanied by a certificate signed by an
authorized officer of Tenant, certifying that such items are true, correct,
accurate and complete, in all material respects, and fairly present, in all
material respects, the financial condition and results of the operations of
Tenant and the Properties (and, to the extent prepared by Tenant, each Property
individually) in a manner consistent with GAAP (subject to normal year-end
adjustments): (y) quarterly and year-to-date statements prepared for such
calendar quarter with respect to Tenant, including a comparison of the actual
income, expense and net cash flow to the Annual Budget, together with a balance
sheet for such quarter and (z) a summary of capital expenditures made by or on
behalf of Tenant with respect to each Property during such calendar quarter. To
the extent that such reports are available and in final form prior to the date
set forth above, Tenant shall use good faith efforts to deliver such statements
to Landlord within forty (40) days after the end of the applicable calendar
quarter. Reports with respect to the operations of a particular Property that
are delivered to Landlord pursuant to this Section, or pursuant to any other
provision in this Lease, shall be kept confidential, and shall not be disclosed
in any Securities Exchange Commission or similar filings
5. Supplemental Information. Tenant shall furnish to Landlord,
within seven (7) days after request, such further detailed information with
respect to the operation of the Properties (or any of them) and the financial
affairs of Tenant as may be reasonably requested by Landlord.
6. Governmental Notices. Tenant shall furnish to Landlord, promptly
after receipt, a copy of any notice received by or on behalf of Tenant from any
Governmental Authority having jurisdiction over any Property with respect to any
material violation of Legal Requirements or any condition existing or alleged to
exist or emanate therefrom or thereat involving Hazardous Substances.
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7. Landlord's Lender. Tenant agrees to furnish to Landlord, at such
time as may be required pursuant to any Landlord's Loan Documents or as may
reasonably be requested by Landlord, such financial reports (including annual
and quarterly financial statements and monthly operating statements, including a
comparison of the actual income, expense and Net Cash Flow to the Annual
Budget), and other information relating in each case to Tenant or the Leased
Properties as may reasonably be requested by Landlord.
8. Annual Budget. Tenant shall prepare and deliver to Landlord, for
Landlord's approval, which approval shall not be unreasonably withheld or
delayed, forty-five (45) days prior to the commencement of each year, a proposed
Annual Budget in respect of the Leased Property (and, to the extent otherwise
prepared by Tenant, each Leased Property individually) for the ensuing Fiscal
Year.
(i) Business and Operations. Tenant will continue to engage in the
businesses currently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management, subleasing and operation of the
Leased Property. Tenant will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the conduct of its business (including the operation and management
of the Leased Property as refrigerated warehousing facilities and related uses).
(j) Intentionally Omitted.
(k) Intentionally Omitted.
(l) Material Agreements. Tenant shall:
(i) promptly perform and/or observe all of the material covenants
and agreements required to be performed and observed by it under any
Material Agreement, and do all things necessary to preserve and to keep
unimpaired its material rights thereunder;
(ii) promptly notify Landlord of the giving of any notice of any
material default by any party under any Material Agreement of which it is
aware; and
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(iii) promptly enforce the performance and observance of all of the
material covenants and agreements required to be performed and/or observed
by the other party under each Material Agreement.
(m) Ground Leased Property. With respect to the Ground Leased Property,
Tenant shall observe and perform all of the obligations of Landlord under each
Ground Lease.
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants. Tenant covenants and agrees with Landlord
that it will not do, directly or indirectly, any of the following:
(a) Operation of Property. Tenant shall not, without Landlord's prior
consent, which consent shall not be unreasonably withheld or delayed (except as
elsewhere herein expressly provided): (i) surrender or terminate any Material
Agreement (unless the other party thereto is in material default and the
termination of such agreement would be commercially reasonable), (ii) increase
or consent to the increase of the amount of any charges payable by Tenant or
Landlord under any Material Agreement, except as provided therein or on an
arms'-length basis and commercially reasonable terms; or (iii) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under any Material Agreement in any material respect that is materially
adverse to the interests of Landlord, except on an arms'-length basis and
commercially reasonable terms.
(b) Liens. Subject to Section 6.1(b)(ii), Tenant shall not, without the
prior written consent of Landlord, create, incur, assume, permit or suffer to
exist any Lien on any portion of the Leased Property (or any of them), except
(i) Permitted Encumbrances, (ii) Liens created by or permitted pursuant to
Landlord's Loan Documents and (iii) Liens for Taxes or Other Charges not yet
delinquent.
(c) Affiliate Transactions. Tenant shall not enter into, or be a party to,
any transaction with an Affiliate of Tenant except in the ordinary course of
business and on terms which are fully disclosed to Landlord in advance and are
no less favorable to Tenant or such Affiliate than would be obtained in a
comparable arms'-length transaction with an unrelated third party.
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(d) Zoning and Uses. Tenant shall not (i) initiate or support any limiting
change in the permitted uses of any Leased Property (or to the extent
applicable, limiting zoning reclassification of any Leased Property), (ii) seek
any variance under existing land use restrictions, laws, rules or regulations
(or, to the extent applicable, zoning ordinances) applicable to any Leased
Property or use or permit the use of any Leased Property in each case in a
manner that would result in the existing use becoming a non-conforming use under
applicable land-use restrictions (and, if any, zoning ordinances) with any
materially adverse effect on the value of the Leased Property or that would
violate the terms of any Lease, Operating Agreement, Legal Requirements or any
Permitted Encumbrance, (iii) modify, amend or supplement any of the terms of any
Permitted Encumbrance in a manner adverse in any material respect to the
interests of Landlord, (iv) impose or permit or suffer the imposition of any
restrictive covenants, easements or encumbrances upon the Leased Property in any
manner that adversely affects in any material respect the value or utility of
the Leased Property, (v) execute or file any subdivision plat affecting any
Leased Property, institute, or permit the institution of, proceedings to alter
any tax lot comprising any Leased Property or (vi) permit or suffer any Leased
Property to be used by the public or any Person in such manner as might make
possible a claim of adverse usage or possession or of any implied dedication or
easement.
(e) Nonexempt ERISA Transactions. Tenant shall not engage in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Tenant, or in any transaction that would cause
any obligation or action taken or to be taken hereunder (or the exercise by
Landlord's Lender of any of its rights under the Lender's Loan Documents (if
applicable)) to be a non-exempt prohibited transaction under ERISA.
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations. Tenant will not make any demolition, alteration,
installation, improvement, expansion, reduction or decoration (each, an
"Alteration") of or to any Leased Property or any part thereof, except in
accordance with the following terms and conditions:
(a) The Alteration shall be undertaken in accordance with the applicable
provisions of this Lease, Landlord's Loan Documents, the Operating Agreements,
the Leases and all Legal Requirements.
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(b) No Event of Default shall have occurred and be continuing and no
Default shall occur as a result of such action.
(c) The Alteration shall not materially adversely affect the (i) Primary
Intended Use or (ii) fair market value of the Leased Property in question.
(d) A Material Alteration shall be conducted under the supervision of a
Qualified Architect or Engineer and shall not be undertaken until ten (10)
Business Days after there shall have been delivered to Landlord, for information
purposes only and not for approval by Landlord, detailed plans and
specifications and cost estimates therefor, prepared and approved in writing by
such Qualified Architect or Engineer. Such plans and specifications may be
revised at any time and from time to time, provided that material revisions of
such plans and specifications shall be delivered to Landlord for information
purposes only.
(e) Other than in connection with any Restoration, the Alteration may not,
in and of itself, either during the Alteration or upon completion, materially
adversely affect the Receipts derived from the Leased Property in question,
taking into account the Percentage Rent requirements hereunder; provided that
if, as reasonably determined by Landlord, such Alteration would materially
adversely affect the Net Operating Income at such Leased Property (taking into
account any amount then in any reserve account funded pursuant to any Cash
Management Procedures and permitted to be used in connection with such Material
Alteration), then in order to proceed with the Alteration, Tenant shall deliver
to a Depositary Eligible Collateral in the total amount of the estimated
reduction in Net Operating Income resulting from the Alteration, which Eligible
Collateral shall be returned to Tenant after substantial completion of the
Alteration if the reduction in Net Operating Income has been restored and no
Event of Default has occurred and is continuing.
(f) All work done in connection with any Alteration shall be performed
with due diligence in a good and workmanlike manner, all materials used in
connection with any Alteration shall be not less than the standard of quality of
the materials generally used at the applicable Leased Property as of the date
hereof (or, if greater, the then-current customary quality in the submarket in
which such Leased Property is located) and all work shall be performed and all
materials used in accordance with all applicable Legal Requirements and
Insurance Requirements.
(g) The cost of any Alteration shall be promptly and fully paid for by
Tenant, subject to the next succeeding sentence. No payment made prior to the
Final Completion
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of an Alteration or Restoration to any contractor, subcontractor, materialman,
supplier, engineer, architect, project manager or other Person who renders
services or furnishes materials in connection with such Alteration shall exceed
ninety five percent (95%) of the value of the work performed from time to time
and materials furnished and incorporated into the Improvements.
(h) All items (other than Eligible Collateral) to be delivered to the
Depositary hereunder shall also be delivered to Landlord (if Landlord is not the
Depositary), and, if required under Section 15.5, Landlord's Lender (if
Landlord's Lender is not the Depositary).
(i) For any Material Alteration (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner), Tenant shall be obligated to deliver to a Depositary Eligible
Collateral in an amount that, when taken together with any amount then in any
reserve account funded pursuant to any Cash Management Procedures and permitted
to be used in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant as such work progresses in accordance with Section 8.1(j). In
addition, if all Material Alterations (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner) then being performed exceeds $10,000,000 (the "Aggregate Threshold
Amount"), Tenant shall be obligated to deliver to the Depositary Eligible
Collateral in amount that, when taken together with (x) any Eligible Collateral
previously delivered under this subsection (i) and (y) any amounts then in any
reserve funded pursuant to any Cash Management Procedures and permitted to be
used in connection with such Material Alteration, shall be sufficient to pay all
of the costs of the Material Alteration in excess of the Aggregate Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant at such time as the remaining costs of the Material Alteration are
less than the Aggregate Threshold Amount.
(j) With respect to any Material Alteration as to which Tenant shall have
delivered Eligible Collateral in accordance with Section 8.1(i):
(i) Tenant shall deliver to the Depositary a schedule (which shall
be concurred in by the Qualified Architect or Engineer) setting forth the
projected stages of completion of such Alteration(s) and the corresponding
amounts
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expected to be due and payable by or on behalf of Tenant in connection
with such completion, such schedule to be updated quarterly by Tenant (and
concurred with by a Qualified Architect or Engineer) during the
performance of such Alteration(s).
(ii) Any Eligible Collateral that Tenant delivers to the Depositary
pursuant hereto (and the proceeds of any such Eligible Collateral) shall
be invested (to the extent such Eligible Collateral can be invested) by
the Depositary in Permitted Investments for a period of time consistent
with the date on which Tenant notifies the Depositary that Tenant expects
to request a release of such Eligible Collateral in accordance with the
next succeeding sentence. From time to time as the Alteration progresses,
the amount of any Eligible Collateral so furnished may, upon the written
request of Tenant to the Depositary, be withdrawn by Tenant and paid or
otherwise applied by or returned to Tenant in an amount equal to the
amount Tenant would be entitled to so withdraw if Section 10.2(d) hereof
were applicable, and any Eligible Collateral so furnished which is a
Credit Facility may be reduced by Tenant in an amount equal to the amount
Tenant would be entitled to so reduce if Section 10.2(d) hereof were
applicable, subject, in each case, to the satisfaction of the conditions
precedent to withdrawal of funds or reduction of the Credit Facility set
forth in said Section 10.2(d). In connection with the above-described
quarterly update of the projected stages of completion of the Material
Alteration (as concurred with by an Qualified Architect or Engineer),
Tenant shall increase (or be permitted to decrease, as applicable) the
Eligible Collateral then deposited with the Depositary as necessary to
comply with Section 8.1(i) hereof.
(iii) At any time after final completion of such Alterations, the
whole balance of any Cash deposited with the Depositary pursuant to
Section 8.1(j) then remaining on deposit may be withdrawn by Tenant and
shall be paid by the Depositary to Tenant, and any Eligible Collateral so
deposited shall, to the extent it has not been called upon, reduced or
theretofore released, be released by the Depositary to Tenant, within ten
(10) days after receipt by the Depositary of an application for such
withdrawal and/or release together with an Officer's Certificate, and as
to the following clauses (A) and (B) of this clause also a certificate of
the Qualified Architect or Engineer, setting forth in substance as
follows:
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(A) that such Alteration(s) has been completed substantially
in accordance with any plans and specifications therefor previously
filed with Landlord under Section 8.1(d) hereof;
(B) that, to the knowledge of the certifying Person, (x) such
Alteration(s) has been completed in compliance, in all material
respects, with all Legal Requirements, and (y) to the extent
required for the legal use or occupancy of the portion of the Leased
Property affected by such Alteration(s), Tenant has obtained a
temporary or permanent certificate of occupancy (or similar
certificate) or, if no such certificate is required, a statement to
that effect;
(C) that to the knowledge of the certifying Person, all
amounts that Tenant is or may become liable to pay in respect of
such Alteration(s) through the date of the certification have been
paid in full or adequately provided for and, to the extent that such
are customary and reasonably obtainable by prudent property owners
in the area where the Leased Property is located, that Lien waivers
have been obtained from the general contractor and major
subcontractors performing such Alteration or, at its sole cost and
expense, Tenant shall cause a nationally recognized title insurance
company to deliver to Landlord either (x) an endorsement or other
affirmative coverage with respect to the then-current loan policy in
favor of Landlord's Lender, updating such policy and insuring over
such Liens without further exceptions to such policy other than
Permitted Encumbrances, or (y) owner's and loan title insurance
policies, in such form, in such amounts and with such endorsements
as shall be reasonably satisfactory to Landlord and Landlord's
Lender, which policies shall be dated the date of completion of the
Material Alteration and shall contain no exceptions other than
Permitted Encumbrances; and
(D) that to the knowledge of the certifying Person, no Event
of Default has occurred and is continuing;
provided that if, for any reason, Tenant is unable to deliver the
certification required by clause (C) above with respect to any costs or
expenses relating to the Alteration, then, assuming Tenant is able to
satisfy each of the other requirements set forth in clauses (A), (B), (C)
and (D) above, Tenant shall be entitled to the release of the difference
between the whole balance of such Eligible Collateral and the total of all
costs and expenses to which Tenant is unable to certify.
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8.2 Subletting and Assignment; Warehouse Agreements.
8.2.1 Generally. Except as expressly provided herein, Tenant shall
not, without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion, assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer this Lease or sublease all or any part of the Leased Property
or suffer or permit this Lease or the leasehold estate created hereby or thereby
or any other rights arising under this Lease to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily or involuntarily or by operation of law, or permit the use or
occupancy of the applicable Leased Property to be offered or advertised for
assignment or subletting except as hereinafter provided. For purpose of this
Section 8.2, an assignment of this Lease shall be deemed to include any change
in control of Tenant, as if such change in control or transaction were an
assignment of this Lease.
8.2.2 Certain Sublettings and Assignments. Subject to the provisions
of Section 8.2.3 and any other express conditions or limitations set forth
herein,
(a) without the consent of Landlord, Tenant may (i) assign
this Lease (in whole but not in part) to any of its Affiliates and (ii)
sublet all or any part of the Leased Property to any Affiliates; provided,
in each case, that after giving effect to such assignment or sublease, the
Leased Properties shall continue at all times to be operated and managed
by substantially the same individuals responsible for the same immediately
prior to the applicable assignment or sublease; and
(b) without the consent of Landlord, Tenant may sublet all or
any part of any one or more Leased Property (i) in the normal course of
the Primary Intended Use and (ii) to concessionaires or other third party
users or operators of portions of the Leased Property in furtherance of
the Primary Intended Use.
8.2.3 Landlord's Right to Collect from Assignees and Subtenants. If
this Lease is assigned or if the applicable Leased Property or any part thereof
is sublet (or occupied by any entity other than Tenant and its employees),
Landlord, after an Event of Default occurs and so long as it is continuing, may
collect the rents from such assignee, Subtenant or occupant, as the case may be,
and apply the net amount collected to the Rent herein reserved, but no such
collection shall be deemed (i) a waiver of the provisions set forth in Section
8.2.1, (ii) the acceptance by Landlord of such assignee, Subtenant or
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occupant, as the case may be, as a tenant or (iii) release of Tenant from the
future performance of its covenants, agreements or obligations contained in this
Lease.
8.2.4 No Release. No subletting or assignment shall in any way
impair the continuing primary liability hereunder of the Tenant named herein, as
well as of each subsequent Tenant, and no consent to any subletting or
assignment in any particular instance shall be deemed a waiver of the
prohibition set forth in this Section 8.2. No assignment, subletting or
occupancy shall affect the obligation to use the Leased Property in accordance
with Section 6.1(a)(ii). Any subletting, assignment or other transfer of
Tenant's interest in this Lease in contravention of this Section 8.2 shall be
void at Landlord's option.
8.2.5 Required Assignment and Subletting Provisions. Any assignment
and/or Sublease must provide that:
(a) it shall be subject and subordinate to all of the terms
and conditions of this Lease,
(b) the use of the applicable Leased Property shall be
restricted to the uses and purposes expressly permitted by this Lease and
shall not conflict with any Legal Requirement, Insurance Requirement or
any other provision of this Lease,
(c) no Subtenant or assignee shall be permitted to further
sublet all or any part of the applicable Leased Property or assign this
Lease or its sublease except as expressly provided in this Lease,
(d) in the event of cancellation or termination of this Lease
for any reason whatsoever or of the surrender of this Lease (whether
voluntary, involuntary or by operation of law) prior to the expiration
date of such Sublease, including extensions and renewals granted
thereunder, then, at Landlord's option, the Subtenant shall make full and
complete attornment to Landlord for the balance of the term of the
Sublease, which attornment shall be evidenced by an agreement in form and
substance satisfactory to Landlord and which the Subtenant shall execute
and deliver within five (5) days after request by Landlord and the
Subtenant shall waive the provisions of any law now or hereafter in effect
which may give the Subtenant any right of election to terminate the
Sublease or to surrender possession in the event any proceeding is brought
by Landlord to terminate this Lease, and
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(e) in the event the Subtenant receives a written notice from
Landlord stating that Tenant is in Default under this Lease, the Subtenant
shall thereafter be obligated to pay all rentals accruing under said
sublease directly to Landlord or as such party may direct; all rentals
received from the Subtenant by Landlord shall be credited against the
amounts owing by Tenant under this Lease.
8.2.6 Reimbursement of Landlord's Costs. Tenant shall pay to
Landlord, within ten (10) business days after request therefore, all costs and
expenses, including reasonable attorneys' fees, incurred by Landlord (including,
to the extent Landlord is liable for the same, by Landlord's Lender) in
connection with any request made by Tenant to Landlord to assign this Lease or
sublet the applicable Leased Property.
8.2.7 Warehouse Agreements. The above provisions of this Section 8.2
shall not be applicable to Warehouse Agreements, provided that Tenant shall use
commercially reasonable efforts to include in any Warehouse Agreement entered
into from and after the date hereof that the other party thereto shall permit
the collateral assignment described in Section 8.4 hereof, and the collateral
assignment by Landlord to Landlord's Lender of Landlord's security interests in
respect of each Sublease and Warehouse Agreement and such amounts to secure
Landlord's obligations under Landlord's Loan Documents.
8.2.8 Certain Leases Senior. With respect to those leases listed on
Exhibit 8.2.8, hereto, the parties acknowledge that Landlord is, as of the
Commencement Date, the lessor thereunder (whether by operation of law or
otherwise) and that such leases are, by operation of law, senior to this Lease.
Tenant shall perform and comply with all obligations of lessor under such leases
and, provided no Event of Default shall have occurred and be continuing, Tenant
shall be entitled to the receipt of all amounts payable by the lessees under
such leases.
8.3 REIT Related Limitations on Subleasing and Warehouse Agreement.
Anything contained in this Lease to the contrary notwithstanding, Tenant shall
not sublet the Leased Property, or enter into Warehouse Agreements, on any basis
such that (i) the rental or other consideration to be paid by the Subtenant or
other party thereunder would be based, in whole or in part, on the income or
profits derived by the business activities of the Subtenant or such other Party,
or (ii) any portion of the amounts received or accrued by Landlord hereunder
would fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto.
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8.4 Collateral Assignment of Subleases and Warehouse Agreements to
Landlord. As security for Tenant's obligations under this Lease and not
otherwise, but subject to any limitations pursuant to applicable law or
contracts (including the terms of any existing or future Subleases and Warehouse
Agreements), Tenant hereby assigns, transfers and sets over unto Landlord all of
Tenant's right, title and interest in and to all Subleases and Warehouse
Agreements, and Tenant hereby confers upon Landlord, its agents and
representatives, a right of entry in, and sufficient possession of, the Leased
Property to permit and assure the collection by Landlord of all sums payable to
Tenant, if any, under the Subleases and all sums payable to Tenant pursuant to
the Warehouse Agreements. The exercise of this right of entry and qualified
possession by Landlord shall not constitute an eviction of Tenant from the
Leased Property. Further, Tenant acknowledges that Landlord may collaterally
assign its rights under this Section 8.4 to Landlord's Lender, to secure
Landlord's obligations in respect of Landlord's Debt. This assignment, although
presently effective, is operative only upon the occurrence of an Event of
Default hereunder and not before. Nothing in this Section 8.4, however, shall be
deemed to limit or qualify the rights of any Leasehold Mortgagee pursuant to
Section 8.5 below.
8.5 Leasehold Mortgages.
8.5.1 Landlord's Estate. No Leasehold Mortgage or any extension
thereof made by Tenant shall be a lien or encumbrance upon the estate or
interest of Landlord in and to the Leased Property or any part thereof.
8.5.2 Certain Leasehold Mortgage Requirements. No Leasehold Mortgage
shall be valid or of any force or effect, or be deemed for purposes of this
Lease to be a Leasehold Mortgage, unless and until (a) a true copy of the
original of each instrument creating and effecting such Leasehold Mortgage,
certified by the Leasehold Mortgagee to be a true copy of such instrument, and
written notice containing the name and post office address of the Leasehold
Mortgagee, shall have been delivered to Landlord, (b) any consent required
hereunder by Landlord shall have been given, and (c) the Leasehold Mortgage
shall contain in substance the following provisions:
"This mortgage is executed upon the condition that no purchaser at
any foreclosure sale or assignee under an assignment in lieu of
foreclosure shall acquire any right, title or interest in or to the
lease hereby mortgaged, unless the said purchaser or assignee, or
the person, firm or corporation to whom or to which such purchaser's
or assignee's right has been assigned, shall in the instrument
transferring to such purchaser or to such assignee
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the interest of tenant under the lease hereby mortgaged, assume and
agree to perform all of the terms, covenants and conditions of that
lease thereafter to be observed or performed on the part of such
tenant (subject to the terms of Section 8.5.3(d) and/or Section
8.5.6 thereof, to the extent applicable), that no further or
additional mortgage or assignment of the lease hereby mortgaged
shall be made except in accordance with the provisions contained in
Article VIII of that lease, and that a duplicate original of said
instrument containing such assumption agreement, duly executed and
acknowledged by such purchaser or such assignee and in recordable
form, shall be delivered to the landlord under the hereby mortgaged
lease immediately after the consummation of such sale, or in any
event, prior to taking possession of the premises demised thereby as
"Tenant" under the lease."
8.5.3 Leasehold Mortgagee Provisions.
(a) If Tenant shall enter into a Leasehold Mortgage and complies, in
connection therewith, with the provisions of Section 8.5.1 and 8.5.2, Landlord
shall give to such Leasehold Mortgagee, at the address of such Leasehold
Mortgagee set forth in the notice mentioned in Section 8.5.2, a copy of each
notice of Default by Tenant and each notice of termination of this Lease at the
same time as, and whenever, any such notice of Default or termination shall be
given to Tenant, and no such notice shall be deemed to have been duly given to
Tenant unless and until a copy thereof shall have been so given to each such
Leasehold Mortgagee. Each Leasehold Mortgagee (i) shall thereupon have a period
of ten (10) days more in the case of a monetary Default and twenty (20) days
more in the case of any non-monetary Default, after notice of such Default is
given to the Leasehold Mortgagee, for curing the Default, or causing the same to
be cured by Tenant or otherwise, than is given Tenant after such notice is given
to Tenant, and (ii) shall, within such period and otherwise as herein provided,
have the right to cure such Default, cause the same to be cured by Tenant or
otherwise. Landlord shall accept performance by a Leasehold Mortgagee of any
covenant, condition, or agreement on Tenant's part to be performed hereunder
with the same force and effect as though performed by Tenant.
(b) Notwithstanding the provisions of Section 8.5.3(a) hereof, no
Event of Default shall be deemed to exist as long as a Leasehold Mortgagee, in
good faith, (i) shall have commenced promptly to cure the Default in question
and prosecutes the same to completion with reasonable diligence and continuity,
subject to Unavoidable Delays, which for the purpose of this Section 8.5.3(b)
shall include causes beyond the control of such Leasehold Mortgagee instead of
causes beyond the control of Tenant, or
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(ii) if possession of the Leased Property is required in order to cure the
Default in question, such Leasehold Mortgagee (x) shall have entered into
possession of the Leased Property with the permission of Tenant for such purpose
or (y) shall have notified Landlord of its intention to institute foreclosure
proceedings to obtain possession directly or through a receiver, and within
fourteen (14) days of the giving of such notice commenced such foreclosure
proceedings and thereafter (1) prosecutes such proceedings with reasonable
diligence and continuity (subject to Unavoidable Delays) or (2) receives an
assignment of this Lease in lieu of foreclosure from Tenant, and, upon obtaining
possession pursuant to clause (x) or (y), commences promptly to cure the Default
in question and prosecutes the same to completion with reasonable diligence and
continuity (subject to Unavoidable Delays) or (iii) if the Leasehold Mortgagee
is a collateral assignee or the holder of a security interest in ownership
interests in Tenant and the foreclosure of its collateral assignment or security
interest is required in order to act under (i) or (ii) above, such Leasehold
Mortgagee shall have notified Landlord of its intention to institute proceedings
to foreclose such collateral assignment or pledge and within fourteen (14) days
of the giving of such notice commences such foreclosure proceedings, and
thereafter (1) prosecutes such proceedings with reasonable diligence and
continuity (subject to Unavoidable Delays) or (2) receives a direct and absolute
assignment from the assignor under the collateral assignment of its interest in
the Leasehold Mortgage or of the ownership interest, in lieu of foreclosure, and
upon the completion of such foreclosure, or the obtaining of such assignment,
commences promptly to act under (i) or (ii) above; provided that the Leasehold
Mortgagee shall have delivered to Landlord, in writing, its agreement to take
the action described in clause (i), (ii) or (iii) herein and shall have assumed
the obligation to cure the Default in question and that during the period in
which such action is being taken (and any foreclosure proceedings are pending),
all of the other obligations of Tenant under this Lease, to the extent they are
susceptible of being performed by the Leasehold Mortgagee, are being duly
performed within any applicable grace periods. However, at any time after the
delivery of the aforementioned agreement, the Leasehold Mortgagee may notify
Landlord, in writing, that it has relinquished possession of the Leased Property
or that it will not institute foreclosure proceedings, or if such proceedings
have been commenced, that it has discontinued them, and in such event, the
Leasehold Mortgagee shall have no further liability under such agreement from
and after the date it delivers such notice to Landlord (except for any
obligations assumed by the Leasehold Mortgagee and accruing prior to the date it
delivers such notice), and, thereupon, Landlord shall have the unrestricted
right to terminate this Lease and to take any other action it deems appropriate
by reason of any Default by Tenant, and upon any such termination the provisions
of Section 8.5.4 shall apply. Anything contained in this Section 8.5.3(b) to the
contrary notwithstanding, the provisions of this Section 8.5.3(b) shall not
apply in the case of a Leasehold Mortgagee which is not an Institutional Lender
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unless such Leasehold Mortgagee shall provide Landlord with security for the
performance of the assumed obligation in amount and form reasonably satisfactory
to Landlord, during the period that such Leasehold Mortgagee is taking the
required action to cure the Default in question.
(c) Landlord and Tenant agree that, from and after the date upon
which Landlord receives the notice and documents mentioned in clause (a) of
Section 8.5.2, they shall not modify or amend this Lease in any respect
materially adverse to the right of Tenant or Leasehold Mortgagee or cancel or
terminate this Lease other than as provided herein without the prior written
consent of the Leasehold Mortgagees which have given such notice.
(d) Except as provided in Section 8.5.3(b), no Leasehold Mortgagee
shall become liable under the provisions of this Lease unless and until such
time as it becomes, and then only for as long as it remains, the owner of the
leasehold estate created hereby.
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease.
(a) In case of termination of this Lease by reason of any Event of
Default or for any other reason, Landlord, subject to the provisions of Section
8.5.4(e), shall give prompt notice thereof to each Leasehold Mortgagee under a
mortgage made in compliance with the provisions of Sections 8.5.1 and 8.5.2,
which notice shall be given as provided in Section 8.5.3(a) hereof. Landlord, on
written request of such Leasehold Mortgagee made any time within thirty (30)
days after the giving of such notice by Landlord, shall execute and deliver
within thirty (30) days thereafter a new lease of the Leased Property to the
Leasehold Mortgagee, or its designee or nominee, for the remainder of the Term,
upon all the covenants, conditions, limitations and agreements herein contained,
provided that the Leasehold Mortgagee (i) shall pay to Landlord, simultaneously
with the delivery of such new lease, all unpaid Rent due under this Lease up to
and including the date of the commencement of the term of such new lease and all
expenses including attorneys' fees and disbursements and court costs, incurred
by Landlord in connection with the Default by Tenant, the termination of this
Lease and the preparation of the new lease, and (ii) shall deliver to Landlord a
statement, in writing, acknowledging that Landlord, by entering into a new lease
with the Leasehold Mortgagee or its nominee or designee, shall not have or be
deemed to have waived any rights or remedies with respect to Defaults existing
under this Lease, notwithstanding that any such Defaults existed prior to the
execution of the new lease, and that the breached obligations which gave rise to
the Defaults and which are susceptible of being cured by
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the Leasehold Mortgagee or its nominee or designee are also obligations under
said new lease, but such statement shall be subject to the proviso that the
applicable grace periods, if any, provided under the new lease for curing such
obligations shall begin to run as of the first day of the term of said new
lease.
(b) Any such new lease and the leasehold estate thereby created
shall, subject to the same conditions contained in this Lease, continue to
maintain the same priority as this Lease with regard to any Leasehold Mortgage
or any other lien, charge or encumbrance whether or not the same shall then be
in existence. Concurrently with the execution and delivery of such new lease,
Landlord shall assign to the tenant named therein all of its right, title and
interest in and to moneys received from any Subleases and Warehouse Agreements
that have not been applied to Rent and have not been applied or being held for
application to the costs incurred by Landlord to operate, maintain and repair
the Leased Property.
(c) Upon the execution and delivery of a new lease under this
Section 8.5.4, all Subleases and Warehouse Agreements which theretofore may have
been assigned to Landlord thereupon shall be assigned and transferred, without
recourse, representation or warranty, by Landlord to the tenant named in such
new lease. Between the date of termination of this Lease and the earlier of (i)
the date of execution and delivery of the new lease and (ii) the date of
Leasehold Mortgagee's option to request a new lease pursuant to this Section
8.5.4 expires without the exercise of such option, Landlord shall not enter into
any new Subleases or Warehouse Agreements, cancel or modify any then existing
Subleases or Warehouse Agreements, or accept any cancellation, termination or
surrender thereof (unless such termination shall be effected as a matter of law
on the termination of this Lease) without the written consent of the Leasehold
Mortgagee, except as permitted in the Subleases or Warehouse Agreements.
(d) If there is more than one Leasehold Mortgage, Landlord shall
recognize the Leasehold Mortgagee whose Leasehold Mortgage is junior in lien as
the Leasehold Mortgagee entitled to the rights afforded by Sections 8.5.3, 8.5.4
and 8.5.5 (unless a Leasehold Mortgagee senior in lien requires that the holder
thereof have a superior entitlement to such rights, in which event such
recognition shall be of the holder of that Leasehold Mortgage), provided that
such Leasehold Mortgagee shall have complied with the provision of Sections
8.5.1 and 8.5.2. A security agreement providing for a security interest in the
ownership interests in Tenant and otherwise complying with the terms hereof for
a Leasehold Mortgage shall be treated as a Leasehold Mortgage that is junior in
lien.
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8.5.5 Notice of Arbitration. In any circumstances where arbitration
is provided for under this Lease, Landlord agrees that Landlord shall give any
Leasehold Mortgagee who shall have given Landlord a notice as provided in
Section 8.5.2(a), notice of any demand by Landlord for any arbitration, and
Landlord shall recognize the Leasehold Mortgagee entitled to the rights afforded
hereunder in accordance with Section 8.5.4(d) as the only proper party to
participate in the arbitration. In such case, Tenant agrees not to participate
in such arbitration.
ARTICLE IX
9.1 Maintenance and Repair.
(a) Subject to Landlord's obligation under Section 9.1(b), Tenant,
at its expense, shall keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto and which are under Tenant's control
(and Tenant's Personal Property) in good order and repair, reasonable wear and
tear excepted (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of such Leased Property or
Tenant's Personal Property, or any portion of either) and shall promptly make
all necessary and appropriate repairs and replacements thereto, of every kind
and nature, whether interior or exterior, structural or non-structural, ordinary
or extraordinary, foreseen or unforeseen, arising by reason of a condition
(concealed or otherwise) occurring subsequent or prior to the Commencement Date.
All repairs shall, to the extent reasonably achievable, be made in good,
workmanlike and first-class manner, in accordance with all applicable federal,
state and local statutes, ordinances, by-laws, codes, rules and regulations
relating to such work. Tenant will not take or omit to take any action the
taking or omission of which might materially impair the value or usefulness of
the Leased Property or any part thereof for the Primary Intended Use.
(b) Notwithstanding anything herein to the contrary, Landlord shall
promptly make all necessary and appropriate repairs and replacements to the
Leased Property (other than those repairs and replacements (i) caused by the
negligence or wilfull misconduct of Tenant or any Person claiming by, through or
under Tenant or (ii) required as a result of Casualty or Condemnation to the
Leased Property) the costs of which are required to be depreciated under the
Internal Revenue Code on a 39-year basis (or any successor period of
depreciation for buildings) ("39-Year Property") in an amount not in excess of
the amount specified on Schedule 9.1(b) hereto under the column captioned
"Landlord's Responsibility," provided (x) Landlord's obligation pursuant to the
above terms of the sentence shall be subject to prior reasonable notice from
Tenant as to the
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need to make such repair and replacement, and (y) Landlord may elect that Tenant
perform such repair and replacement, in which event, Landlord shall reimburse or
pay to Tenant, within fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in making such
repairs and replacements. Further,
(1) Tenant shall make all necessary and appropriate repairs
and replacements required in respect of 39-Year Property to the extent the
same exceed the amount specified on said Schedule 9.1(b) under the column
captioned "Landlord's Responsibility", and
(2) Tenant agrees that (A) it shall expend annually for the
repair and replacement of 39-Year Property not less than the amount
specified on Schedule 9.1(b) under the column captioned "Minimum Tenant's
Responsibility", provided that Tenant shall not be deemed to have expended
any amounts in satisfaction of the "Minimum Tenant's Responsibility"
identified on said Schedule 9.1(b) until such time as Tenant shall have
expended all amounts required to be spent by Tenant under Section 2.3 of
the Asset Purchase Agreement in connection with which this Lease is being
executed, to which Tenant (or its Affiliate) is party, (B) to the extent
Tenant shall have spent less than the specified amount in any Lease Year,
such unspent amount shall cumulate and Tenant shall be required to expend
the unspent portion in subsequent Lease Years, and (C) if at the end of
the Term, there shall be any cumulative unspent amounts, Tenant shall pay
such amount to Landlord not later than the end of the Term.
(c) Except as expressly specified in Section 9.1(b), Landlord shall
not under any circumstances be required to build or rebuild any improvements on
the Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or non-structural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, or to
maintain the Leased Property in any way, except as expressly provided herein.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or thereafter enacted.
(d) Nothing contained herein and no action or inaction by Landlord
shall be construed as (i) constituting the consent or request of Landlord,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property
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for the construction, alteration, addition, repair or demolition of or to the
Leased Property, or (ii) giving Tenant any right, power or permission to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against Landlord in respect thereof or to make any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Landlord in the
Leased Property.
(e) Tenant will, upon the expiration or prior termination of the
Term with respect to any Leased Property, vacate and surrender the same to
Landlord in the condition in which the same was originally received from
Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the Term). In addition, Tenant shall
not be permitted to remove any of Tenant's Personal Property from the Leased
Property unless such removal shall not damage the Leased Property in any
material respect.
9.2 Encroachments, Restrictions, etc. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other agreement affecting the Leased
Property, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of any adverse final determination, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment, whether
the same shall affect Landlord or Tenant or (ii) make such changes in the Leased
Improvements, and take such other actions, as Tenant in good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment, and to
end such violation or impairment, including, if necessary, the alteration of any
of the Leased Improvements, and in any event take all such actions as may be
necessary in order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article VIII. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under
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any policy of title or other insurance, and Tenant shall be entitled to a credit
for any sums recovered by Landlord under any such policy of title or other
insurance.
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance. Tenant shall at all times keep the applicable Leased
Property, and all property located in or on the applicable Leased Property,
including Tenant's Personal Property, insured with the kinds and amounts of
insurance described below or with such other insurance as may be reasonably
requested by Landlord (taking into consideration any insurance requirements that
may be required in respect of any Landlord's Debt).
(a) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall keep all of the Leased Property insured and
obtain and maintain policies of insurance insuring against loss or damage
by standard perils included within the classification "All Risks of
Physical Loss", which policy or policies shall cover (by endorsement or
otherwise) warehouse legal liability. Such insurance (i) shall be in an
aggregate amount equal to the then full replacement cost of the Leased
Property and the Equipment (without deduction for physical depreciation)
and (ii) shall have deductibles no greater than $100,000 (as escalated by
the CPI Increase) (with such higher deductibles for wind and earthquake
coverage as the applicable issuer may require). The policies of insurance
carried in accordance with this paragraph shall be paid in accordance with
the agreed upon payment schedule incorporated into such policies and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation.
(b) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall also obtain and maintain the following policies
of insurance:
(i) Flood insurance with respect a Leased Property, if any
part of such Leased Property is located in an area identified by the
Federal Emergency Management Agency as an area federally designated
a "100 year flood plain" and (A) flood insurance is generally
available at reasonable premiums and in such amount as generally
required by institutional lenders for similar properties or (B) if
not so available from a
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private carrier, from the federal government at commercially
reasonable premiums to the extent available. In either case, the
flood insurance shall be in an amount at least equal to the
Termination Amount with respect to such Leased Property or the
maximum limit of coverage available with respect to such Leased
Property under said program, whichever is less;
(ii) Commercial general liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing
minimum limits per occurrence of $1,000,000 for any policy year. In
addition, at least $25,000,000 excess and/or umbrella liability
insurance shall be obtained, and at all times at least $10,000,000
excess and/or umbrella liability insurance shall be available (such
that, at all times, such coverage shall be maintained against which
no claim shall have been asserted) and maintained for any and all
claims, including legal liability imposed upon Tenant and related
court costs and attorneys' fees generally covered by such insurance
policies; provided that if there are one or more claims in
connection with a property other than the Leased Property that
results in the amount of excess and/or umbrella liability insurance
coverage to be less than $25,000,000, Tenant shall give notice to
Landlord that such coverage has so decreased and Tenant shall cause
such coverage to be increased to $25,000,000.
(iii) Rental loss and/or business interruption insurance in an
amount sufficient to avoid any co-insurance penalty and equal to the
greater of (A) the estimated Receipts from the operation of the
Leased Property (including (x) the total payable under the Subleases
and the Warehouse Agreements, and (y) the total amount of all other
amounts to be received by Tenant or third parties that are the legal
obligation of the Subtenants), less non-continuing Operating
Expenses (i.e., Operating Expenses which were incurred in connection
with the ownership, operation and/or maintenance of the Leased
Property prior to the insured event, but which are not incurred
during the period covered by the insurance required pursuant to this
Section 10.1(b)(iii)), for a period of up to the next succeeding
eighteen (18) months, or (B) the projected Operating Expenses
(including debt service) for the maintenance and operation of the
Leased Property for a period of up to the next succeeding eighteen
(18) months as the same may be reduced or increased from time to
time due to changes in such Operating Expenses. The amount of such
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insurance shall be increased from time to time as and when the rents
increase or the estimate of (or the actual) Receipts, as may be
applicable, increases or decreases to the extent rents or the
estimates of gross revenue decrease;
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter
installed in any of the Improvements (without exclusion for
explosions) and insurance against loss of occupancy or use arising
from any breakdown, in such amounts as are generally available at
reasonable premiums and are generally required by institutional
lenders for properties comparable to the Leased Property;
(v) Worker's compensation insurance with respect to all
employees of Tenant, as and to the extent required by any
Governmental Authority or Legal Requirement;
(vi) During any period of repair or restoration costing in
excess of $5,000,000, builder's "all risk" insurance in an amount
equal to not less than the full insurable value of the related
Leased Property against such risks (including fire and extended
coverage and collapse of the Improve ments to agreed limits) as
Landlord may reasonably request, in form and substance reasonably
acceptable to Landlord;
(vii) Coverage to compensate for the cost of demolition and
the increased cost of construction for the Leased Property in an
amount satisfactory to Landlord, which amount shall not exceed
$10,000,000;
(viii) If required by Landlord's Lender, in the event any
Leased Property is located in a federal earthquake zone, earthquake
insurance with respect to such Leased Property in an amount equal to
probable maximum loss with respect to such Leased Property, with a
maximum deductible of five percent (5%) of the replacement cost of
such Leased Property; and
(ix) Such other insurance as may from time to time be
reasonably required by Landlord in order to protect its interests,
provided such insurance is generally available at commercially
reasonable premiums.
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(c) All policies of insurance (the "Policies") required pursuant to
Section 10.1 with respect to any Leased Property shall be issued by companies
licensed to do business in the state where such Leased Property is located.
Further, unless otherwise approved by Landlord in writing, the issuer(s) of the
Policies required under Section 10.1(a) for all risk coverage shall have a
claims paying ability rating of "AA" or better by Standard & Poor's and Moody's
or (unless objected to by Landlord's Lender) "A-X" or better by Best's, and (b)
Policies for all other coverage shall have a claims paying ability rating of "A"
or better by Standard & Poor's and Moody's or (unless objected to by Landlord's
Lender) "A-X" or better by Best's. The Policies (i) shall name Landlord and
Landlord's Lender (if any) and its successors and/or assigns, as their interest
may appear, as additional insureds or loss payees (except that in the case of
general liability insurance, Landlord and Landlord's Lender shall be named as
additional insureds and not a loss payee); (ii) shall contain, for the benefit
of Landlord's Lender, a Non-Contributory Standard Lender Clause and, except with
respect to general liability insurance, a Lender's Loss Payable Endorsement, or
their equivalents, naming Landlord's Lender as the person to which all payments
made by such insurance company shall be paid; (iii) shall include effective
waivers by the insurer of all claims for insurance premiums against all loss
payees, additional insureds and named insureds (other than Tenant) and all
rights of subrogation against any loss payee, additional insured or named
insured; (iv) if directed by Landlord, shall be assigned to Landlord's Lender;
(v) except as otherwise provided above, shall be subject to a deductible, if
any, not greater in any material respect, in proportion to the coverage
maintained, than the deductible for such coverage on the date hereof; (vi) shall
contain such provisions as Landlord deems reasonably necessary or desirable to
protect its interest (and that of Landlord's Lender, to the extent so requested
by Landlord on behalf of Landlord's Lender), including endorsements providing
that: none of Tenant, Landlord, Landlord's Lender or any other party shall be a
co-insurer under said Policies and that no modification that would result in
non-compliance with the provisions of this Section 10.1, cancellation,
termination or non-renewal of any of the Policies shall be effective until at
least thirty (30) days after receipt by each named insured, additional insured
and loss payee of written notice thereof or ten (10) days after receipt of such
notice with respect to nonpayment of premium; (vii) shall permit Landlord or
Landlord's Lender to pay the premiums and continue any insurance upon failure of
Tenant to pay premiums when due, upon the insolvency of Tenant or through
foreclosure or other transfer of title to the Leased Property (or any of them)
(it being understood that Tenant's rights to coverage under such policies may
not be assignable without the consent of the insurer); and (viii) shall provide
that the insurance shall not be impaired or invalidated by virtue of (A) any
act, failure to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by Tenant, Landlord,
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Landlord's Lender or any other named insured, additional insured or loss payee,
except for the willful misconduct of Landlord or Landlord's Lender knowingly in
violation of the conditions of such policy, (B) the occupation, use, operation
or maintenance of the Leased Property for purposes more hazardous than permitted
by the terms of the Policy, (C) any foreclosure or other proceeding or notice of
sale relating to the Leased Property or (D) any change in the possession of the
Leased Property without a change in the identity of the holder of actual title
thereto (provided that with respect to items (C) and (D), any notice
requirements of the applicable Policies are satisfied).
(d) Insurance Premiums; Certificates of Insurance.
(i) Tenant shall pay the premiums for such Policies (the "Insurance
Premiums") as the same become due and payable and shall furnish to
Landlord the receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Landlord (provided
Tenant is not required to furnish such evidence of payment if such
Insurance Premiums are to be paid pursuant to the Cash Management
Procedures relating to any Landlord's Debt). Within thirty (30) days after
request by Landlord, Tenant shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested by Landlord,
taking into consideration changes in liability laws, changes in prudent
customs and practices, and the like. In the event Tenant satisfies the
requirements under this Section 10.1 through the use of a Policy covering
properties in addition to the Leased Property, then, at Landlord's
request, Tenant shall provide to Landlord evidence satisfactory to it that
the Insurance Premiums for the Leased Property are separately allocated
under such Policy to the Leased Property and that payment of such
allocated amount shall maintain the effectiveness of such Policy as to the
Leased Property notwithstanding the failure of payment of any other
portion of premiums. If such allocation is required by the immediately
preceding sentence, but such allocation is not available, Landlord shall
have the right to increase any tax and insurance escrow account required
in connection with Landlord's Debt in an amount sufficient to purchase a
non-blanket Policy covering the Leased Property covered by such Policy
from insurance companies which qualify under this Lease.
(ii) Tenant shall deliver to Landlord on or prior to the Closing
Date certificates setting forth in reasonable detail the material terms
(including any applicable notice requirements) of all Policies from the
respective insurance companies (or their authorized agents) that issued
the Policies, including that such Policies may not be modified in a manner
that would result in such Policies not
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complying with the provisions of this Section 10.1, canceled, terminated
or not renewed without thirty (30) days' prior notice to Landlord, or ten
(10) days' notice with respect to nonpayment of premium. Tenant shall
deliver to Landlord, concurrently with each material change in any Policy,
a certificate with respect to such changed Policy certified by the
insurance company issuing that Policy, in substantially the same form and
containing substantially the same information as the certificates required
to be delivered by Tenant pursuant to the first sentence of this clause
(d)(ii) and stating that all premiums then due thereon have been paid to
the applicable insurers and that the same are in full force and effect (or
if such certificate and report shall not be obtainable by Tenant, Tenant
may deliver an Officer's Certificate to such effect in lieu thereof).
(e) Renewal and Replacement of Policies.
(i) Not less than four (4) Business Days prior to the expiration,
termination or cancellation of any Policy, Tenant shall renew such policy
or obtain a replacement policy or policies (or a binding commitment for
such replacement policy or policies), which shall be effective no later
than the date of the expiration, termination or cancellation of the
previous policy, and shall deliver to Landlord (and, if requested by
Landlord, to Landlord's Lender) a certificate in respect of such policy or
policies (A) containing the same information as the certificates required
to be delivered by Tenant pursuant to clause (d)(ii) above, or a copy of
the binding commitment for such policy or policies and (B) confirming that
such policy complies with all requirements hereof.
(ii) If Tenant does not furnish the certificates as required under
clause (e)(i), Landlord may procure, but shall not be obligated to
procure, such replacement policy or policies and pay the Insurance
Premiums therefor, and Tenant agrees to reimburse Landlord for the cost of
such Insurance Premiums promptly on demand.
(iii) Concurrently with the delivery of each replacement policy or a
binding commitment for the same pursuant to this clause (e), Tenant shall
deliver to Landlord a report from a reputable and experienced insurance
broker or from the insurer, setting forth the particulars as to all
insurance obtained by Tenant pursuant to this Section 10.1 and then in
effect and stating that all Insurance Premiums then due thereon have been
paid in full to the applicable insurers and that such insurance policies
are in full force and effect (or if such report shall not be available
after Tenant shall have used its reasonable efforts to provide the
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same, Tenant will deliver to Landlord an Officer's Certificate containing
the information to be provided in such report) and Tenant shall deliver to
Landlord an Officer's Certificate stating that such insurance otherwise
complies in all material respects with the requirements of this Section
10.1.
(f) Separate Insurance. Tenant will not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 10.1 unless such insurance complies with
clause (c) above.
(g) Tenant shall name any Person holding, servicing or administering
Landlord's Debt and reasonably designated by Landlord (including any trustee,
servicer or special servicer) as a loss payee or additional insured with respect
to any Policy under which Landlord's Lender is to be so named hereunder.
10.2 Casualty; Application of Proceeds.
(a) Right to Adjust.
(i) If any Leased Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Tenant shall give prompt
written notice thereof to Landlord generally describing the nature and
extent of such Casualty. Subject to Section 10.2(b), following the
occurrence of a Casualty, Tenant, regardless of whether proceeds are
available, shall in a reasonably prompt manner proceed to restore, repair,
replace or rebuild the affected Leased Property to the extent practicable
to be of at least equal value and of substantially the same character and
quality as prior to the Casualty, all in accordance with the terms hereof
applicable to Alterations.
(ii) Subject to clause (v) below, in the event of a Casualty that
does not exceed $1,000,000, Tenant may settle and adjust such claim;
provided that such adjustment is carried out in a competent and timely
manner.
(iii) Subject to clause (v) below, in the event a Casualty shall
exceed $1,000,000, Tenant may settle and adjust such claim only with the
consent of Landlord (and, if required under the terms of Landlord's Loan
Documents, Landlord's Lender), which consent shall not be unreasonably
withheld or delayed, and Landlord (and Landlord's Lender) shall have the
opportunity to participate, at Tenant's cost, in any such adjustments.
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(iv) The proceeds of any Policy shall be due and payable solely to a
Depositary.
(v) Notwithstanding the terms of clauses (ii) and (iii) above,
Landlord shall have the sole discretion to adjust any claim with respect
to a Casualty and to collect all Proceeds if an Event of Default shall
have occurred and is continuing.
The provisions of this Section 10.2(a) are subject to the terms of any lease
that would be considered a "Superior Interest" (as defined herein) to the
contrary.
(b) Tenant's Right to Proceeds for Certain Casualty. In the event either
of (i) a Casualty that involves a loss of less than thirty percent (30%) of the
Termination Amount with respect to the affected Leased Property or (ii) a
Condemnation where the loss is in an aggregate amount less than twenty percent
(20%) of the Termination Amount with respect to the affected Leased Property,
Tenant be entitled to apply the Proceeds (after reimbursement of any expenses
incurred by Landlord and Landlord's Lender) to reimburse Tenant for the cost of
restoring, repairing, replacing or rebuilding the affected Leased Property (the
"Restoration"), in the manner required hereby, provided and on the condition
that, no Event of Default shall have occurred and be then continuing and, in the
reasonable judgment of Landlord:
(i) the Restoration can be completed by the earliest to occur
of:
(A) the 365th day following the receipt of the Proceeds,
or, with Landlord's written consent, such longer period as may
reasonably be required,
(B) the scheduled maturity date of Landlord's Debt, and
(C) with respect to a Casualty, the expiration of the
payment period on the rental-loss insurance or business interruption
insurance coverage in respect of such Casualty, and
(ii) after receiving reasonably satisfactory evidence to such
effect, during the period of the Restoration, the sum of (A) income
derived from the Leased Properties (taken as a whole), plus (B) proceeds
of rental-loss insurance or business interruption insurance, if any,
payable together with such other monies as Tenant may irrevocably make
available for the Restoration, will equal or exceed the sum required for
Tenant to pay the Minimum Rent, Taxes, Other Charges and
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all other Operating Expenses and required capital expenditures for all of
the Leased Properties (taken as a whole).
Notwithstanding the foregoing, if any of the conditions set forth in the proviso
in this clause (b) is not satisfied, then, notwithstanding anything herein to
the contrary, unless Landlord shall otherwise elect, at its sole option, (w) the
Proceeds shall be paid to Landlord up to the Termination Amount, and the balance
thereof, after payment of all Landlord's and Landlord's Lender's reasonable
expenses in connection therewith, shall be paid to Tenant, (x) this Lease shall
terminate in respect of the affected Leased Property (except for such terms as
are expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set forth on
Exhibit 3.1(a) shall be adjusted to reflect the portion of Minimum Rent
allocated to each Leased Property remaining subject to the terms of this Lease.
Notwithstanding any of the foregoing, in the event of a Casualty or Condemnation
where an Operating Agreement, a Warehouse Agreement with respect to all or
substantially all of a Leased Property, or a Sublease with a Major Subtenant
requires that Tenant restore the affected Leased Property or any affected
portion thereof, Landlord shall permit the application of the Proceeds (after
reimbursement of any expenses incurred by Landlord and Landlord's Lender) to
reimburse Tenant for the cost of Restoration provided no Event of Default shall
have occurred and then be continuing.
(c) Termination of Lease in Certain Circumstances. In any case in which
Tenant is not entitled to the Proceeds for Restoration pursuant to Section
10.2(b), then:
(i) if Landlord's Lender does not permit, pursuant to
Landlord's Loan Documents, the application of the Proceeds to the
Restoration (which Landlord's Lender shall notify Landlord and Tenant
within a reasonable time after the Casualty or Condemnation, and in no
event later than the 40th day after the receipt of Proceeds), then (x)
Landlord shall be entitled to the Proceeds up to the Termination Amount
(and Tenant shall be entitled to any balance, after payment of all
Landlord's and Landlord's Lender's reasonable expenses in connection
therewith), (y) this Lease shall terminate as to the affected Leased
Property (except with respect to those matters that are expressly intended
to survive the expiration or earlier termination of this Lease) and (z)
the Minimum Rent shall be reduced by the portion thereof allocable
thereto, as determined by reference to Exhibit 3.1(a), or
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(ii) if Landlord's Lender is required or elects under the
terms of the Landlord's Loan Documents to permit the application of
Proceeds to Restoration, then the Proceeds shall be so applied provided
that Landlord is reasonably satisfied that, upon the completion of the
Restoration, Tenant shall be able to satisfy its obligations hereunder in
respect of the affected Leased Property (assuming for these purposes a pro
rata Minimum Rent obligation.
(d) Manner of Reimbursement of Restoration Expenses. If Tenant is entitled
pursuant to Section 10.2(b) or (c) hereof to reimbursement of Restoration costs
from Proceeds, such Proceeds shall be disbursed on a monthly basis upon the
Depositary being furnished with (i) such architect's certificates, Lien waivers,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as the
Depositary may reasonably require and approve, and (ii) all plans and
specifications for such Restoration, such plans and specifications to be
approved by Landlord prior to commencement of any work (such approval not to be
unreasonably withheld or delayed). In addition, no payment made prior to the
Final Completion of the Restoration shall exceed ninety-five percent (95%) of
the value of the work performed from time to time; funds other than Proceeds
shall be disbursed prior to disbursement of such Proceeds; and at all times, the
undisbursed balance of such Proceeds remaining in the hands of the Depositary,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Landlord by or on behalf of Tenant for that purpose, shall be at
least sufficient in the reasonable judgment of Landlord to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Prior to any disbursement, Landlord shall have received evidence reasonably
satisfactory to it of the estimated cost of completion of the Restoration (such
estimate to be made by Tenant's architect or contractor and approved by Landlord
in its reasonable discretion), and Tenant shall have deposited with the
Depositary Eligible Collateral in an amount equal to the excess (if any) of such
estimated cost of completion over the net Proceeds. Any surplus which may remain
out of Proceeds received pursuant to a Casualty shall be paid to Tenant after
payment of such costs of Restoration. Any surplus which may remain out of
Proceeds received pursuant to a Condemnation after payment of such costs of
Restoration shall be paid over to and belong to Landlord.
10.3 Condemnation.
(a) Tenant shall promptly give Landlord written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting any Leased Property (a "Condemnation") and shall deliver to Landlord
copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a
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Condemnation, Tenant, regardless of whether Proceeds are available, shall
promptly proceed to restore, repair, replace or rebuild the same to the extent
practicable to be of at least equal value and of substantially the same
character as prior to such Condemnation, all to be effected in accordance with
the terms hereof applicable to Alterations.
(b) Landlord is hereby irrevocably appointed as Tenant's attorney-in-fact,
coupled with an interest, with exclusive power to collect, receive and retain
any Proceeds in respect of a Condemnation and to make any compromise or
settlement in connection with such Condemnation, subject to the provisions of
this Section, and such power shall include the power to substitute Landlord's
Lender in Landlord's discretion. Provided no Event of Default has occurred and
is continuing, (x) in the event of a Condemnation where the loss does not exceed
$1,000,000, Tenant may settle and compromise such Proceeds; provided that the
same is effected in a competent and timely manner, and (y) in the event a
Condemnation, where the loss exceeds $1,000,000, Tenant may settle and
compromise the Proceeds only with the consent of Landlord (and, if required
under the terms of Landlord's Loan Documents, Landlord's Lender), which consent
shall not be unreasonably withheld or delayed, and Landlord shall have the
opportunity to participate, at Tenant's cost, in any litigation and settlement
discussions in respect thereof. Tenant shall cause any Proceeds that are payable
to Tenant to be paid directly to a Depositary to be held and applied in
accordance with the terms hereof.
(c) The Rent shall be subject to adjustment in the manner provided for in
Section 4.2.
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures. Tenant hereby agrees to cooperate with
Landlord and to execute any and all instruments reasonably requested by Landlord
(including, if necessary, the execution of an amendment to this Lease), in the
establishment and maintenance of escrow and/or reserve accounts and cash
management procedures reasonably requested by any Landlord's Lender in
connection with Landlord's Loan Documents (the "Cash Management Procedures");
provided, however, that the Cash Management Procedures shall be no more onerous
than the "Cash Management Procedures" relating to that certain Master Lease
Agreement, dated as of April 22, 1998, between Americold Real Estate, L.P., as
landlord, and Americold Corporation, as tenant.
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ARTICLE XII
12.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) if Tenant shall fail to pay the Minimum Rent when due and
payable hereunder, or
(b) if Tenant shall fail to pay when due any amount (other than
Minimum Rent) when due and payable and such default shall continue for ten
(10) days after notice thereof to Tenant, or
(c) if Tenant shall fail to observe or perform any term, covenant or
condition of this Lease not specifically provided for in this Section 12.1
and such failure is not cured within a period of thirty (30) days after
receipt of notice from Landlord, unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
period of time shall be extended to such period of time as may be
necessary to cure such default with all due diligence, or
(d) if Tenant shall admit in writing its inability to pay its debts
generally as they become due; file a petition in bankruptcy or a petition
to take advantage of any insolvency act; make an assignment for the
benefit of its creditors; consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; or file a
petition or answer seeking reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any State thereof, or
(e) any petition shall be filed by or against Tenant under Federal
bankruptcy laws, or any other proceeding shall be instituted by or against
Tenant or such subsidiary seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian
or other similar official for Tenant, or for any substantial part of the
property of Tenant, and such proceeding is not dismissed within ninety
(90) days after institution thereof, or Tenant shall take any action to
authorize or effect any of the actions set forth above in this paragraph
(e), or
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(f) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding any
the same shall not be vacated or discharged within the later of ninety
(90) days after commencement thereof or thirty (30) days after receipt by
Tenant of notice thereof from Landlord, (unless Tenant shall be contesting
such lien or attachment in good faith in accordance with the terms of this
Lease), or
(g) if an event of default under any of the Other Leases shall have
occurred and be continuing,
then, and in any such event, Landlord may terminate this Lease by giving not
less than ten (10) days' notice of such termination and upon the expiration of
the time fixed in such notice, if any, and the failure of the applicable Event
of Default to be cured within such ten-day period, the Term shall terminate and
all rights of Tenant under this Lease shall cease. Landlord shall have all
rights at law and in equity available to Landlord as a result of Tenant's breach
of this Lease.
Tenant shall, to the maximum extent permitted by law, pay as Additional Charges
all Litigation Costs as a result of any Event of Default hereunder.
12.2 Certain Remedies. Landlord shall have the right to terminate this
Lease, and otherwise exercise remedies, at any time and from time to time, with
respect to one or more, or all, of the Leased Properties, and the termination of
this Lease or other exercise of remedies with respect to one or more Leased
Properties shall in no way constitute a waiver on the part of Landlord to
terminate this Lease on account of such Event of Default, or otherwise exercise
remedies, at any time and from time to time, in one or more other instances,
with respect to the balance of the Leased Properties.
12.3 Damages. Neither (a) the termination of this Lease pursuant to
Section 12.1 with respect to any or all of the Leased Property, (b) the
repossession of the applicable Leased Property or any portion thereof, (c) the
failure of Landlord, notwithstanding reasonable good faith efforts to relet the
applicable Leased Property or any portion thereof, (d) the reletting of all or
any portion thereof, nor (e) the failure of Landlord to collect or receive any
rentals due upon any such reletting, shall relieve Tenant of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event of any such termination, Tenant shall
forthwith pay to Landlord all Rent due and payable with respect to the Leased
Property to and including the date of such termination. Thereafter, Tenant,
until the end of what would have been the Term in the absence of such
termination, and whether or not the
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applicable Leased Property or any portion thereof shall have been re-let, shall
be liable to Landlord for, and shall pay to Landlord, as current damages, the
Rent and other charges which would be payable hereunder for the remainder of the
Term had such termination not occurred, less the net proceeds, if any, of any
reletting of the applicable Leased Property, after deducting all expenses in
connection with such re-letting, including all repossession costs, brokerage
commissions, legal expenses, attorneys' fees, advertising costs, expenses of
employees, alteration costs and expenses of preparation for such reletting.
Tenant shall pay such current damages to Landlord monthly on the days on which
the Minimum Rent would have been payable hereunder if this Lease had not been
terminated.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages and in lieu of
all such current damages beyond the date of such termination, at Landlord's
election, Tenant shall pay to Landlord either, at Landlord's election, (a) an
amount equal to the excess, if any, of the Rent and other charges which would be
payable hereunder from the date of such termination (assuming that, for the
purposes of this paragraph, annual payments by Tenant on account of Taxes and
Other Charges would be the same as payments required for the immediately
preceding twelve calendar months, or if less than twelve calendar months have
expired since the Commencement Date, the payments required for such lesser
period projected to an annual amount) for what would be the then unexpired term
of this Lease if the same remained in effect (with respect to the applicable
Leased Property), over the Fair Market Rental for the same period, or (b) an
amount equal to the lesser of (i) the Rent and other charges that would have
been payable for the balance of the Term had it not been terminated, or (ii) the
aggregate of the Minimum Rent, Additional Charges and other charges accrued in
the twelve (12) months ended next prior to such termination (without reduction
for any free rent or other concession or abatement). In the event this Lease is
so terminated prior the expiration of the first full year of the Term, the
liquidated damages which Landlord may elect to recover pursuant to this Section
shall be calculated as if such termination had occurred on the first anniversary
of the Commencement Date. Nothing contained herein shall, however, limit or
prejudice the right of Landlord to prove and obtain in proceedings for
bankruptcy or insolvency an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater than,
equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet the applicable Leased
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Property or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may, at Landlord's option, be equal to,
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant concessions or free rent to the extent that
Landlord considers advisable and necessary to relet the same, and (b) make such
alterations, repairs and decorations in the applicable Leased Property or any
portion thereof as Landlord, in its sole judgment, considers advisable and
necessary for the purpose of reletting the applicable Leased Property; and the
making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure to relet the
applicable Leased Property, or, in the event that the applicable Leased Property
is relet, for failure to collect the rent under such reletting. To the fullest
extent permitted by law, Tenant hereby expressly waives any and all rights of
redemption granted under any present or future laws in the event of Tenant's
being evicted or dispossessed, or in the event of Landlord's obtaining
possession of the applicable Leased Property, by reason of the violation by
Tenant of any of the covenants and conditions of this Lease.
12.4 Waiver. If this Lease is terminated pursuant to Section 12.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XII, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt (provided nothing herein shall be construed to
limit Tenant's liability hereunder, which is intended to be fully recourse to
Tenant, to its interest in the Leased Property).
12.5 Application of Funds. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State where the applicable Leased Property is located.
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ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, without waiving or releasing
any obligation or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and at
the expense of Tenant, and may, to the extent permitted by law, enter upon the
applicable Leased Property or any portion thereof for such purpose and take all
such action thereon as, in Landlord's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
sums so paid by Landlord and all costs and expenses (including attorneys' fees
and expenses, in each a case, to the extent permitted by law) so incurred,
together with interest thereon (to the extent permitted by law) at the Overdue
Rate from the date on which such sums or expenses are paid or incurred by
Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XIV
14.1 Holding Over. If Tenant shall for any reason remain in possession of
the applicable Leased Property after the expiration of the Term or earlier
termination of the Term, such possession shall be as a month-to-month tenant
during which time Tenant shall pay as rental each month, one and one-half times
the aggregate of (i) one-twelfth of the aggregate Minimum Rent payable with
respect to the last Lease Year of the Term; (ii) all Additional Charges accruing
during the month and (iii) all other sums, if any, payable by Tenant pursuant to
the provisions of this Lease with respect to the applicable Leased Property.
During such period of month-to-month tenancy, Tenant shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to month-to-month tenancies to continue its occupancy and use of the
applicable Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Lease.
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ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance. This Lease and all rights of Tenant
hereunder are subject and subordinate to the Lien affecting the Leased
Properties created pursuant to Lender's Loan Documents, whether now or hereafter
existing, or the interest of any landlord under a lease senior in title to this
Lease, whether now or hereafter existing (all such Liens and interests,
collectively, the "Superior Interests"), and to all renewals, modifications,
consolidations, replacements and extensions of Superior Interests, provided that
the holder of such Superior Interest shall have executed and delivered to Tenant
a "non-disturbance" agreement in favor of Tenant substantially on the same terms
and conditions as are contained in the form attached hereto as Exhibit 15.1.
Subject to the foregoing proviso, this Section shall be self-operative and no
further instrument of subordination shall be required, but in confirmation of
such subordination, Tenant agrees to execute and deliver promptly any
commercially reasonable form of instrument (in recordable form, if requested)
that Landlord or the holder of any Superior Interest (each, a "Superior Party")
may request to evidence such subordination.
15.2 Attornment. If the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of any such Superior Interest, then Tenant shall, at
the option of such purchaser, assignee or any Superior Party, as the case may
be, (x) attorn to such party and perform for its benefit all the terms,
covenants and conditions of this Lease on Tenant's part to be performed with the
same force and effect as if such party were the Landlord originally named in
this Lease, or (y) enter into a new lease with such party, as Landlord, for the
remaining Term and otherwise on the same terms and conditions of this Lease
except that such successor Landlord shall not be (i) liable for any previous
act, omission or negligence of Landlord under this Lease; (ii) subject to any
counterclaim, defense or offset which theretofore shall have accrued to Tenant
against Landlord; (iii) bound by any previous modification or amendment of this
Lease or by any previous prepayment of more than one month's rent in advance of
its due date, unless such modification, amendment or prepayment shall have been
approved in writing by the Superior Party through or by reason of which such
successor Landlord shall have succeeded to the rights of Landlord under this
Lease; or (iv) liable for any security (if any) deposited pursuant to this Lease
unless such security has actually been delivered to such successor Landlord.
Nothing contained in this Section shall be construed to impair any right
otherwise exercisable by any such owner, holder or Tenant.
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15.3 Notice of Default to Landlord's Lender. In the event of any act or
omission by Landlord which would give Tenant the right, either immediately or
after the lapse of a period of time, to terminate this Lease, or to claim a
partial or total eviction, Tenant will not exercise any such right (A) until it
has given written notice of such act or omission to Landlord's Lender, and (B)
until a reasonable period of time (not less than thirty (30) days) for remedying
such act or omission shall have elapsed following giving of such notice and
following the time when Lender shall have become entitled under the Landlord's
Loan Documents to remedy the same, provided Lender, with reasonable diligence,
shall (i) have pursued such remedies as are available to it under Landlord's
Loan Documents so as to be able to remedy the act or omission, and (ii)
thereafter shall have commenced and continued to remedy such act or omission or
cause the same to be remedied. Tenant's agreement herein shall not apply to
those situations specifically set forth herein wherein Tenant has an express
option to cancel and terminate this Lease.
15.4 Modifications to Secure Financing. If any Superior Party or
prospective Superior Party shall request modifications of this Lease as a
condition to the provision, continuance or renewal of any such financing, Tenant
will not unreasonably withhold, delay or defer its consent thereto, provided
that (i) either such modifications do not materially increase the obligations of
Tenant hereunder or materially adversely affect Tenant's rights under this Lease
or (ii) if such modifications would materially increase the obligations of
Tenant hereunder or materially adversely affect Tenant's rights under this
Lease, then Landlord shall compensate Tenant for the same. Disputes as between
Landlord and Tenant regarding whether a proposed modification would materially
increase the obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, and the compensation that would be payable to
Tenant as a result thereof shall be determined by arbitration in accordance with
the terms of Schedule 15.4 hereto.
15.5 Delivery of Notices to Landlord's Lender. Subsequent to the receipt
by Tenant of Notice from Landlord as to the identity and address of any Superior
Party (which Notice shall be accompanied by a copy of the instrument creating
such Superior Interest), no Notice from Tenant to Landlord shall be effective
unless and until a duplicate original of such Notice shall be given to such
Superior Party at the address set forth in the above described Notice. The
curing of any of Landlord's defaults by such Superior Party shall be treated as
performance by Landlord.
15.6 Right of Landlord's Lender to Enforce Lease. To the extent permitted
under the Landlord's Loan Documents, Landlord's Lender may exercise the
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rights of Landlord hereunder, including the right on the part of Landlord to
obtain insurance in the circumstances set forth in Section 10.1(e)(ii) hereof.
15.7 Exercise of Landlord's Discretion. In any instance hereunder in which
Landlord must be reasonable in making a request or granting or withholding an
approval or consent, Tenant acknowledges and agrees that Landlord may take into
account the reasonable objections of Landlord's Lender to the extent Landlord is
required to take such objections into account under Landlord's Loan Documents.
In any instance hereunder in which Landlord may make a request or grant or
withhold an approval in its discretion, Landlord may take into account the views
of Landlord's Lender to the extent Landlord is required to take such views into
account under Landlord's Loan Documents.
ARTICLE XVI
16.1 Indemnification. Notwithstanding the existence of any insurance
required to be provided hereunder, and without regard to the policy limits of
any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord and Landlord's Lender and their respective partners, shareholders,
officers, directors and employees (each, an "Indemnitee") from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and reasonable expenses (including Litigation Costs), to the maximum extent
permitted by law, imposed upon or incurred by or asserted against such
Indemnitee by reason of: (a) any accident, injury to or death of persons or loss
of or damage to property occurring on or about the Leased Property or adjoining
sidewalks, including any claims made by employees at the Leased Property, (b)
any use, misuse, non-use, condition, maintenance or repair by Tenant or anyone
claiming by, through or under Tenant, including agents, contractors, invitees or
visitors of the applicable Leased Property or Tenant's Personal Property, (c)
any Taxes or Other Charges, (d) any failure on the part of Tenant or anyone
claiming by, through or under Tenant to perform or comply with any of the terms
of this Lease, (e) any failure by Tenant to perform its obligations under any
Sublease or Warehouse Agreement and any claims made thereunder, (f) any contest
of any Legal Requirement or Insurance Requirement, regardless whether the same
is conducted in accordance with the terms hereof. Any amounts which become
payable by Tenant under this Section shall be paid within ten (10) days after
liability therefor on the part of Tenant is determined by litigation or
otherwise, and if not timely paid, shall bear interest (to the extent permitted
by law) at the Overdue Rate from the date of such determination to the date of
payment. Tenant, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or
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instituted against Indemnitee or may compromise or otherwise dispose of the same
as Tenant sees fit. Nothing herein shall be construed as indemnifying an
Indemnitee against its own grossly negligent acts or omissions or willful
misconduct. If at any time an Indemnitee shall have notice of a claim, such
Indemnitee shall give reasonably prompt written notice of such claim to Tenant;
provided that (i) such Indemnitee shall have no liability for a failure to give
notice of any claim of which Tenant has otherwise been notified or has knowledge
and (ii) the failure of such Indemnitee to give such a notice to Tenant shall
not limit the rights of such Indemnitee or the obligations of Tenant with
respect to such claim except to the extent that Tenant incurs actual expenses or
suffers actual monetary loss as a result of such failure. Tenant shall have the
right to control the defense or settlement of any Claim, provided that (A)
Tenant shall first confirm in writing to such Indemnitee that such claim is
within the scope of this indemnity and that Tenant shall pay any and all amounts
required to be paid in respect of such claim, (B) if the compromise or
settlement of any such claim shall not result in the complete release of such
Indemnitee from the claim so compromised or settled, the compromise or
settlement shall require the prior written approval of such Indemnitee and (C)
no such compromise or settlement shall include any admission of wrongdoing on
the part of such Indemnitee. An Indemnitee shall have the right to approve
counsel engaged to defend such claim and, at its election and sole cost and
expense, shall have the right, but not the obligation, to participate in the
defense of any claim. Tenant's liability under this Article with respect to
matters arising or accruing during the Term hereof shall survive any termination
of this Lease.
The parties hereto agree that this Article XVI shall not apply to those matters
specifically covered by the provisions of Article XXVI hereof.
ARTICLE XVII
17.1 No Waiver. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
ARTICLE XVIII
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18.1 Remedies Cumulative. Except as otherwise expressly provided herein,
to the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord or Tenant now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Landlord or Tenant or any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord or Tenant of any or all of such other rights, powers and remedies.
ARTICLE XIX
19.1 Acceptance of Surrender. No surrender to Landlord of this Lease or of
any Leased Property, or of any interest therein, shall be valid or effective
unless agreed to and accepted in writing by Landlord and Landlord's Lender (if
any) and no act by Landlord or any representative or agent of Landlord, other
than such a written acceptance by Landlord and Landlord's Lender (if any), shall
constitute an acceptance of any such surrender.
ARTICLE XX
20.1 No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same Person may
acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold
estate created thereby or any interest herein or in such leasehold estate and
(b) the fee estate in the applicable Leased Property.
ARTICLE XXI
21.1 Conveyance by Landlord. If Landlord or any successor owner of the
applicable Leased Property shall convey such Leased Property in accordance with
the terms hereof other than as security for a debt, and the grantee or
transferee of the Leased Property shall expressly assume all obligations of
Landlord hereunder arising or accruing from and after the date of such
conveyance or transfer, Landlord or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and obligations of
Landlord under this Lease arising or accruing from and after the date of such
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conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
ARTICLE XXII
22.1 Quiet Enjoyment. So long as Tenant shall pay all Rent as the same
becomes due and no Event of Default shall have occurred and be continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Landlord or anyone
claiming by, through or under Landlord, but subject to all liens and
encumbrances of record as of the date hereof or otherwise permitted to be
created by Landlord hereunder, liens as to the obligations of Landlord that are
either not yet due or which are being contested in good faith and by proper
proceedings, and liens hereafter consented to by Tenant. No failure by Landlord
to comply with the foregoing covenant shall give Tenant any right to cancel or
terminate this Lease or abate, reduce or make a deduction from or offset against
the Rent or any other sum payable under this Lease, or to fail to perform any
other obligation of Tenant hereunder or thereunder. Notwithstanding the
foregoing, Tenant shall have the right, by separate and independent action to
pursue any claim it may have against Landlord as a result of a breach by
Landlord of the covenant of quiet enjoyment contained in this Section.
ARTICLE XXIII
23.1 Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
AmeriCold Logistics, LLC
10 Glenlake Parkway
9th Floor
Atlanta, Georgia 30328
Attention: Chief Financial Officer
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(b) if to Landlord:
Americold Corporation
c/o Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
Attention: Chief Financial Officer
(c) if required pursuant to Section 15.5 hereof, to Landlord's
Lender, in accordance with the terms of said Section.
or to such other address as either party may hereunder designate, and shall be
effective upon receipt.
ARTICLE XXIV
24.1 Appraisers. In the event that it becomes necessary to determine the
Fair Market Value or Fair Market Rental of any property for any purpose of this
Lease, and the parties cannot agree amongst themselves on such value within
twenty (20) days after the first request made by one of the parties to do so,
then either party may notify the other of a person selected to act as appraiser
on its behalf. Within fifteen (15) days after receipt of any such notice, the
other party shall by notice to the first party appoint a second person as
appraiser on its behalf. The appraisers thus appointed, each of whom must be a
member of The Appraisal Institute/American Institute of Real Estate Appraisers
(or any successor organization thereto), shall, within 45 days after the date of
the notice appointing the first appraiser, proceed to appraise the applicable
Leased Property to determine the Fair Market Value or Fair Market Rental thereof
as of the relevant date; provided that if one appraiser shall have been so
appointed, or if two appraisers shall have been so appointed but only one such
appraiser shall have made such determination within 50 days after the making of
the initial appointment, then the determination of such appraiser shall be final
and binding upon the parties. If two appraisers shall have been appointed and
shall have made their determinations within the respective requisite periods set
forth above and if the difference between the amounts so determined shall not
exceed ten percent (10%) of the lesser of such amounts, then the Fair Market
Value or Fair Market Rental shall be an amount equal to 50% of the sum of the
amounts so determined. If the difference between the amounts so determined shall
exceed ten percent (10%) of the lesser of such amounts, then such two appraisers
shall have 20 days to appoint a third appraiser, but if such appraisers fail to
do so, then either party may
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request the American Arbitration Association or any successor organization
thereto to appoint an appraiser within 20 days of such request, and both parties
shall be bound by any appointment so made within such 20 day period. If no such
appraiser shall have been appointed within such 20 days or within 90 days of the
original request for a determination of Fair Market Value or Fair Market Rental,
whichever is earlier, either Landlord or Tenant may apply to any court having
jurisdiction to have such appointment made by such court. Any appraiser
appointed by the original appraisers, by the American Arbitration Association or
by such court shall be instructed to determine the Fair Market Value or Fair
Market Rental within 30 days after appointment of such Appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determination of the other two appraisers shall be excluded, and 50% of the
sum of the remaining two determinations shall be final and binding upon Landlord
and Tenant as the Fair Market Value or Fair Market Rental for such interest.
This provision for determination by appraisal shall be specifically enforceable
to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties except as
otherwise provided by applicable law. Landlord and Tenant shall each pay the
fees and expenses of the appraiser appointed by it and their own legal fees, and
each shall pay one-half of the fees and expenses of the third appraiser and
one-half of all other cost and expenses incurred in connection with each
appraisal.
ARTICLE XXV
25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or an
Affiliate of Landlord intends to elect to qualify as a real estate investment
trust ("REIT"). Accordingly, unless otherwise notified by Landlord, the
following requirements (the "REIT Requirements") must be satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or
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a portion of the amounts paid by Tenant to Landlord hereunder to fail to
qualify as "rents from real property" within the meaning of Section 856(d)
of the Code.
(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and agrees
to use reasonable efforts to cause its Affiliates, to permit the REIT
Requirements to be satisfied. Tenant agrees, and agrees to use reasonable
efforts to cause its Affiliates, to cooperate in good faith with Landlord to
ensure that the REIT Requirements are satisfied, including providing Landlord
with information about the ownership of Tenant and its Affiliates to the extent
that such information is reasonably available. In addition, Tenant agrees, and
agrees to cause its Affiliates, to cooperate with Landlord in connection with
any additional requirements relating to Landlord's qualification as a REIT
arising from and after the date of this Lease. Immediately after becoming aware
that the REIT Requirements are not, or will not be, satisfied, Tenant shall
notify Landlord of such noncompliance.
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions. Tenant hereby agrees to hold
harmless Landlord and Landlord's Lender, any successors to their respective
interests in this Lease, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Landlord or
any other indemnitee or assessed against the Leased Property by virtue of any
claim or lien by any governmental or quasi-governmental unit, body, or agency,
or any third party, for cleanup costs or other costs pursuant to any
Environmental Laws, but only to the extent that the same relate to the period
from and after the date hereof. Tenant's indemnity shall survive the termination
of this Lease, provided, however, Tenant shall have no indemnity obligation with
respect to (i) Hazardous Substances first introduced to the Leased Property
subsequent to the date that Tenant's occupancy of the Leased
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Property shall have fully terminated or (ii) Hazardous Substances introduced to
the Leased Property by Landlord, its successors and assigns. Landlord hereby
agrees to hold harmless Tenant and any successors to its interest in this Lease,
and the respective directors, officers, employees and agents of any of the
foregoing from and against any losses, claims, damages (including consequential
damages), penalties, fines, liabilities (including strict liability), costs
(including cleanup and recovery costs), and expenses (including expenses of
litigation and attorneys' fees) incurred by Tenant or any other indemnitee or
assessed against the Leased Property by virtue of any claim or lien by any
governmental or quasi-governmental unit, body, or agency, or any third party,
for cleanup costs or other costs pursuant to any Environmental Laws, but only to
the extent that the same relate to the period prior to the date hereof.
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination.
27.2 Severability. If any term or provision of this Lease or any
application thereof shall be invalid or unenforceable, the remainder of this
Lease and any other application of such term or provision shall not be affected
thereby.
27.3 Maximum Permissible Rate. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be
determined at the maximum permissible rate.
27.4 Headings. The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
27.5 Exculpation. Landlord's liability hereunder shall be limited solely
to its interest in the Leased Property, and no recourse under or in respect of
this Lease shall be had against any other assets of Landlord whatsoever.
Furthermore, except as otherwise expressly provided herein, in no event shall
Landlord (original or successor) ever be liable to Tenant for any indirect or
consequential damages suffered by Tenant from whatever cause.
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27.6 Transfer of Licenses. Upon the expiration or earlier termination of
the Term, Tenant shall use its best efforts to transfer to Landlord or
Landlord's nominee or to cooperate with Landlord or Landlord's nominee in
connection with the processing by Landlord or Landlord's nominee of any
applications for all licenses, operating permits and other governmental
authorization and all contracts, including contracts with governmental or
quasi-governmental entities which may be necessary for the operation of the
Leased Property; provided that the costs and expenses of any such transfer or
the processing of any such application shall be paid by Landlord or Landlord's
nominee.
27.7 Exhibition of Leased Property. Landlord and Landlord's agent shall
have the right to enter the applicable Leased Property at all reasonable times
for the purpose of exhibiting the Leased Property to others.
27.8 Entire Agreement. This Lease contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof.
27.9 Governing Law. This Lease shall be construed with respect to each
Leased Property under the substantive laws of the State of in which such Leased
Property is situated.
27.10 No Waiver. No waiver of any condition or covenant herein contained,
or of any breach of any such condition or covenant, shall be held or taken to be
a waiver of any subsequent breach of such covenant or condition, or to permit or
excuse its continuance or any future breach thereof or of any condition or
covenant herein construed as a waiver of such default, or of Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing default.
27.11 Successors and Assigns. This Lease shall be binding upon and shall
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
27.12 Modifications in Writing. This Lease may only be modified by a
writing signed by both Landlord and Tenant and, if otherwise required by the
terms hereof, Leasehold Mortgagee and/or Landlord's Lender.
27.13 No Waiver. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
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27.14 Claims Against Landlord. In the event that a claim or adjudication
is made that Landlord or its agents have acted unreasonably or unreasonably
delayed (or refrained from), acting in any case where by law or under this
Lease, Landlord or such agent, as the case may be, has an obligation to act
reasonably or promptly, Tenant agrees that neither Landlord nor its agents shall
be liable for any monetary damages, and Tenant's sole remedies shall be limited
to commencing an action seeking injunctive relief or declaratory judgment,
except in any instance in which it has been finally determined that Landlord's
action, delay or inaction has constituted gross negligence, fraud, willful
misconduct or an illegal act. The parties hereto agree that any action or
proceeding to determine whether Landlord has acted reasonably shall be
determined by an action seeking declaratory judgment.
ARTICLE XXVIII
28.1 Memorandum of Lease. Landlord and Tenant shall, promptly upon the
request of either enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the state in which the applicable
Leased Property is located, in which reference to this Lease, and all options
contained therein, shall be made. Tenant shall pay all costs and expenses of
recording such Memorandum of Lease.
ARTICLE XXIX
29.1 Landlord's Option to Purchase Tenant's Personal Property. Tenant
hereby grants Landlord the option to purchase all of the equipment and personal
property (tangible and intangible) that is employed by Tenant in connection with
the use and operation of each of the Properties, and the business conducted
thereat, including any interest of Tenant in the warehousing and customer
contracts (to the extent the same is assignable) and the interest of Tenant in
any equipment leases and the like. Such option shall be exercisable by Landlord
at any time prior to the date of expiration or earlier termination of this Lease
in respect of a Property and the conveyance in respect thereof shall be
consummated (and the payment of the purchase price therefor made) concurrently
with such expiration or earlier termination. The purchase price payable for
Tenant's Personalty shall be the Fair Market Value thereof, determined in
accordance with the terms of Article XXIV hereof (as adjusted to the extent
required to reflect that the subject of the appraisal is Tenant's Personalty
rather than a Leased Property). Tenant agrees to cooperate with Landlord in
effecting the smooth and orderly transfer of Tenant's Personalty in the event of
Landlord's exercise of the Purchase Option. Tenant's
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Personalty shall be conveyed free and clear of all liens, encumbrances or rights
of other parties, except as may have been disclosed to the appraisers in the
process of establishing the Fair Market Value thereof.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed, sealed and delivered in their respective names and in their behalf;
and if a corporation, by its officers duly authorized, as of the date first
hereinabove set forth.
Landlord:
AMERICOLD CORPORATION, an Oregon corporation
By: /s/ Daniel F. McNamara
----------------------------------------
Name: Daniel F. McNamara
-------------------------------------
Its: President
-------------------------------------
Tenant:
AMERICOLD LOGISTICS, LLC, a Delaware limited
liability company
By: /s/ Frederick B. Beilstein III
----------------------------------------
Name: Frederick B. Beilstein III
-------------------------------------
Its: Senior Vice President
-------------------------------------
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Exhibit A
[omitted: legal descriptions of parcels in Bartow, Florida; Brooks, Oregon;
Watertown, Massachusetts; Burbank, California; Denver, Colorado; Fullerton,
California; Grand Island, Nebraska; Ontario, Oregon; Pasco, Washington; Tampa,
Florida; and Watsonville, California]
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<PAGE> 93
Exhibit 1.5(b)
List of Ground Leases and Expiration Dates
Fullerton
1) Standard Industrial Lease - Net, by and between Lincoln Fullerton Cold
Storage, a California limited partnership, and Patrician Associates, Inc., a
California corporation ("Lessor") and Americold Corporation, an Oregon
corporation ("Lessee"), dated July 20, 1999. Expires July 31, 1999 with no
options to extend.
Grand Island
1) Ground Lease Agreement, by and between ORE-IDA Foods, Inc., a Delaware
corporation ("Lessor") and Americold Corporation, an Oregon corporation
("Lessee"), dated as of June 21, 1995. Expires June 21, 2015, plus eight options
to extend for 10 years each.
2) Facility Lease, by and between ACL Company, LLC, a Minnesota limited
liability company ("Lessor") and Americold Corporation, an Oregon corporation
("Lessee"), dated February 1, 1996. Expires February 11, 2006, plus two options
to extend for 5 years each.
Ontario, Oregon
1) Lease Agreement by and between Oregon Warehouse Partners, a Texas general
partnership ("Landlord") and Americold Corporation, an Oregon corporation
("Tenant"), dated May 15, 1992. Expires May 5, 2017, plus two options to extend
for 5 years each.
Pajero
1) Ground Lease, dated March 31, 1993, by and between Americold Corporation and
Encincal Partnership No. 1 for lease of property in Monterey, California, as
amended July 15, 1997. Expires March 31, 2000 with no options to extend.
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Port of Tampa
1) Ground Lease, dated September 1, 1978, by and between Tampa Port Authority
and National Sea Products, as assigned to Americold Corporation by that certain
Assignment and Assumption of Tenant's Interest and Obligations in Lease and
Supplemental Facilities Agreement, dated July 31, 1991, by and between Tampa
Port Authority, National Sea Products and Americold Corporation, for lease of
property in Tampa, Florida. Expires August 31, 2003, plus one option to extend
for 5 years.
Pasco
1) Ground Lease, dated November 1, 1996, by and between ACL Company, LLC and
Americold Corporation for lease of property in Pasco, WA. Expires August 31,
2006, plus one option to extend for 5 years.
Tampa 50th Street
1) Ground Lease, dated February 15, 1972, by and between BF Properties Company
and Beatrice Foods Co., as assigned to Americold Corporation, for lease of
property in Tampa, Florida. Expires February 25, 2002, plus six options to
extend for 5 years each.
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<PAGE> 95
Exhibit 2.1(a)
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<PAGE> 96
Exhibit 3.1(a)
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<PAGE> 97
Exhibit 3.1(b)
CALCULATION OF PERCENTAGE RENT
Percentage Rent, with respect to each Lease, year shall becalculoated annually
as follows:
(a) for the period from Commencement Date through December 31, 2001, the
product of (i) 24% times (ii) all Receipts for the applicable Lease
Year in excess of the Breakpoint;
(b) for the period from January 1, 2002 through December 31, 2006, the
product of (i) 37.5% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint;
(c) for the period from January 1, 2007 through December 31, 2011, the
product of (i) 40% times (ii) all Receipts for the applicable Lease
Year in excess of the Breakpoint; and
(d) for the period from January 1, 2012 through February 28, 2014, the
product of (i) 41% times (ii) all Receipts for the applicable Lease
Year in excess of the Breakpoint.
As used herein, the "Breakpoint" with respect to any Lease Year shall be (i)
$32,320,000. for the period from the Commencement Date through December 31, 2001
and (ii) $26,000,000. for the period from January 1, 2002 through February 28,
2014. The Breakpoint shall be adjusted to account for the termination of this
Lease with respect to any one or more of the Leased Properties in accordance
with the terms of this Lease on a pro rata basis among each Leased Property
based on the percentages set forth next to each Leased Property in Exhibit
3.1(a) attached to this Lease.
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Exhibit 8.2.8
CERTAIN SUPERIOR LEASES
None.
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<PAGE> 99
Schedule 9.1(b)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Landlord's Responsibility Minimum Tenant's Responsibility
- ------------------------- -------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C>
None Commencement Date through 12/31/99: $953,836
1/1/2000 through 12/31/2000: $918,870
1/1/2001 through 12/31/2001: $959,634
1/1/2002 through 12/31/2002: $784,051
1/1/2003 through 12/31/2003: $651,699
1/1/2004 through 12/31/2004: $673,894
1/1/2005 through 2/18/2014: Expenditures
will increase 5%
annually but the
expenditures for the
period from 1/1/2014
through 2/18/2014 shall
be the same as the
expenditures for the
immediately preceding
Fiscal Year.
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 100
Exhibit 15.1
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of _________, ________ is made by and among
[____________] ("Landlord"), AmeriCold Logistics [II], LLC., a Delaware limited
liability company ("Tenant"), and [LANDLORD'S LENDER], a [___________] (together
with its successors and assigns "Lender") pursuant to that certain Loan
Agreement (the "Loan Agreement"), dated as of [_______________], by and between
Lender and Landlord.
W I T N E S S E T H
WHEREAS, under a certain master lease dated ________ __, 1999 (hereinafter
referred to as the "Lease"), Landlord did lease, let and demise the property
(hereinafter called the "Leased Property"), as described in the Lease to Tenant
for the period of time and upon the covenants, terms and conditions therein
stated; and
WHEREAS, the Lease has not been further amended or modified; and
WHEREAS, by making a mortgage loan, Lender became the owner of an
indebtedness and holder of a certain Note or Notes, secured by first priority
mortgages, deeds of trust and deeds to secure debt (collectively, the
"Mortgages"), which shall constitute liens upon the property described in said
Mortgages and as described in Exhibit A attached hereto (the "Mortgaged
Premises"), and is secured by an assignment of Landlord's interest in the Lease
as more particularly set forth in the Mortgage; and
WHEREAS, Landlord and Tenant acknowledge and agree to the aforesaid
assignment of Landlord's interest in the Lease; and
WHEREAS, Lender desires the Lease and all rights of the Tenant thereunder
to be subordinate to the Mortgage and all rights of Lender thereunder, and the
Tenant desires Lender's assurance not to disturb Tenant's rights of possession
of the Leased Property under the Lease in the event that Lender exercises its
remedies as a Lender under the Mortgages;
NOW THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
<PAGE> 101
Section 1.
The Lease, as the same may heretofore and hereafter be modified, amended
or extended, is and shall be subject and subordinate to the Mortgages on the
Mortgaged Premises, to each and every advance made or hereafter made under the
Loan Agreement, and to all renewals, modifications, consolidations, replacements
and extensions of the Mortgages.
Lender agrees that it shall make available to Tenant the insurance policy
proceeds and condemnation awards (or payments made in anticipation thereof or in
connection therewith) in accordance with the terms of Section 10.2(b) and
10.2(d) of the Lease.
Section 2.
So long as no default by Tenant has occurred and has continued to exist
for such period of time (after notice, if any, required by the Lease) as would
entitle Landlord to terminate the Lease (hereinafter called an "Event of
Default"), (A) Lender shall not, in any foreclosure action or proceeding which
may be instituted or taken by Lender under any Mortgage by reason of any default
thereunder, evict Tenant from the Leased Premises by the Lease, or terminate or
disturb Tenant's leasehold estate under the Lease, and (B) none of Tenant's
rights under the Lease shall be disturbed by reason of any default under any of
the Mortgages.
Section 3.
Tenant shall give Lender copies of all notices and other communications
given by Tenant to the Landlord under the Lease relating to defaults on the part
of the Landlord under the Lease.
Section 4.
In the event of any act or omission by Landlord which would give Tenant
the right, either immediately or after the lapse of a period of time, to
terminate the Lease, or to claim a partial or total eviction, Tenant will not
exercise any such right (A) until it has given written notice of such act or
omission to Lender by delivering such notice of such act or omission by
certified mail, return receipt requested, addressed to Lender at the address
specified under Section 7 hereof, and (B) until a reasonable period of time (not
less than thirty (30) days) for remedying such act or omission shall have
elapsed following giving of such notice and following the time when Lender shall
have become
<PAGE> 102
entitled under the Mortgages or any additional mortgage to remedy the same,
provided Lender, with reasonable diligence, shall (i) have pursued such remedies
as are available to it under the Mortgages so as to be able to remedy the act or
omission, and (ii) thereafter shall have commenced and continued to remedy such
act or omission or cause the same to be remedied.
Section 5.
Without limitation of any of the provisions of the Lease, in the event
that, by reason of any default on the part of the Landlord, Lender or its
assigns shall succeed to the interest of Landlord or any successor to Landlord,
then subject to the provisions of this Agreement the Lease shall nevertheless
continue in full force and effect and Tenant shall attorn to Lender or its
assigns and shall recognize Lender or its assigns as its landlord. Upon request
of Lender, Tenant shall execute and deliver to Lender or its assigns an
agreement of attornment. If Lender or its assigns shall succeed to the interest
of Landlord or any successor to Landlord, in no event shall Lender be obligated
to remedy and default, nor shall Lender or its assigns have any liability under
the Lease prior to the date Lender or its assigns shall succeed to the rights of
Landlord or any successor to Landlord under the Lease, nor any liability for
offsets or defenses which Tenant might have had against Landlord or any
successor to Landlord. Lender and its assigns shall have no personal liability
as successor to Landlord, and Tenant shall look only to the estate and property
of Lender or its assigns (as applicable) in the Mortgaged Premises or the
proceeds thereof for the satisfaction of Tenant's remedies for the collection of
a judgment (or other judicial process) requiring the payment of money in the
event of any default by Lender and its assigns as Landlord under the Lease. No
other property or assets of Lender or its assigns shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to the Lease, the relationship of Landlord and
Tenant thereunder or Tenant's use or occupancy of the Leased Property.
Section 6.
Tenant has not subordinated the Lease or any of its rights under the Lease
to any lien or mortgage other than the Mortgage prior to the date hereof, and it
will not subordinate the Lease or the rights of the Tenant thereunder to any
lien or mortgage other than the Mortgage without the prior written consent of
Lender, unless otherwise permitted under the Lease. If Tenant at any time
acquires the interest of the Landlord under the Lease, the Lease will remain in
full force and effect and the interests of the Tenant and the Landlord under the
Lease will not merge.
<PAGE> 103
Section 7.
All notices, demands, requests, consents, approvals and other
communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
AmeriCold Logistics [II], LLC
10 Glenlake Parkway
9th Floor
Atlanta, Georgia 30328
Attention: Chief Executive Officer
(b) if to Lender:
________________
________________
________________
Attn: __________
or as to each party, to such other address as the party may designate by a
notice given in accordance with the requirements contained in this Section 7.
Section 8.
No prepayment of rent or additional rent due under the Lease of more than
one month in advance, and no amendment, modification, surrender or cancellation
of the Lease, shall be binding upon Lender, as holder of the Mortgages or as
Landlord under the Lease if it succeeds to that position, unless consented to in
writing by Lender. In addition, Lender as holder of the Mortgages or as Landlord
under the Lease if it succeeds to that position shall in no event have any
liability for the performance or completion of any work or to make improvements
to the Mortgaged Premises.
Section 9.
<PAGE> 104
If at any time Lender shall notify Tenant that an Event of Default has
occurred under the Mortgage and shall demand that any then unpaid rent or
additional rent and any rent or additional rent thereafter payable under the
Lease be paid directly to Lender, then Tenant shall thenceforth and until
notified by Lender that the matter in default has been paid or remedied pay such
rent or additional rent to Lender as the same becomes due under the Lease,
without the necessity for further notice and without obligation on the part of
Tenant to inquire whether or not default under the Mortgage occurred or has been
remedied. Any such payment made by the Tenant to Lender shall discharge in full
Tenant's obligation to make that payment to Landlord.
Section 10.
This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall apply to, bind and inure to the benefit of the parties hereto
and their respective successors and assigns. As used herein "Lender" shall
include any subsequent holder of the Mortgage. This Agreement shall supersede
and replace any agreement entered into prior to the date hereof by Tenant (or
any predecessor in interest of Tenant under the Lease) with any previous holder
of a mortgage covering the Mortgaged premises, which has been assigned to
Lender.
Section 11.
This Agreement shall be construed in accordance with the laws of the State
in which the Leased Property is situate.
[remainder of page intentionally left blank]
<PAGE> 105
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed, sealed and delivered in their respective names and in their behalf;
and if a corporation, by its officers duly authorized, as of the date first
hereinabove set forth.
Landlord:
[________________________________________]
By: ______________________________________
Tenant:
AMERICOLD LOGISTICS [II], LLC, a Delaware
limited liability company
By: ______________________________________
Name:
Title:
Lender:
[________________________________________]
By: [____________________________________]
By: __________________________________
<PAGE> 106
STATE OF )
) SS.:
COUNTY OF )
On this day of , 1999, before me personally
came to me known, who being by me duly sworn,
did depose and say that he resides at , that
he is the of , the trust described in and
which executed the foregoing as authorized signatory and on behalf of ; that he
knows the seal of said trust, that the seal affixed to said instrument is such
trust seal, that it was so affixed by order of the board of trustees of said
trust, and that he signed his name thereto by like order. In witness whereof I
hereunto set my hand and official seal.
_____________
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this day of , 1999, before me
personally came to me known, who by me being duly
sworn, did depose and say that he resides at ,
that he is the of .,
the of , the limited partnership
described in and which executed the foregoing instrument; that it was executed
by authority of the board of directors of said corporation and that he signed
his name thereto by like authority; and he acknowledged to me that said
instrument was executed by said corporation for and on behalf of said limited
partnership for the purposes therein mentioned.
<PAGE> 107
_____________
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this day of , 1999, before me personally
came to me known, who being by me duly sworn, did
depose and say that he resides at , that he is the
of , the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation, that such corporate seal was affixed to the foregoing instrument;
that it was so affixed by order of the Board of Directors of said Corporation,
and who thereupon signed his name thereto by like order. In witness whereof I
hereunto set my hand and official seal.
_____________
Notary Public
(Notarial Seal)
<PAGE> 108
Schedule 15.4
Arbitration Procedures
Arbitration shall be held in the city of Atlanta, Georgia in accordance with the
rules of the American Arbitration Association then in effect. There shall be one
arbitrator appointed in accordance with those rules. As part of the award, the
arbitrator shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. The arbitration
shall commence within thirty (30) days after demand for arbitration is made by a
party hereto. The arbitrator shall render his/her award within thirty (30) days
after the completion of the arbitration and the arbitration shall be held on
consecutive Business Days. Failure by either party to submit to arbitration as
required under this Lease shall result in the arbitrator ruling in favor of the
other party is such other party has submitted to arbitration under this Lease.
Judgement may be entered on the arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction of the
Georgia courts for that purpose. The arbitrator may grant injunctive or other
equitable relief.
<PAGE> 1
Exhibit 10.10
================================================================================
MASTER LEASE AGREEMENT
Dated as of March 11, 1999
Between
EACH OF THE ENTITIES IDENTIFIED ON EXHIBIT A HERETO
collectively as Landlord,
and
AMERICOLD LOGISTICS, LLC,
as Tenant
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
1.1 Leased Property..........................................................1
1.2 Release of Unimproved Parcels. .........................................2
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.........3
1.4 Initial Term.............................................................5
1.5 Renewal Terms............................................................5
1.6 Limitation of Term as a Result of Ground Lease Terms.....................6
1.7 Condition of the Leased Property.........................................6
ARTICLE II
2.1 Definitions..............................................................7
ARTICLE III
3.1 Rent....................................................................22
3.2 Net Lease...............................................................26
ARTICLE IV
4.1 No Termination, Abatement, etc..........................................26
4.2 Abatement Procedures....................................................27
ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property........................................28
5.2 Tenant's Personal Property..............................................28
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants........................................................28
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<PAGE> 3
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants.............................................35
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations.............................................................36
8.2 Subletting and Assignment; Warehouse Agreements.........................40
8.2.1 Generally.........................................................40
8.2.2 Certain Sublettings and Assignments...............................40
8.2.3 Landlord's Right to Collect from Assignees and Subtenants.........41
8.2.4 No Release........................................................41
8.2.5 Required Assignment and Subletting Provisions.....................41
8.2.6 Reimbursement of Landlord's Costs.................................42
8.2.7 Warehouse Agreements..............................................42
8.2.8 Certain Leases Senior. ..........................................42
8.3 REIT Related Limitations on Subleasing and Warehouse Agreement..........43
8.4 Collateral Assignment of Subleases and Warehouse Agreements
to Landlord.............................................................43
8.5 Leasehold Mortgages.....................................................43
8.5.1 Landlord's Estate................................................43
8.5.2 Certain Leasehold Mortgage Requirements..........................43
8.5.3 Leasehold Mortgagee Provisions...................................44
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease......46
8.5.5 Notice of Arbitration. ..........................................47
ARTICLE IX
9.1 Maintenance and Repair..................................................48
9.2 Encroachments, Restrictions, etc........................................50
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance...............................................................51
10.2 Casualty; Application of Proceeds.......................................56
10.3 Condemnation............................................................59
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<PAGE> 4
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures..............................................60
ARTICLE XII
12.1 Events of Default.......................................................61
12.2 Certain Remedies........................................................62
12.3 Damages.................................................................62
12.4 Waiver..................................................................64
12.5 Application of Funds....................................................64
ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default...............................64
ARTICLE XIV
14.1 Holding Over............................................................65
ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance.......................................65
15.2 Attornment.............................................................65
15.3 Notice of Default to Landlord's Lender.................................66
15.4 Modifications to Secure Financing......................................66
15.5 Delivery of Notices to Landlord's Lender...............................67
15.6 Right of Landlord's Lender to Enforce Lease............................67
15.7 Exercise of Landlord's Discretion......................................67
ARTICLE XVI
16.1 Indemnification.........................................................67
ARTICLE XVII
17.1 No Waiver...............................................................68
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<PAGE> 5
ARTICLE XVIII
18.1 Remedies Cumulative.....................................................69
ARTICLE XIX
19.1 Acceptance of Surrender.................................................69
ARTICLE XX
20.1 No Merger of Title......................................................69
ARTICLE XXI
21.1 Conveyance by Landlord..................................................69
ARTICLE XXII
22.1 Quiet Enjoyment.........................................................70
ARTICLE XXIII
23.1 Notices.................................................................70
ARTICLE XXIV
24.1 Appraisers..............................................................71
ARTICLE XXV
25.1 General REIT Provisions.................................................72
25.1.1 REIT Requirements................................................72
25.1.2 Satisfaction of REIT Requirements................................72
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions.......................................73
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<PAGE> 6
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims.......................................................73
27.2 Severability.............................................................73
27.3 Maximum Permissible Rate.................................................73
27.4 Headings.................................................................74
27.5 Exculpation.............................................................74
27.6 Transfer of Licenses....................................................74
27.7 Exhibition of Leased Property...........................................74
27.8 Entire Agreement........................................................74
27.9 Governing Law...........................................................74
27.10 No Waiver..............................................................74
27.11 Successors and Assigns..................................................74
27.12 Modifications in Writing...............................................75
27.13 No Waiver..............................................................75
27.14 Claims Against Landlord................................................75
ARTICLE XXVIII
28.1 Memorandum of Lease.....................................................75
ARTICLE XXIX
29.1 Landlord's Option to Purchase Tenant's Personal Property................75
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<PAGE> 7
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A - List of Fee Owners
EXHIBIT A-1 - Legal Description of the Land
EXHIBIT 1.5(b) - List of Ground Leases and Expiration Dates
EXHIBIT 2.1(a) - Release Amounts
EXHIBIT 3.1(a) - Minimum Rent Allocations
EXHIBIT 3.1(b) - Calculation of Percentage Rent
EXHIBIT 8.2.8 - Certain Superior Leases
SCHEDULE 9.1(b) - Capital Expenditure Responsibilities
EXHIBIT 15.1 - Form of Non-Disturbance Agreement
SCHEDULE 15.4 - Arbitration Procedures
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<PAGE> 8
MASTER LEASE AGREEMENT (this "Lease"), dated as of the 11th day of March,
1999, among EACH OF THE ENTITIES IDENTIFIED ON EXHIBIT A HERETO (collectively,
"Landlord"), having offices c/o Vornado Realty Trust, Park 80 West, Plaza II,
Saddle Brook, New Jersey 07663 Attention: Chief Financial Officer, and AMERICOLD
LOGISTICS, LLC, a Delaware limited liability company ("Tenant"), having its
principal offices at 10 Glenlake Parkway, 9th Floor, Atlanta, Georgia 30328,
Attention: Chief Executive Officer.
RECITALS
WHEREAS, Landlord has agreed to let to Tenant, and Tenant has agreed to
lease from Landlord, certain parcels of real property and improvements each for
use and operation as dry and cold warehousing facilities and related uses,
defined hereinbelow as the "Leased Property" (all capitalized terms used but not
elsewhere defined herein shall have the meaning provided therefor in Article II
hereof).
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE I
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following
(collectively, the "Leased Property"):
(i) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit A attached hereto and made a part hereof
(collectively, the "Land");
(ii) all buildings, structures, Fixtures and other improvements of
every kind, including alleyways and connecting tunnels, sidewalks, utility
pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased
Improvements");
<PAGE> 9
(iii) all easements, rights and appurtenances relating to the Land
and the Leased Improvements; and
(iv) all permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components
thereof, now and hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air- and
water-pollution-control, waste-disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire- and theft-protection
equipment, and built-in oxygen and vacuum systems, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto
to constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but excluding all items included within
Tenant's Personal Property (collectively the "Fixtures").
1.2 Release of Unimproved Parcels. Notwithstanding anything herein to the
contrary, Landlord shall have the right from time to time to terminate this
Lease, with respect to any Unimproved Parcels located at the Leased Property as
well as grant in connection therewith in respect of the Leased Property
remaining subject to this Lease reasonable easements, restrictions, covenants,
reservations and rights of way for, among other things, traffic circulation,
ingress, egress, parking, access, water and sewer lines, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes at no
cost to Landlord and with no adjustment in Rent; provided, in each such case,
(x) such Unimproved Parcel shall be used either for the purpose of erecting,
maintaining and operating cold or dry storage warehouses or other structures and
improvements not inconsistent with the use of the related Leased Property, and
(y) such termination will not materially adversely affect either the value of
the remaining portion of the related Leased Property (as distinguished from the
value of the entire Leased Property) or the net operating income of the
remaining portion of the Leased Property (taking into account, to the extent
applicable, any potential loss of revenue resulting if the transfer and
development of the Unimproved Parcel by Landlord were not to occur), as
supported by the Officer's Certificate of Landlord described below. As used
herein, "Unimproved Parcel" shall mean, with respect to a Leased Property, one
or more land areas comprising such Leased Property on which no improvements
generating Receipts are situate, and not materially required for the generation
of Receipts. In connection with any termination permitted pursuant to this
Section, Tenant agrees to execute and deliver any instrument reasonably
necessary or appropriate to facilitate said action, subject to Tenant's receipt
of:
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<PAGE> 10
1. a plot plan identifying the location of the applicable Unimproved
Parcel;
2. a metes and bounds description of the portion of such Unimproved
Parcel; and
3. an amendment to the legal description attached as an exhibit to
this Lease implementing the proposed release, including a metes and bounds
description of the portion of the Land at the relevant Leased Property
that will continue to be subject to this Lease after the proposed
termination.
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.
(a) Subject to the terms of this Section, if, at any time during the Term,
in the good faith judgment of Tenant (as evidenced by an Officer's Certificate
on behalf of Tenant which describes the basis for such judgment), (x) any Leased
Property becomes or imminently will become uneconomic or unsuitable for its
Primary Intended Use, and will remain uneconomic or unsuitable for such use for
the foreseeable future, and Tenant undertakes to cease its operation of such
Leased Property for its Primary Intended Use as soon as is reasonably
practicable or (y) a Default hereunder relating to a particular Leased Property
has occurred and is continuing and Tenant, notwithstanding the exercise of
reasonable diligence, is unable to cure such Event of Default other than by
terminating this Lease with respect to the Leased Property in question (in each
case, any such Leased Property, an "Uneconomic Property"), then, unless
otherwise prohibited by the terms of any Landlord's Debt, Tenant shall have the
right, so long as (i) no Event of Default shall have occurred and be continuing
(other than one arising from the Default described in clause (y) above), and
(ii) any other requirements relating to the substitution of such Uneconomic
Property under any applicable Landlord's Loan Document have been satisfied, to
purchase such Uneconomic Property described in clause (x) above in accordance
with the terms of this Section. Tenant shall signify its election to exercise
such purchase option by giving notice of the election to Landlord, accompanied
by the Officer's Certificate described in the immediately preceding sentence.
Tenant's restoration of the operations at any Uneconomic Property as a result of
events which are not within the control of Tenant and were not foreseeable by
Tenant at the time such Officer's Certificate was delivered shall not be deemed
to evidence Tenant's bad faith in making the determination which is the subject
of such Officer's Certificate.
(b) In the event Tenant elects to exercise its right to purchase a Leased
Property pursuant to this Section, Tenant shall, as described in clause (x)
above, either:
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<PAGE> 11
(i) offer to Landlord a property owned by Tenant of like kind and
quality to the Leased Property proposed to be purchased by Tenant (each a
"New Leased Property"), which New Leased Property, if accepted by Landlord
(in Landlord's reasonable discretion), would serve as consideration for
Tenant's purchase of the Leased Property in question (each a "New Property
Purchase"); or
(ii) offer to pay Landlord the Termination Amount for the Uneconomic
Property in question (each a "Cash Purchase"). Landlord shall have sixty
days from the date of such offer to either accept or reject Tenant's offer
to make a Cash Purchase. Upon the closing of the Cash Purchase or
Landlord's rejection thereof, (x) this Lease shall terminate in respect of
the Uneconomic Property in question (except for such terms as are
expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set
forth on Exhibit 3.1(a) shall be adjusted to reflect the portion of
Minimum Rent allocated to each Leased Property remaining subject to the
terms of this Lease (except to the extent otherwise indicated on said
Exhibit 3.1(a)).
(c) As a condition to any New Property Purchase, Tenant shall deliver to
Landlord (i) a deed evidencing the transfer of the fee interest in the New
Leased Property to Landlord, (ii) a Title Policy with respect to the New Leased
Property, (iii) a survey of the New Leased Property, (iv) environmental reports
relating to the New Leased Property, (iv) an amendment to this Lease (x)
terminating this Lease with respect to the Uneconomic Property and (y) causing
the New Leased Property to become a Leased Property hereunder and (v) any and
all other documents, reports, legal opinions or other items reasonably requested
by Landlord. Upon any such purchase, the Uneconomic Property removed will no
longer be a Leased Property hereunder and this Lease, as such relates to the
Uneconomic Property in question, will be terminated. Upon any New Property
Purchase, the applicable New Leased Property shall be a Leased Property
hereunder and the percentage of Minimum Rent (as set forth on Exhibit 3.1(a)
hereto) assigned to the applicable Uneconomic Property shall be assigned to such
New Leased Property.
(d) As a condition to any Cash Purchase, Tenant shall pay to Landlord (in
immediately available federal funds) the applicable Termination Amount and shall
deliver to Landlord (i) an amendment to this Lease terminating this Lease with
respect to the Uneconomic Property (ii) any and all other documents, reports,
legal opinions or other items reasonably requested by Landlord. Upon any such
purchase, the Uneconomic Property removed will no longer be a Leased Property
hereunder and this Lease, as such
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<PAGE> 12
relates to the Uneconomic Property in question, will be terminated in accordance
with the last sentence of Section 1.3(b)(ii) herein.
(e) Tenant hereby covenants and agrees that any purchase of an Uneconomic
Property pursuant to this Section shall not in any way impair the obligations of
Tenant to make payments of Rent hereunder.
(f) Tenant hereby agrees to pay all expenses in connection with any
actions taken pursuant to this Section, including all out-of-pocket expenses and
costs incurred by Landlord or Landlord's Lender (or any of their respective
affiliates), regardless whether a substitution is ultimately effected, including
fees and costs of: audits; travel; accounting services; environmental and
engineering reports; credit reports; appraisals; property evaluations;
preparation, negotiation, execution and delivery of any amendments of or
documents supplemental to this Lease or Landlord's Loan Documents; attorneys'
fees and expenses of Landlord and Landlord's Lender; transfer, transfer gains,
intangibles, deed and mortgage recording taxes; title insurance; survey; and
document recordings and filings.
1.4 Initial Term. The initial term of this Lease (the "Initial Term")
shall commence on the Commencement Date and shall expire on February 28, 2014,
unless otherwise terminated as provided herein, subject to the terms of Section
1.6.
1.5 Renewal Terms. (a) Subject to Section 1.6, provided (i) no Event of
Default shall have occurred and be continuing hereunder or under the Other
Leases and (ii) the tenant under each of the Other Leases shall have exercised
its respective renewal option under the applicable Other Lease to the extent the
same is available, Tenant shall have the right to renew this Lease (as to all,
but not less than all, the Leased Property subject to this Lease at such time)
for two (2) successive five (5) year terms ("Extended Terms") upon giving
written notice to Landlord of each such renewal at least eighteen (18) months
prior to the termination of the then current Term. During each such Extended
Term, all of the terms and conditions of this Lease shall continue in full force
and effect, except that the Minimum Rent for and during each Extended Term shall
be the greater of (i) the then current fair market rental ("Fair Market
Rental"), which unless otherwise mutually agreed to by Landlord and Tenant shall
be determined by the appraisal procedure set forth in Article XXIV and (ii) the
Minimum Rent for the Lease Year immediately preceding the Extended Term plus
five percent (5%). Tenant's failure to exercise its renewal option as to the
first Extended Term shall result in the loss of its renewal option as to the
second Extended Term.
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<PAGE> 13
(b) Subject to Section 1.6, Landlord shall exercise renewal rights (if
any) that are available under each Ground Lease so as to provide Tenant, to the
greatest extent possible, with an Extended Term described in Section 1.5(a),
provided that (without waiving Landlord's rights under Section 1.6) Landlord
shall not be required to exercise any renewal option in respect of any Ground
Lease unless prior to such time Tenant shall have duly exercised its renewal
option hereunder.
(c) If Landlord or any Affiliate of Landlord shall purchase any fee or
other interest in a Leased Property that is superior to the interest of
Landlord, such as the ground lessor's interest in a Ground Leased Property, then
the estate of Landlord and such superior interest shall not merge and, without
limiting the foregoing, Tenant shall continue to be liable hereunder to pay any
ground rent and perform any other obligations of the lessee under such Ground
Lease. Further, in the event Landlord or any Affiliate of Landlord acquires a
ground lessor's interest in a Ground Leased Property and the term of the related
Ground Lease shall have expired, then Landlord or such Affiliate shall have the
right to enter into a new Ground Lease and receive from Tenant reimbursement (or
payment) of ground rent in an amount equal to the same ground rent as was
payable under the expired Ground Lease, increased by 5 percent, and increased
again by 5 percent every fifth anniversary of the commencement of the new Ground
Lease.
1.6 Limitation of Term as a Result of Ground Lease Terms. With respect to
any Ground Leased Property the Ground Lease for which has an expiration date
(taking into account any renewal options thereunder as of the date hereof or
hereafter exercised) prior to the expiration of Term (taking into account any
exercised renewal options hereunder), (i) this Lease shall expire with respect
to such Ground Leased Property on the business day immediately preceding such
Ground Lease expiration date (taking into account the terms of the following
clause (ii)), and (ii) if a Ground Lease renewal option is not exercised as of
the date hereof and Landlord has not (in its sole discretion) determined to
exercise such renewal option, then Tenant may require Landlord to exercise such
renewal term on the following terms and conditions: (1) no default on the part
of Tenant hereunder or Event of Default shall have occurred and be continuing,
(2) Tenant shall notify Landlord, on a date reasonably prior to the date on
which such renewal option must be exercised, that Tenant wishes Landlord to
exercise such renewal option, and (3) such notice shall constitute Tenant's
agreement to pay to Landlord (as and when the same become due and payable) all
base and additional rent and other sums due and payable under the affected
Ground Lease during such renewal term (including the portion thereof extending
beyond the Term), provided that Landlord shall credit against amounts due under
this clause (3), in respect of the portion of the Ground Lease renewal term,
extending beyond the Term any rent and similar payments Landlord receives from
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<PAGE> 14
any third party in consideration for the lease of the premises in respect of
such portion of the Ground Lease renewal term.
1.7 Condition of the Leased Property. Tenant acknowledges (a) receipt and
delivery of possession of the Leased Property, (b) that Tenant has inspected and
otherwise has knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease and (c) that Tenant has found the same to
be in good order and repair and satisfactory for its purposes hereunder. Tenant
is leasing the Leased Property "AS IS" in its present condition. Tenant waives
any claim or action against Landlord in respect of the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, AS TO ACCESS TO THE LEASED
PROPERTY OR AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, OR AS TO THE ABSENCE OF ANY DEFECT, LATENT OR PATENT, IT BEING AGREED
THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
ARTICLE II
2.1 Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, (iv) the words "herein," hereof" and "hereunder" and other words of
similar import refer to this Lease as a whole and not to any particular Article,
Section or other subdivision, (v) the term "including" and words of similar
import shall be deemed to be followed by the phrase "without limitation," (vi)
the term "attorneys' fees" and "attorneys' fees and expenses" and words of
similar import shall be deemed preceded with the word "reasonable," and (vii)
the phrase "Leased Property" shall be deemed to mean a specific Leased Property
or all of the Leased Property, as the context may require, and shall be deemed
to be followed by the phrase "or any portion thereof".
Additional Charges: As defined in Article III.
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<PAGE> 15
Affiliate: A Person or Persons directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with the
Person or Persons in question. The term "control", as used in the immediately
preceding sentence, shall mean, with respect to a Person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting
rights attributable to the shares of the controlled corporation and, with
respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled Person.
Aggregate Threshold Amount: As defined in Article VIII.
Alteration: As defined in Section 8.1.
Annual Budget: Tenant's annual budget setting forth, in reasonable detail,
Tenant's good faith estimates of the anticipated results of operations of the
Leased Property (taken as a whole), including Receipts, all Operating Expenses,
management fees and capital expenditures, approved by Landlord in accordance
with Section 6.1(h)(4) hereof.
Business Day: Any day other than a Saturday, Sunday or any other day on
which national banks in New York, New York are not open for business.
Cash: Coin or currency of the United States of America or immediately
available federal funds, including such funds delivered by wire transfer.
Cash Management Procedures: As defined in Article XI.
Casualty: As defined in Section 10.2.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: The date of this Lease.
Condemnation: As defined in Section 10.3.
CPI Increase: When used to qualify a fixed dollar amount set forth herein
at the date in question, such fixed dollar amount, as increased by the
percentage by which the Consumer Price Index for All Items, Urban Consumers
published by the United States Department of Labor, applicable to the United
States (all items) (base year 1982-84 =
-8-
<PAGE> 16
100) (the "Consumer Price Index"), or any successor index thereof as such
successor index may be appropriately adjusted to establish substantial
equivalence with the Consumer Price Index, shall have increased over such
Consumer Price Index (or successor, equivalent or comparable index, as
applicable) for the month in 1998 in which the Commencement Date occurs. If the
Consumer Price Index is converted to a different standard reference base or
otherwise revised, then whenever the determination of a CPI Increase figure is
called for herein, the Consumer Price Index shall be converted in accordance
with the conversion factors published by the United States Department of Labor,
Bureau of Labor Statistics, or, if said Bureau shall not publish the same, as
the same may be published by Prentice-Hall, Inc. or any other nationally
recognized publisher of similar statistical information selected by Landlord. If
the Consumer Price Index ceases to be published and there is no successor
thereto, such other index as Landlord shall reasonably select shall be
substituted for the Consumer Price Index.
Credit Facility: Shall mean a clean, irrevocable, unconditional
transferable letter of credit, payable on sight draft only, which shall not be
secured by any Leased Property, for the benefit of Landlord (or, at Landlord's
option, Landlord's Lender) and entitling such beneficiary to draw thereon in New
York, New York or in such other city as Landlord's office may be located (or, at
Landlord's option, the corporate trust office of Landlord's Lender) may be
located at the time of the issuance of such letter of credit, issued by a
domestic bank or the U.S. agency or branch of a foreign bank the long-term
unsecured debt rating of which at the time such letter of credit is delivered
and throughout the term of such letter of credit is not less than the then
Required Rating, or, if the Required Rating is "AAA" and there are no domestic
banks or U.S. agencies or branches of a foreign bank having such long-term
unsecured debt rating then issuing letters of credit, then such letter of credit
may be issued by a domestic bank the long-term unsecured debt rating of which is
not lower than "AA" by the Rating Agencies. Such Credit Facility shall provide
that (i) it will automatically renew unless the issuer of such Credit Facility
delivers written notice to the beneficiary (and to Landlord, if Landlord is not
the beneficiary) at least thirty (30) days prior to its expiration that such
Credit Facility will not be renewed and (ii) if not so renewed, the beneficiary
shall be entitled to draw upon the full amount thereof. Without in any way
limiting the generality of the foregoing, if any Credit Facility is not renewed
or replaced with another Credit Facility prior to the date that is thirty (30)
days prior to its expiration, the beneficiary shall be entitled to draw upon the
full amount thereof.
Crescent Realty: Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership.
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Crescent Trust: Crescent Real Estate Equities Company, a Texas real estate
investment trust.
Default: The occurrence of any event hereunder which, but for the giving
of notice or passage of time, or both, would be an Event of Default hereunder.
Depositary: Landlord or, at Landlord's election, Landlord's Lender or a
depositary selected by Landlord, it being agreed that different Persons may
serve as Depositary at any one time and from time to time.
Eligible Collateral: U.S. Government Securities, Debt Securities, a Credit
Facility, Cash and Cash Equivalents, and a guaranty of payment and performance
(in form and substance reasonably satisfactory to Landlord) by Vornado Trust or
Vornado Realty (provided Vornado Trust or Vornado Realty, as applicable, has a
long-term unsecured debt rating at least equal to the Investment Grade rating)
and/or Crescent Trust or Crescent Realty (provided Crescent Trust or Crescent
Realty, as applicable, has a long-term unsecured debt rating at least equal to
the Investment Grade rating), or any combination of the foregoing.
Environmental Laws: Any and all of the following as applicable to Tenant
and/or the Leased Property: present and future federal, state and local laws
(whether under common law, statute, ordinance, rule, regulation or otherwise),
court or administrative orders or decrees, requirements of permits issued with
respect thereto, and other requirements of governmental authorities relating to
any Hazardous Substances or Hazardous Substances Activity (including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss.ss.9601, et seq.) as heretofore or hereafter amended from time to
time).
Event of Default: As defined in Article XII.
Extended Term: As defined in Article I.
Fair Market Rental: With respect to a particular Leased Property, the
rental that a willing tenant not compelled to rent would pay a willing landlord
not compelled to let for such Leased Property, excluding all capital
improvements (as distinguished from necessary repairs and replacements) paid for
by Tenant, determined in accordance with the appraisal procedures set forth in
Article XXIV or in such other manner as shall be mutually acceptable to Landlord
and Tenant.
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Fair Market Value: With respect to a particular Leased Property, the price
that a willing buyer not compelled to buy would pay a willing seller not
compelled to sell for such Leased Property, excluding all capital improvements
(as distinguished from necessary repairs and replacements) paid for by Tenant,
and (a) assuming the same is unencumbered by this Lease, (b) determined in
accordance with the appraisal procedures set forth in Article XXIV or in such
other manner as shall be mutually acceptable to Landlord and Tenant, and (c) not
taking into account any reduction in value resulting from any indebtedness to
which such Leased Property is subject except as expressly provided hereinbelow.
In determining such Fair Market Value, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions of
any encumbrance which is not removed at or prior to the closing of the
transaction as to which such Fair Market Value determination is being made shall
be taken into account.
Fiscal Year: Each twelve (12) month period from January 1 to December 31.
Fixtures: As defined in Article I.
Governmental Authority: Any court, board, agency, commission, office or
authority of any nature whatsoever of or for any governmental unit (federal,
state, county, district, municipal, city or otherwise), whether now or hereafter
in existence.
Ground Lease: Each of the ground leases identified on Exhibit 1.5(b)
hereto.
Ground Leased Property: Collectively, the Leased Property identified on
Exhibit 1.5(b) hereto.
Hazardous Substances: Any of the following: (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance", "hazardous material", "hazardous waste", "extremely hazardous
waste", "infectious waste", "toxic substance", "toxic pollutant" or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity" and (ii) any
petroleum, natural gas, natural gas liquid, liquefied natural gas, synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas), ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters, and other wastes associated with
the exploration, development or reduction of crude oil, natural gas, or
geothermal resources. Without limiting the foregoing, Hazardous
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Substances shall also include asbestos and asbestos-containing materials and
polychlorinated biphenyls.
Initial Term: As defined in Article I.
Institutional Lender: Any one or more of the following: a bank, investment
bank, trust company, broker-dealer, insurance company, separate account, pension
fund, retirement plan, governmental agency, real estate investment trust,
investment company, investment company adviser or pension fund adviser, or any
Affiliate of any of the foregoing, in each case, whether acting for its own
account or as a trustee, fiduciary or agent of others.
Insurance Premiums: As defined in Section 10.1(d).
Interest Rate: A rate equal to 90-day U.S. Treasuries plus 2.00%.
Insurance Requirements: All terms of any insurance policy required
hereunder covering or applicable to the Leased Property, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Leased Property or
any use of the Leased Property.
Land: As defined in Article I with respect to the Leased Property.
Landlord: Collectively, each of the entities identified on Exhibit A
hereto, and their respective successors and assigns.
Landlord Liens: Liens on or against the Leased Property or this Lease or
any payment of Rent (i) in favor of any taxing authority by reason of any tax
excluded from the definition of "Taxes" hereunder owed by Landlord or (ii)
securing Landlord's Debt.
Landlord's Debt: The outstanding principal amount borrowed by Landlord
from time to time, together with all interest accrued and unpaid thereon, and
all other sums due in connection therewith, including any yield-maintenance
payments or other prepayment premium or penalty, the payment of which may be
secured by Landlord's interest in the Leased Property and the Rent and other
amounts payable hereunder.
Landlord's Lender: The holder of Landlord's Debt from time to time,
provided that if Landlord's Debt shall be held legally or beneficially by more
than one Person, then
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Landlord's Lender shall be deemed to refer to only one such Person as selected
by Landlord in a notice to Tenant or, failing such selection, as selected by
Tenant.
Landlord's Loan Documents: The instrument(s) and agreement(s) evidencing,
establishing and securing Landlord's Debt, including (to the extent applicable)
a promissory note, loan agreement, a mortgage, deed of trust or deed to secure
debt and assignment of leases and rents.
Lease Year: Any Fiscal Year or portion thereof during the Term, commencing
with the 1999 Fiscal Year.
Leased Improvements; Leased Property: Each as defined in Article I.
Leasehold Mortgage: Any mortgage, deed of trust or other security interest
encumbering Tenant's leasehold estate hereunder, or direct or indirect ownership
interests in Tenant, which has been granted to secure repayment of debt of
Tenant or the holders of such ownership interests.
Leasehold Mortgagee: The holder of a Leasehold Mortgage from time to time.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Landlord, Tenant
or the Leased Property, or the construction, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Tenant, at any time in force affecting the Leased Property
(other than any subleases, this Lease, and service contracts and other similar
agreements now in effect or hereafter entered into in the ordinary course of
Tenant's business), including any which may (i) require repairs, modifications
or alterations in or to the Leased Property, or (ii) in any way limit the use
and enjoyment thereof.
Litigation Costs: All costs reasonably incurred by Landlord in connection
with the enforcement of any provision of this Lease, including attorneys' fees
and expenses, court costs and reasonable consultants' fees and expenses.
Lien: Any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting the Leased Property or Tenant, or any interest therein,
including any conditional sale or other
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title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
notice or other instrument and mechanics', materialmen's and other similar liens
and encumbrances.
Major Subtenant: A tenant under a Sublease for all or substantially all of
a Leased Property.
Material Agreement: Operating Agreements and agreements (i) requiring
payment by Tenant of more than $2,000,000 per annum and not cancellable without
a penalty of $500,000 or more, or (ii) pursuant to which Tenant is entitled to
receive more than $2,000,000 per year, relating, in each case, to the ownership,
development, use, operation, leasing, maintenance or repair of the Leased
Property, provided "Material Agreements" shall not include agreements pursuant
to which either party thereto may discontinue the provision of, or request for,
services, or the delivery of goods to Tenant for storage, without payment of any
penalty or without notice to the other party (regardless whether the agreement
is formally terminated) .
Material Alteration: Any Alteration to be performed by or on behalf of
Tenant at a Leased Property (other than an Alteration the cost of which a
Subtenant is obligated to reimburse to Tenant and which Tenant reasonably
believes will be so reimbursed), the cost of which as reasonably estimated by a
Qualified Architect or Engineer exceeds the Threshold Amount.
Material Casualty: As defined in Section 10.2.
Material Condemnation: As defined in Section 10.2.
Minimum Rent: As defined in Article III.
Net Operating Income: Operating Income less Operating Expenses.
New Leased Property: As defined in Article I.
Notice: As defined in Article XXIII (regardless whether the same is
capitalized herein).
Officer's Certificate: A certificate made by an individual authorized to
act on behalf of Tenant and, to the extent applicable, any constituent Person
with respect to Tenant. Without limiting the foregoing, if the individual
signing the certificate is doing
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so on behalf of a corporation, then such individual shall hold the office of
President, Vice President or Chief Financial Officer (or the equivalent) with
respect to such corporation.
Operating Agreements: Reciprocal easement and/or operating agreements;
covenants, conditions and restrictions; and similar agreements affecting any
Leased Property and binding upon and/or benefitting Landlord or Tenant and other
third parties. Without limiting the foregoing, "Operating Agreements" shall not
include any Warehouse Agreements.
Operating Expenses: For any specified period, on an accrual basis, all
expenses paid (or due and payable, except to the extent that the same constitute
Trade Payables that are not more than 60 days outstanding) by Tenant during such
period in connection with the operation of the Leased Property, as well as
bookkeeping, accounting, insurance costs, wages and other costs and expenses
incurred for the Leased Property and legal expenses incurred in connection with
the operation of the Leased Property, determined, in each case, consistently
with GAAP. "Operating Expenses" shall not include (1) depreciation or
amortization or other noncash items (other than expenses that are due and
payable but not yet paid), (2) the principal of and interest on any indebtedness
(except for any payments required under any Permitted Equipment Leases), (3)
income taxes or other taxes in the nature of income taxes, (4) any expenses
(including legal, accounting and other professional fees, expenses and
disbursements) incurred in connection with and allocable to any indebtedness
(except for any of the same in connection with any Permitted Equipment Leases),
(5) the cost of any capital expenditures (except for any payments required under
any Permitted Equipment Leases), (6) distributions to the shareholders, members
or partners in Tenant or any asset management fees or similar compensation
payable to any Affiliate of Tenant, and (7) any item of expense which otherwise
would be considered within Operating Expenses but is paid directly by any
Subtenant. Expenses that are accrued as Operating Expenses during any period
shall not be included in Operating Expenses when paid during any subsequent
period.
Operating Income: For any specified period, on an accrual basis, all
income received or accrued by Tenant during such period in connection with the
operation of the Leased Property, determined consistent with GAAP, including the
following, but without duplication:
(i) all rents, rent equivalents, moneys payable as damages pursuant
to a Lease or in lieu of rent or rent equivalents, royalties (including
all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and
other deposits), accounts, cash, issues,
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profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or
benefit of Tenant or its agents or employees from any and all sources
arising from or attributable to the Leased Property, including any
obligations now existing or hereafter arising or created out of the lease,
sublease, license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Tenant;
(ii) charges received by Tenant for electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any other energy,
telecommunications, telephone, utility or similar items, including
overtime usage, HVAC equipment charges, sprinkler charges, escalation
charges, license fees, maintenance fees, charges for improvements, Taxes
and other amounts payable to Tenant, under any Lease or other agreement
relating to the Leased Property pursuant to which any portion of the
Leased Property, utilities, facilities, equipment, parking facilities or
other services are furnished by Tenant, but excluding any security
deposits received;
(iii) condemnation awards to the extent that such awards are
compensation for lost rent;
(iv) business interruption and loss of "rental value" insurance
proceeds;
(v) income from cash holdings and interest from notes in lieu of
rent; and
(vi) all other amounts received by Tenant during such period in
respect of items which in accordance with GAAP would be included in
Tenant's annual financial statements for such period or any other period
as operating income of the Leased Property and which are reasonably
expected to recur during the next two (2) years following the date on
which Net Cash Flow or Net Operating Income is being calculated.
Notwithstanding the foregoing clauses (i) through (vi), Operating Income shall
not include (A) any condemnation or insurance proceeds (other than of the types
described in clauses (i), (ii) and (iii) above), (B) any proceeds resulting from
the sale, exchange, transfer, financing or refinancing of all or any part of the
Tenant's interest in the Leased Property or any interest therein (other than of
the types described in clause (iii) above), (C) any repayments received from
Subtenants of principal loaned or advanced to Subtenants by Tenant, or (D) any
type of income that would otherwise be considered
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Operating Income pursuant to the provisions above but is paid directly by any
Subtenant to a Person other than Tenant or its agent.
Other Charges: All ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including vault charges and license fees for
the use of vaults, chutes and similar areas adjoining a Leased Property, now or
hereafter levied or assessed or imposed against any Leased Property or any part
thereof (subject to the same exclusion set forth in the proviso in the
definition of "Taxes").
Other Leases: Collectively, (i) that certain Master Lease Agreement, dated
as of April 22, 1998, between URS Real Estate, L.P., as Landlord, and URS
Logistic, Inc., as amended, (ii) that certain Master Lease Agreement, dated as
of April 22, 1998, between Americold Real Estate, L.P., as landlord, and
Americold Corporation, as tenant, as amended, (iii) that certain Master Lease
Agreement, dated as of February 28, 1999, between Americold Corporation, as
landlord, and AmeriCold Logistics, LLC, as tenant, as amended, (iv) that certain
Master Lease Agreement, dated as of the date hereof, between URS Logistics,
Inc., as landlord, and AmeriCold Logistics II, LLC, as tenant, as amended, and
(v) that certain Master Lease Agreement, dated as of the date hereof, among VC
Omaha Holdings, L.L.C. and Carmar Freezers Thomasville, L.L.C., together as
landlord, and AmeriCold Logistics, LLC, as tenant, as amended.
Overdue Rate: On any date, a rate equal to the Interest Rate plus 2%, but
in no event greater than the maximum rate then permitted under applicable law.
Percentage Rent: As set forth in Exhibit 3.1(b) attached hereto.
Permitted Encumbrances: Collectively, (a) all Liens disclosed in the Title
Policy, (b) Liens, if any, for Taxes or Other Charges not yet payable or
delinquent or which are being diligently contested in good faith in accordance
with this Lease, (c) Liens in respect of property or assets imposed by law which
were incurred in the ordinary course of business, such as carriers',
warehousemen's, landlord's, mechanics', materialmen's, repairmen's and other
similar Liens arising in the ordinary course of business, and Liens for workers'
compensation, unemployment insurance and similar programs, in each case arising
in the ordinary course of business which are being diligently contested in good
faith in accordance with the terms hereof, (d) Subleases, (e) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances (including any of such matters incurred or
entered into by Tenant in the ordinary course of business) which in each case do
not diminish in any material respect the value of the affected Leased Property
or affect in any material respect the validity,
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enforceability or priority of this Lease or the Liens created by Landlord's Loan
Documents, and (f) such other title and survey exceptions as Landlord has
approved or may approve in writing. In addition, "Permitted Encumbrances" shall
include any Landlord Liens.
Permitted Equipment Leases means capital and/or operating lease
obligations in respect of equipment used at the Leased Property with an
aggregate annual rent obligation reasonable and customary for facilities such as
the Leased Properties, as mutually agreed upon by Landlord and Tenant.
Permitted Investments: The following, subject to qualifications
hereinafter set forth:
1. Obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or instrumentality
thereof, when such obligations are backed by the full faith and
credit of the U.S. These obligations include, but are not limited
to:
o U.S. Treasury obligations All direct or fully guaranteed
obligations
o Farmers Home Administration Certificates of beneficial
ownership
o General Services Administration Participation
certificates
o U.S. Maritime Administration Guaranteed Title XI
financing
o Small Business Administration Guaranteed participation
certificates Guaranteed pool certificates
o U.S. Department of Housing and Urban Development Local
authority bonds
o Washington Metropolitan Area Transit Authority
Guaranteed transit bonds
2. Federal Housing Administration debentures.
3. Obligations of government-sponsored agencies that are not backed by
the full faith and credit of the U.S., where the obligation is
limited to those
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instruments that have a predetermined fixed dollar amount of
principal due at maturity that cannot vary or change. These
obligations are limited to:
o Federal Home Loan Mortgage Corp. (FHLMC) Debt
obligations
o Farm Credit System (formerly: Federal land Banks,
Federal Intermediate Credit Banks, and Banks for
Cooperatives) Consolidated systemwide bonds and notes
o Federal Home Loan Banks (FHL Banks) Consolidated debt
obligations
o Federal National Mortgage Association (FNMA) Debt
obligations
o Student Loan Marketing Association (SLMA) Debt
obligations
o Financing Corp. (FICO) Debt obligations
o Resolution Funding Corp. (REFCORP) Debt obligations.
4. Federal funds, unsecured certificates of deposit, time deposits,
banker's acceptances, and repurchase agreements having maturities of
not more than 365 days of any bank, the short-term debt obligations
of which are rated "A-1+" (or the equivalent) by the Rating Agencies
or secured by U.S. Treasury obligations (as described in Paragraph 1
above).
5. Deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC).
6. Debt obligations maturing in 365 days or less that are rated AAA or
higher (or the equivalent) by the Rating Agencies.
7. Commercial paper rated "A-1+" (or the equivalent) by the Rating
Agencies and maturing in 365 days or less.
8. Investments in certain short-term debt of issuers rated "A-1" (or
the equivalent) by the Rating Agencies may be permitted with certain
restrictions. The total amount of debt from "A-1" issuers must be
limited to the investment of an amount equal to Monthly Debt Service
Payment Amount. The total amount of "A-1" investments should not
represent more than 20% of the rated issue's outstanding principal
amount and each investment should not mature beyond 30 days.
Investment in "A-1" (or
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the equivalent) rated securities are not eligible for reserve
accounts, cash collateral accounts, or other forms of credit
enhancement. Short-term debt for purposes of this definition
includes: commercial paper, federal funds, repurchase agreements,
unsecured certificates of deposit, time deposits, and banker's
acceptances.
9. Investment in money market funds rated "AAAm" or "AAm-G" (or the
equivalent) by the Rating Agencies.
10. Such other investments as shall be approved in writing by Landlord.
Notwithstanding the foregoing, "Permitted Investments": (i) shall exclude any
security with the Standard & Poor's "r" symbol (or any other Rating Agency's
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
"strips"; (ii) shall not have maturities in excess of one year; (iii) as to the
investments described in (1), (3), (4), (5), (6), (7) and (8): the obligations
shall be limited to those instruments that have a predetermined fixed dollar of
principal due at maturity that cannot vary or change; interest may either be
fixed or variable; and any variable interest should be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index; and (iv) shall exclude any investment where the right to receive
principal and interest derived from the underlying investment provide a yield to
maturity in excess of 120 percent of the yield to maturity at par of such
underlying investment. No investment shall be made which requires a payment
above par for an obligation if the obligation may be prepaid at the option of
the issuer thereof prior to its maturity. All investments shall mature or be
redeemable upon the option of the holder thereof on or prior to the earlier of
(x) three (3) months from the date of their purchase or (y) the Business Day
preceding the day before the date such amounts are required to be applied
hereunder.
Person: Any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.
Policies: As defined in Section 10.1.
Primary Intended Use: As defined in Section 6.1.
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Qualified Architect or Engineer: Any experienced architect, engineer or
construction manager licensed or registered in the jurisdiction where the
applicable Leased Property is located, if required by the laws of such
jurisdiction.
Rating Agencies: Any one or more of the following designated by Landlord:
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA, Inc. or
any other nationally-recognized statistical rating agency selected by Landlord.
Receipts: The items described in Operating Income, determined, however, on
a cash basis.
REIT: As defined in Article XXV.
REIT Requirements: As defined in Article XXV.
Release Amount: With respect to each Leased Property, shall refer to the
applicable "Release Amount" as set forth on Exhibit 2.1(a) hereto. Tenant hereby
agrees that in connection with any new Landlord's Debt, the Release Amount in
respect of any Leased Property shall be the greater of the amount set forth on
Exhibit 2.1(a) and the amount required to be paid by Landlord to Lender to
obtain the release of the lien affecting such Leased Property.
Rent: Collectively, (i) the Minimum Rent, (ii) Percentage Rent and (iii)
Additional Charges.
Rental Period. As defined in Article III.
Rent Payment Date. As defined in Article III.
Restoration: As defined in Section 10.2.
State: The State or Commonwealth in which the particular Leased Property
in located.
Sublease. Any lease, sublease, license agreement or occupancy agreement
entered into by Tenant affecting all or any portion of the Leased Property,
provided that Warehouse Agreements shall not be included within the definition
of Subleases.
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Subtenant: A subtenant, licensee, occupant or other party to any Sublease.
Superior Interests: As defined in Article XV.
Superior Party: As defined in Article XV.
Taxes: All real estate and personal property taxes, assessments, fees,
taxes on rents or rentals, water rates or sewer rents and other governmental
charges now or hereafter levied or assessed or imposed against Landlord, Tenant
or the Leased Property or rents therefrom or which may become Liens, provided
that Taxes shall not include any income, franchise, estate, inheritance or gift
taxes, or any other tax imposed on or measured by the net income of Landlord,
except to the extent that the same is in direct substitution for a tax that
would otherwise be included within the definition of "Taxes" hereunder.
Tenant's Personal Property: All motor vehicles, machinery, equipment,
furniture, furnishings, movable walls or partitions, computers or trade fixtures
or all other personal property, and consumable inventory and supplies, now owned
or hereafter acquired by Tenant and located on the applicable Leased Property or
used or useful in Tenant's business on such Leased Property, including all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, except items, if any, included within the
definition of Fixtures.
Term: Collectively, the Fixed Term and any Extended Terms, to the extent
properly exercised by Tenant pursuant to the provisions of Article I, unless
earlier terminated pursuant to the provisions of this Lease.
Termination Amount: With respect to a specified Leased Property, the
greater of the Fair Market Value thereof and the Release Amount therefor.
Threshold Amount: Two million dollars ($2,000,000).
Title Policy: The ALTA (or equivalent) title insurance policy acquired by
Landlord most recently prior to the date hereof (i) naming Landlord as the
insured and (ii) insuring Landlord's ownership of the Leased Property subject to
the exceptions and exclusions set forth therein.
Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil
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commotion, fire, unavoidable casualty or other causes beyond the control of the
party responsible for performing an obligation hereunder, provided that lack of
funds shall not be deemed a cause beyond the control of either party hereto
unless such lack of funds is caused by the failure of the other party hereto to
perform any obligations of such party under this Lease.
Uneconomic Property. As defined in Article I.
Unimproved Parcel. As defined in Article I.
Unsuitable for Its Primary Intended Use: A state or condition at a Leased
Property such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Tenant, reasonably exercised, the
Leased Property cannot by operated on a commercially practicable basis for its
Primary Intended Use.
Vornado Realty: Vornado Realty L.P., a Delaware limited partnership.
Vornado Trust: Vornado Realty Trust, a Maryland real estate investment
trust.
Warehouse Agreements: Warehousing agreements, logistics and services
agreements, distribution agreements, handling agreements and other similar
agreements in connection with the Primary Intended Use to the extent (but only
to the extent) the same are for goods stored or services rendered at any Leased
Property, in such forms and on such terms as are customarily entered into by
Tenant, together with any amendments and modifications to such agreements.
ARTICLE III
3.1 Rent. Tenant will pay to Landlord, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, at Landlord's address set forth above or at such other place or
to such other person, firms or corporations as Landlord may designate in writing
from time to time, (i) Minimum Rent (as defined below), and (ii) Percentage
Rent. In addition, Tenant will pay to Landlord or the Person otherwise entitled
thereto all Additional Charges during the Term on or before the same are
delinquent.
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(a) Minimum Rent:
For the period commencing on the Commencement Date through February
28, 2014, the sum of TWENTY-ONE MILLION THREE HUNDRED THIRTY
THOUSAND AND 00/100 DOLLARS ($21,330,000.00) per annum.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable:
(x) for the period from the Commencement Date through (and including) the
Rent Payment Date (as defined herein) occurring in September, 2000, in
arrears, and,
(y) for the period from (but excluding) the Rent Payment Date occurring in
September, 2000, through the balance of the Term, in advance,
in either case in twelve (12) equal installments on the eleventh (11th) day of
each calendar month of the Initial Term and each Extended Term (the "Rent
Payment Date"); provided that if such 11th day is not a Business Day, then the
Rent Payment Date shall be the next preceding Business Day; provided further
that the advance Minimum Rent installment otherwise payable on the Rent Payment
Date in September, 2000, shall instead be deferred and paid in six (6) equal
installments on each Rent Payment Date occurring in September, 2000 through
February, 2001. Minimum Rent shall be paid for the period of the eleventh
(11th) of each month (or, if applicable, the Commencement Date) through the
tenth (10th) of the next month (or, if applicable, the expiration of the Term)
(each, a "Rental Period"), provided that the first and last payments of Minimum
Rent shall be prorated as to any partial Rental Period, based on the number of
days within the Term during such Rental Period and the number of days in such
Rental Period. Tenant hereby agrees to make reasonable changes with respect to
the definition of "Rental Period" as may be requested in connection with any
Landlord's Debt. The first installment payment of Minimum Rent shall be payable
on March 11, 1999, for the Rental Period beginning with the Commencement Date
and ending March 10, 1999.
Notwithstanding the foregoing, for the period commencing with the
date hereof and expiring on the third (3rd) anniversary of the date hereof, to
the extent that Available Cash is less than the amount of Fixed Rent and
Percentage Rent, as certified by Tenant (together with reasonable documentation
thereof) and agreed to by Landlord, the Fixed Rent and Percentage Rent shall
accrue, and the payment thereof (together with interest at the Interest Rate)
shall be deferred to, the earlier of (A) the third (3rd) anniversary of the date
hereof and (B) such date as Available Cash shall be available, to the extent of
such Available Cash (and Available Cash shall be applied first to interest, then
to the accrued Fixed Rent and then to the accrued Percentage Rent), provided
that the maximum amount of Fixed Rent that may be deferred under this paragraph
shall be fifteen percent (15%) of the stated Fixed Rent obligation. As used
herein, Available Cash
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shall be Receipts less Operating Expenses. In no event, however, shall the rent
deferral permitted hereunder be such that Landlord will have insufficient cash
flow to service Landlord's Debt.
(b) Percentage Rent:
(i) Generally; Payment in Installments. In addition to the Minimum
Rent payable with respect to the Leased Property, Tenant shall pay
Percentage Rent for each Lease Year. Percentage Rent shall be payable
quarterly in arrears in four (4) installments, on the Rent Payment Date
occurring in April, July, August and January of each Lease Year, in
respect of the quarter ending in the prior month, commencing in 2000. Each
quarterly installment shall be based on, and accompanied by, an Officer's
Certificate setting forth Tenant's current estimated Receipts for the
Leased Property (on a Leased Property-by-Leased Property basis) on a
cumulative basis for the period commencing with the Lease Year through the
end of the quarter in question, and shall take into account previous
installments paid in respect of such Lease Year.
(ii) Presentation of Certificate and Audit. Not later than the 25th
day following the end of each Lease Year, Tenant shall deliver to Landlord
an Officer's Certificate setting forth (x) the Receipts for the Leased
Property (on a Leased Property-by-Leased Property basis) and (y) the
computation made by Tenant in determining Percentage Rent, in each case
(a) for such Lease Year and (b) for each individual calendar quarter
during such Lease Year, together with an audit of such Receipts conducted
by a "Big Six" firm of independent certified public accountants proposed
by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed). Tenant shall utilize, or cause to be
utilized, an accounting system for the Leased Property in accordance with
its usual and customary practices and in accordance with GAAP, which will
accurately record Receipts for the Leased Property. Tenant shall retain
such records, for at least three (3) years after the expiration of each
Lease Year.
(iii) Confirmation of Percentage Rent. Landlord, at its own expense,
except as provided herein below, shall have the right, exercisable by
Notice to Tenant within two (2) years after receipt of the applicable
Officer's Certificate referred to in clause (ii) above, by its accountants
or representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns).
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(iv) Adjustments of Percentage Rent. If the certificate or audit
described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a deficiency in the payment of Percentage Rent and
any differences between the parties are resolved (which, absent the
parties' agreement shall be determined pursuant to arbitration in
accordance with Schedule 15.4), Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as determined or
agreed upon or compromised as aforesaid, is more than four percent (4%) of
the Receipts reported by Tenant for such Lease Year and, as a result,
Landlord did not receive at least ninety-five percent (95%) of the
Percentage Rent payable with respect to such Lease Year, Tenant shall pay
the reasonable cost of such audit and examination. If the certificate or
audit described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a overpayment of Percentage Rent and any
differences between the parties are resolved (which, absent the parties'
agreement shall be determined pursuant to arbitration in accordance with
Schedule 15.4), then (provided no Event of Default has occurred and is
continuing) Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at the
Interest Rate accruing from the date of payment by Tenant until the date
such credit is applied. If such credit cannot be made because the Term has
expired prior to application in full thereof, then (provided no Event of
Default has occurred and is continuing and provided Tenant has paid all
amounts required under this Lease), Landlord shall repay the unapplied
balance of such credit to Tenant.
(v) Maximum Adjustments of Percentage Rent. Notwithstanding the
foregoing, (A) in no event shall Tenant be permitted under Section
3.1(b)(iv) a credit or refund in respect of Percentage Rent in excess of
15 percent of the aggregate installments of Percentage Rent paid in
respect of any Lease Year pursuant to Section 3.1(b)(i) and (B) in no
event shall Tenant be permitted under Section 3.1(b)(i) a credit or refund
in respect of Percentage Rent in excess of 15 percent of the aggregate
installments of Percentage Rent paid in respect of immediately preceding
calendar quarter pursuant to Section 3.1(b)(i).
(vi) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public
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information, (2) disclosed to the extent that Landlord is advised by
counsel that Landlord is required to disclose such information by
subpoena, court order, securities laws and regulations, any other laws or
regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to any Landlord's Debt, provided that,
with respect to the disclosures permitted under clause (4), Landlord shall
obtain the agreement of the Persons to whom disclosure is made to maintain
such information as confidential in accordance with terms of this
Subsection (iv) and in no event shall public or Rule 144A holders of
Landlord's Debt be permitted to receive such information on an individual
Leased Property basis.
(vii) Survival. The obligations of Tenant and Landlord contained in
this Section 3.1 shall survive the expiration or earlier termination of
this Lease.
(c) Additional Charges. In addition to the Minimum Rent and Percentage
Rent payable with respect to the Leased Property, Tenant shall pay and discharge
as and when due and payable the following (collectively, "Additional Charges"):
(1) Taxes and Other Charges. Tenant shall pay all Taxes and Other
Charges as set forth in Section 6.1(b) herein.
(2) Utility Charges. Tenant shall pay all charges for electricity,
power, gas, oil, water, sanitary and storm sewer, refuse collection and
other utilities used or consumed in connection with the applicable Leased
Property during the Term.
(3) Insurance Premiums. Tenant shall pay, as Additional Charges, all
premiums for the insurance coverage required to be maintained pursuant to
Article VIII hereof.
(4) Other Charges. Tenant shall pay, as Additional Charges, all
other amounts, liabilities and obligations that Tenant assumes or agrees
to pay under this Lease, including all of its indemnification obligations
set forth herein.
(5) Late Payment of Rent. If any installment of Minimum Rent,
Percentage Rent or Additional Charges (but only as to those Additional
Charges which are payable directly to Landlord, if any) shall not be paid
within five (5)
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Business Days after its due date, Tenant will pay to Landlord on demand,
as Additional Charges, a late charge (to the extent permitted by law)
computed at the Overdue Rate (or at the maximum rate permitted by law,
whichever is the lesser) on the amount of such installment, from the due
date of such installment to the date of payment thereof.
To the extent that Tenant timely pays any Additional Charges to Landlord
pursuant to any requirement of this Lease, Tenant shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due. If Landlord's Loan Documents shall so require, or if any
Additional Charges shall not be paid to a third party payee within five (5)
Business Days after its due date, Landlord may at any time thereafter, at
Landlord's option, require Tenant to deposit into an escrow account under the
sole dominion and control of Landlord (or the applicable Landlord's Lender), on
the first day of each month (or such other day(s) as Landlord shall reasonably
specify), an amount which, together with similar escrow deposits on succeeding
deposit dates, is sufficient to ensure that such escrow account shall contain an
amount sufficient to make such payment on its next due date, in which event
Landlord shall make all future payments for such expense from the escrow
account. In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost that may be added for non-payment or late
payment of such items. Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Lease or by statute or
otherwise in the case of non-payment of the Rent. Landlord shall have the right
to have such escrows held with a Depositary.
3.2 Net Lease. The Minimum Rent and Percentage Rent, as well as such
Additional Charges as are due and payable to Landlord, shall be paid absolutely
net to Landlord, so that this Lease shall throughout the Term yield to Landlord
the full amount of the installments of Minimum Rent and Percentage Rent, as well
as any payments of Additional Charges payable to Landlord, subject to any other
provisions of this Lease which expressly provide for adjustment or abatement of
Rent or other charges.
ARTICLE IV
4.1 No Termination, Abatement, etc. Except as otherwise specifically
provided herein, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any
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abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent, nor shall the respective obligations of Landlord and Tenant be otherwise
affected by reason of (a) any damage to, or destruction of, any Leased Property
from whatever cause or any taking of the Leased Property, (b) the interruption
or discontinuance of any service or utility servicing the applicable Leased
Property, (c) the lawful or unlawful prohibition of, or restriction upon,
Tenant's use of the Leased Property, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title, (d) any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties, (e) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee or transferee of Landlord, or (f)
for any other cause whether similar or dissimilar to any of the foregoing other
than a discharge of Tenant from any such obligations as a matter of law. Tenant
hereby specifically waives all rights, arising from any occurrence whatsoever,
which may now or hereafter be conferred upon it by law to (i) modify, surrender
or terminate this Lease or quit or surrender the Leased Property, or (ii)
entitle Tenant to any abatement, reduction, suspension or deferment of the Rent
or other sums payable by Tenant hereunder, except as otherwise specifically
provided in this Lease. The obligations of Landlord and Tenant hereunder shall
be separate and independent covenants and agreements and the Rent and all other
sums payable by Tenant hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions this Lease. In any instance where, after the occurrence of an
Event of Default, Landlord retains funds which, but for the occurrence of such
Event of Default, would be payable to Tenant, Landlord shall refund such funds
to Tenant to the extent the amount thereof exceeds the amount necessary to
compensate Landlord for any cost, loss or damage incurred in connection with
such Event of Default.
4.2 Abatement Procedures. In the event of a partial taking or temporary
taking, which taking does not render the Leased Property Unsuitable for its
Primary Intended Use, this Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord. If Landlord and Tenant are unable to agree upon the amount
of such abatement within thirty (30) days after such taking, the matter may be
submitted by either party to a court of competent jurisdiction for resolution.
Pending such resolution, Tenant shall remain bound to pay Rent based upon the
amounts asserted by Landlord to be due and payable, provided Landlord shall
remain liable for the repayment to Tenant of amounts ultimately determined to be
overpaid to Landlord.
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ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease, provided that, until the expiration or earlier
termination of this Lease, all capital improvements and additions made by
Tenant, at Tenant's expense, to any Leased Property shall be the property of
Tenant and, upon the expiration or earlier termination of this Lease, title to
such improvements, additions and replacements shall vest in Landlord.
5.2 Tenant's Personal Property. Tenant may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements any items of Tenant's Personal
Property, and Tenant may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Tenant shall
provide and maintain during the entire Lease Term all such Tenant's Personal
Property as shall be necessary to operate each Leased Property in compliance
with all applicable Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Primary Intended
Use. All of Tenant's Personal Property not removed by Tenant within thirty (30)
days following the expiration or earlier termination of this Lease with respect
to such Leased Property where such Tenant's Personal Property is located shall
be considered abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account
therefor.
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ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants. Tenant hereby covenants and agrees with Landlord
that:
(a) Existence; Use of Leased Property; Legal Compliance; Insurance.
(i) Tenant shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with
all Legal Requirements applicable to it and the Leased Property. Tenant
shall at all times maintain and preserve the Leased Property and shall
keep the Leased Property in good working order and repair, reasonable wear
and tear excepted, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto; provided that Tenant shall, without the consent of
Landlord, make no Alteration to any Leased Property which constitutes
"Nonseverable Improvements" as such term is used in Section 4(4).03 of IRS
Revenue Procedure 75-21, as modified by IRS Revenue Procedure 79-48,
unless the conditions of Section 4(4).03(B) are satisfied and the
alteration is described in at least one of the subparagraphs of Section
4(4).03(C). Tenant will operate, maintain, repair and improve the Leased
Property in material compliance with all Legal Requirements, and will not
cause or allow the same to be misused or wasted or to deteriorate,
reasonable wear and tear excepted.
(ii) After the Commencement Date and throughout the entire Term,
Tenant shall use the applicable Leased Property and the Leased
Improvements thereof as a dry and cold storage warehousing facility and
for such other uses as may be necessary or incidental to such use,
including the provision of distribution services (such use, the "Primary
Intended Use") and, notwithstanding any restrictions on subletting
contained herein, Landlord hereby agrees that Tenant shall have the right
to enter into Warehouse Agreements. Tenant shall not use the applicable
Leased Property or any portion thereof for any other use without the prior
written consent of Landlord, which consent shall not be unreasonably
withheld or delayed (taking into account, among other things, the
provisions hereof relating to Percentage Rent). No use shall be made or
permitted to be made of a Leased Property, and no acts shall be done, that
will cause the cancellation of any insurance policy covering such Leased
Property, nor shall Tenant sell or
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otherwise provide, or permit to be kept, used or sold in or about such
Leased Property any article which may be prohibited by law or by Insurance
Requirements. Tenant shall, at its sole cost, comply with all of the
requirements pertaining to the Leased Property or other improvements of
any insurance board, association, organization or company necessary for
the maintenance of insurance, as herein provided, covering the Leased
Property and Tenant's Personal Property. Absent force majeure and any
other event beyond the reasonable control of Tenant, and except during a
period following a Casualty or Condemnation or in which an Alteration is
being performed, Tenant shall continuously operate the Leased Property for
its Primary Intended Use.
(b) Taxes and Other Charges; Contest for Taxes and Other Charges, Legal
Requirements and Liens.
(i) Subject to the provisions of Section 6.1(b)(ii), Tenant shall
pay all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Leased Property prior to the date on which such sums
become delinquent. Tenant will deliver to Landlord, upon request, receipts
for payment or other evidence satisfactory to Landlord that the Taxes and
Other Charges have been so paid (provided Tenant shall not be required to
furnish such receipts for payment of Taxes in the event such Taxes have
been (or were to have been) paid by Landlord's Lender pursuant to
Landlord's Loan Documents). Subject to the provisions of Section
6.1(b)(ii) and other than Permitted Encumbrances, Tenant shall not suffer
and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Leased
Property, and shall promptly pay for all utility services provided to the
Leased Property. Subject to Section 6.1(b)(ii), Tenant shall pay, bond or
otherwise discharge, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers and others that, if
unpaid, might result in, or permit the creation of, a lien or encumbrance
on any Leased Property, or on the rents arising therefrom.
(ii) After prior written notice to Landlord, Tenant, at its own
expense, may contest by appropriate legal, administrative or other
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges or Lien therefor or any Legal Requirement or
Insurance Requirement or the application of any instrument of record
affecting the Leased Property (other than this Lease or Landlord's Loan
Documents) or any claims or judgments of mechanics,
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materialmen, suppliers, vendors or other Persons or any Lien therefor, and
may withhold payment of the same pending such proceedings if permitted by
law; provided that (A) no Event of Default has occurred and remains
uncured, except for an Event of Default caused by the matter being
contested, (B) such proceeding shall suspend any collection of the
contested Taxes, Other Charges or Liens from the Leased Property, Tenant
or Landlord, or adequate time shall at all times remain prior to such
collection, (C) such proceeding shall be permitted under and be conducted
in accordance with the provisions of any other instrument to which Tenant
is subject and shall not constitute a default thereunder, (D) neither any
Leased Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost, (E) to the extent
not already reserved with Landlord (or Landlord's Lender) or bonded or
otherwise deposited or paid in connection with such proceedings, Tenant
shall have furnished Landlord with security (in an amount reasonably
approved by Landlord) to insure the payment of any such Taxes or Other
Charges, or the cost of the contested Legal Requirement or Insurance
Requirement or the removal of the Lien, in each case together with all
reasonably anticipated interest and penalties thereon, (F) in the case of
an Insurance Requirement, the failure of Tenant to comply therewith shall
not impair the validity of any insurance required to be maintained by
Tenant hereunder or the right to full payment of any claims thereunder,
(G) in the case of any essential or significant service with respect to
any Leased Property, any contest or failure to pay will not result in a
discontinuance of any such service, (H) in the case of any instrument of
record affecting any Leased Property or any part thereof, the contest or
failure to perform under any such instrument shall not result in the
placing of any Lien on any Leased Property or any part thereof (except if
such Lien would be removed upon completion of such proceedings and the
compliance by the parties with the terms of the resulting order, decision
or determination and the removal costs for such Lien have been escrowed
with Landlord or in the proceeding or bonded or otherwise deposited or
paid in connection with such proceedings), (I) except to the extent Tenant
has provided sufficient Eligible Collateral therefor or bonded or
otherwise deposited or paid in connection with such proceedings, neither
the failure to pay or perform any obligation which Tenant is permitted to
contest under this Section nor an adverse determination of any such
contest shall result in a material adverse effect on the utility, value or
operation of the applicable Leased Property, and (J) Tenant shall promptly
upon final determination thereof pay the amount of any such Taxes, Other
Charges or Liens, together with all costs, interest and penalties which
may be payable in connection therewith. Landlord may pay over any such
cash deposit or part thereof held by or on behalf of Landlord to the
claimant entitled thereto at any time when, in the
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judgment of Landlord, the entitlement of such claimant is finally
established, and Landlord shall otherwise remit any remaining such amounts
to Tenant. Landlord shall give Tenant written notice of any such payments
promptly following the making thereof. Subject to the foregoing, at
Tenant's timely request, Landlord shall not pay and shall not cause to be
paid from any tax or insurance escrow account that may be maintained in
connection with Landlord's Debt the contested Taxes or Other Charges being
contested.
(c) Litigation. Tenant shall give prompt written notice to Landlord of any
litigation or governmental proceedings pending or threatened in writing against
Landlord, Tenant or against or affecting the Leased Property which, if
determined adversely to Landlord, Tenant or the Leased Property, might
reasonably be expected to materially adversely affect Landlord, or Tenant's
condition (financial or otherwise) or business or the operation or value of the
Leased Property.
(d) Inspection. Tenant shall permit agents, representatives and employees
of Landlord and/or Landlord's Lender (including any servicer or special servicer
on behalf of Landlord's Lender) to inspect the Leased Property on any Business
Day at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Tenant shall promptly advise Landlord of any
material adverse change in Tenant's condition (financial or otherwise) that
could reasonably be expected to materially impair the ability of Tenant to
comply with its obligations hereunder, or of the occurrence of any Default or
Event of Default under this Lease of which Tenant has knowledge.
(f) Cooperate in Legal Proceedings. Tenant shall cooperate fully with
Landlord (and with Landlord's Lender) with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the
rights of Landlord (or Landlord's Lender, as the case may be) hereunder or in
respect of the Leased Property and, in connection therewith, permit Landlord
(and Landlord's Lender, as applicable), at its election, to participate in any
such proceedings.
(g) Insurance Benefits. Tenant shall cooperate with Landlord (and
Landlord's Lender) in obtaining for Landlord (and Landlord's Lender, as
applicable) the benefits of any insurance proceeds lawfully or equitably payable
in connection with the Leased Property, and Landlord (and Landlord's Lender, as
applicable) shall be reimbursed for any out-of-pocket expenses reasonably
incurred in connection therewith (including attorneys' fees and disbursements,
and, if reasonably necessary to collect such proceeds,
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the expense of an appraisal on behalf of Landlord in case of a fire or other
casualty affecting any Leased Property) out of such insurance proceeds.
(h) Financial Reporting and Other Information.
1. Generally. Tenant will keep and maintain or will cause to be kept
and maintained on a Fiscal Year basis proper and accurate books, records and
accounts reflecting all of the financial affairs of Tenant and all items of
Operating Income, Operating Expenses and capital expenditures. Landlord and/or
Landlord's Lender shall have the right from time to time at all times during
normal business hours upon reasonable notice to examine such books, records and
accounts at the office of Tenant set forth in Article XXIII or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof, at Landlord's expense, as Landlord and/or Landlord's Lender shall
desire, provided, after the occurrence of an Event of Default, Tenant shall pay
any reasonable out-of-pocket costs and expenses incurred by Landlord and/or
Landlord's Lender in any such examination and copying (or extraction).
2. Annual Reports. Tenant will use reasonable efforts to furnish to
Landlord within sixty (60) days (and in no event later than seventy-five (75)
days) following the end of each Fiscal Year of Tenant, a complete copy of
Tenant's annual financial statements, audited by an Approved Accounting Firm, in
accordance with GAAP, covering the Properties (and, to the extent prepared by
Tenant, each Property individually) for such Fiscal Year and containing balance
sheets for Tenant and statements of profit and loss for Tenant and the
Properties in such detail as Landlord may reasonably request. Tenant's annual
financial statements shall be accompanied by a certificate signed by an
authorized officer of tenant certifying that such annual financial statement
presents fairly, in all material respects, the financial condition of the
Properties and has been prepared in accordance with GAAP. Together with Tenant's
annual financial statements, Tenant shall furnish to Landlord (A) a certificate
signed by an authorized officer of the Tenant certifying as of the date thereof
whether, to Tenant's knowledge, there exists a Default or Event of Default, and
if such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same, and (B)
an annual report for the most recently completed fiscal year, which report shall
contain (y) a summary of capital expenditures made by or on behalf of Tenant
with respect to each Property during such fiscal year, and (z) a description of
anticipated capital expenditures during the subsequent fiscal year. Reports with
respect to the operations of a particular Property that are delivered to
Landlord pursuant to this Section, or pursuant to any other provision in this
Lease, shall be kept
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confidential, and shall not be disclosed in any Securities Exchange Commission
or similar filings.
3. Monthly Reports. Tenant will furnish, or cause to be furnished,
to Landlord on or before the fifteenth (15th) day after the end of each calendar
month, a monthly operating statement, including a comparison of the actual
income, expense and net cash flow to the Annual Budget. The reports delivered to
Landlord pursuant to this Section need not include such statements or
comparisons with respect to the operations of individual Properties.
4. Quarterly Reports. Tenant will furnish, or cause to be furnished,
to Landlord on or before the fifteenth (15th) day after the end of each calendar
quarter, the following items, accompanied by a certificate signed by an
authorized officer of Tenant, certifying that such items are true, correct,
accurate and complete, in all material respects, and fairly present, in all
material respects, the financial condition and results of the operations of
Tenant and the Properties (and, to the extent prepared by Tenant, each Property
individually) in a manner consistent with GAAP (subject to normal year-end
adjustments): (y) quarterly and year-to-date statements prepared for such
calendar quarter with respect to Tenant, including a comparison of the actual
income, expense and net cash flow to the Annual Budget, together with a balance
sheet for such quarter and (z) a summary of capital expenditures made by or on
behalf of Tenant with respect to each Property during such calendar quarter. To
the extent that such reports are available and in final form prior to the date
set forth above, Tenant shall use good faith efforts to deliver such statements
to Landlord within forty (40) days after the end of the applicable calendar
quarter. Reports with respect to the operations of a particular Property that
are delivered to Landlord pursuant to this Section, or pursuant to any other
provision in this Lease, shall be kept confidential, and shall not be disclosed
in any Securities Exchange Commission or similar filings
5. Supplemental Information. Tenant shall furnish to Landlord,
within seven (7) days after request, such further detailed information with
respect to the operation of the Properties (or any of them) and the financial
affairs of Tenant as may be reasonably requested by Landlord.
6. Governmental Notices. Tenant shall furnish to Landlord, promptly
after receipt, a copy of any notice received by or on behalf of Tenant from any
Governmental Authority having jurisdiction over any Property with respect to any
material violation of Legal Requirements or any condition existing or alleged to
exist or emanate therefrom or thereat involving Hazardous Substances.
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7. Landlord's Lender. Tenant agrees to furnish to Landlord, at such
time as may be required pursuant to any Landlord's Loan Documents or as may
reasonably be requested by Landlord, such financial reports (including annual
and quarterly financial statements and monthly operating statements, including a
comparison of the actual income, expense and Net Cash Flow to the Annual
Budget), and other information relating in each case to Tenant or the Leased
Properties as may reasonably be requested by Landlord.
8. Annual Budget. Tenant shall prepare and deliver to Landlord, for
Landlord's approval, which approval shall not be unreasonably withheld or
delayed, forty-five (45) days prior to the commencement of each year, a proposed
Annual Budget in respect of the Leased Property (and, to the extent otherwise
prepared by Tenant, each Leased Property individually) for the ensuing Fiscal
Year.
(i) Business and Operations. Tenant will continue to engage in the
businesses currently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management, subleasing and operation of the
Leased Property. Tenant will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the conduct of its business (including the operation and management
of the Leased Property as refrigerated warehousing facilities and related uses).
(j) Intentionally Omitted.
(k) Intentionally Omitted.
(l) Material Agreements. Tenant shall:
(i) promptly perform and/or observe all of the material covenants
and agreements required to be performed and observed by it under any
Material Agreement, and do all things necessary to preserve and to keep
unimpaired its material rights thereunder;
(ii) promptly notify Landlord of the giving of any notice of any
material default by any party under any Material Agreement of which it is
aware; and
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(iii) promptly enforce the performance and observance of all of the
material covenants and agreements required to be performed and/or observed
by the other party under each Material Agreement.
(m) Ground Leased Property. With respect to the Ground Leased Property,
Tenant shall observe and perform all of the obligations of Landlord under each
Ground Lease.
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants. Tenant covenants and agrees with Landlord
that it will not do, directly or indirectly, any of the following:
(a) Operation of Property. Tenant shall not, without Landlord's prior
consent, which consent shall not be unreasonably withheld or delayed (except as
elsewhere herein expressly provided): (i) surrender or terminate any Material
Agreement (unless the other party thereto is in material default and the
termination of such agreement would be commercially reasonable), (ii) increase
or consent to the increase of the amount of any charges payable by Tenant or
Landlord under any Material Agreement, except as provided therein or on an
arms'-length basis and commercially reasonable terms; or (iii) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under any Material Agreement in any material respect that is materially
adverse to the interests of Landlord, except on an arms'-length basis and
commercially reasonable terms.
(b) Liens. Subject to Section 6.1(b)(ii), Tenant shall not, without the
prior written consent of Landlord, create, incur, assume, permit or suffer to
exist any Lien on any portion of the Leased Property (or any of them), except
(i) Permitted Encumbrances, (ii) Liens created by or permitted pursuant to
Landlord's Loan Documents and (iii) Liens for Taxes or Other Charges not yet
delinquent.
(c) Affiliate Transactions. Tenant shall not enter into, or be a party to,
any transaction with an Affiliate of Tenant except in the ordinary course of
business and on terms which are fully disclosed to Landlord in advance and are
no less favorable to Tenant or such Affiliate than would be obtained in a
comparable arms'-length transaction with an unrelated third party.
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(d) Zoning and Uses. Tenant shall not (i) initiate or support any limiting
change in the permitted uses of any Leased Property (or to the extent
applicable, limiting zoning reclassification of any Leased Property), (ii) seek
any variance under existing land use restrictions, laws, rules or regulations
(or, to the extent applicable, zoning ordinances) applicable to any Leased
Property or use or permit the use of any Leased Property in each case in a
manner that would result in the existing use becoming a non-conforming use under
applicable land-use restrictions (and, if any, zoning ordinances) with any
materially adverse effect on the value of the Leased Property or that would
violate the terms of any Lease, Operating Agreement, Legal Requirements or any
Permitted Encumbrance, (iii) modify, amend or supplement any of the terms of any
Permitted Encumbrance in a manner adverse in any material respect to the
interests of Landlord, (iv) impose or permit or suffer the imposition of any
restrictive covenants, easements or encumbrances upon the Leased Property in any
manner that adversely affects in any material respect the value or utility of
the Leased Property, (v) execute or file any subdivision plat affecting any
Leased Property, institute, or permit the institution of, proceedings to alter
any tax lot comprising any Leased Property or (vi) permit or suffer any Leased
Property to be used by the public or any Person in such manner as might make
possible a claim of adverse usage or possession or of any implied dedication or
easement.
(e) Nonexempt ERISA Transactions. Tenant shall not engage in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Tenant, or in any transaction that would cause
any obligation or action taken or to be taken hereunder (or the exercise by
Landlord's Lender of any of its rights under the Lender's Loan Documents (if
applicable)) to be a non-exempt prohibited transaction under ERISA.
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations. Tenant will not make any demolition, alteration,
installation, improvement, expansion, reduction or decoration (each, an
"Alteration") of or to any Leased Property or any part thereof, except in
accordance with the following terms and conditions:
(a) The Alteration shall be undertaken in accordance with the applicable
provisions of this Lease, Landlord's Loan Documents, the Operating Agreements,
the Leases and all Legal Requirements.
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(b) No Event of Default shall have occurred and be continuing and no
Default shall occur as a result of such action.
(c) The Alteration shall not materially adversely affect the (i) Primary
Intended Use or (ii) fair market value of the Leased Property in question.
(d) A Material Alteration shall be conducted under the supervision of a
Qualified Architect or Engineer and shall not be undertaken until ten (10)
Business Days after there shall have been delivered to Landlord, for information
purposes only and not for approval by Landlord, detailed plans and
specifications and cost estimates therefor, prepared and approved in writing by
such Qualified Architect or Engineer. Such plans and specifications may be
revised at any time and from time to time, provided that material revisions of
such plans and specifications shall be delivered to Landlord for information
purposes only.
(e) Other than in connection with any Restoration, the Alteration may not,
in and of itself, either during the Alteration or upon completion, materially
adversely affect the Receipts derived from the Leased Property in question,
taking into account the Percentage Rent requirements hereunder; provided that
if, as reasonably determined by Landlord, such Alteration would materially
adversely affect the Net Operating Income at such Leased Property (taking into
account any amount then in any reserve account funded pursuant to any Cash
Management Procedures and permitted to be used in connection with such Material
Alteration), then in order to proceed with the Alteration, Tenant shall deliver
to a Depositary Eligible Collateral in the total amount of the estimated
reduction in Net Operating Income resulting from the Alteration, which Eligible
Collateral shall be returned to Tenant after substantial completion of the
Alteration if the reduction in Net Operating Income has been restored and no
Event of Default has occurred and is continuing.
(f) All work done in connection with any Alteration shall be performed
with due diligence in a good and workmanlike manner, all materials used in
connection with any Alteration shall be not less than the standard of quality of
the materials generally used at the applicable Leased Property as of the date
hereof (or, if greater, the then-current customary quality in the submarket in
which such Leased Property is located) and all work shall be performed and all
materials used in accordance with all applicable Legal Requirements and
Insurance Requirements.
(g) The cost of any Alteration shall be promptly and fully paid for by
Tenant, subject to the next succeeding sentence. No payment made prior to the
Final Completion
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of an Alteration or Restoration to any contractor, subcontractor, materialman,
supplier, engineer, architect, project manager or other Person who renders
services or furnishes materials in connection with such Alteration shall exceed
ninety five percent (95%) of the value of the work performed from time to time
and materials furnished and incorporated into the Improvements.
(h) All items (other than Eligible Collateral) to be delivered to the
Depositary hereunder shall also be delivered to Landlord (if Landlord is not the
Depositary), and, if required under Section 15.5, Landlord's Lender (if
Landlord's Lender is not the Depositary).
(i) For any Material Alteration (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner), Tenant shall be obligated to deliver to a Depositary Eligible
Collateral in an amount that, when taken together with any amount then in any
reserve account funded pursuant to any Cash Management Procedures and permitted
to be used in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant as such work progresses in accordance with Section 8.1(j). In
addition, if all Material Alterations (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner) then being performed exceeds $10,000,000 (the "Aggregate Threshold
Amount"), Tenant shall be obligated to deliver to the Depositary Eligible
Collateral in amount that, when taken together with (x) any Eligible Collateral
previously delivered under this subsection (i) and (y) any amounts then in any
reserve funded pursuant to any Cash Management Procedures and permitted to be
used in connection with such Material Alteration, shall be sufficient to pay all
of the costs of the Material Alteration in excess of the Aggregate Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant at such time as the remaining costs of the Material Alteration are
less than the Aggregate Threshold Amount.
(j) With respect to any Material Alteration as to which Tenant shall have
delivered Eligible Collateral in accordance with Section 8.1(i):
(i) Tenant shall deliver to the Depositary a schedule (which shall
be concurred in by the Qualified Architect or Engineer) setting forth the
projected stages of completion of such Alteration(s) and the corresponding
amounts
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expected to be due and payable by or on behalf of Tenant in connection
with such completion, such schedule to be updated quarterly by Tenant (and
concurred with by a Qualified Architect or Engineer) during the
performance of such Alteration(s).
(ii) Any Eligible Collateral that Tenant delivers to the Depositary
pursuant hereto (and the proceeds of any such Eligible Collateral) shall
be invested (to the extent such Eligible Collateral can be invested) by
the Depositary in Permitted Investments for a period of time consistent
with the date on which Tenant notifies the Depositary that Tenant expects
to request a release of such Eligible Collateral in accordance with the
next succeeding sentence. From time to time as the Alteration progresses,
the amount of any Eligible Collateral so furnished may, upon the written
request of Tenant to the Depositary, be withdrawn by Tenant and paid or
otherwise applied by or returned to Tenant in an amount equal to the
amount Tenant would be entitled to so withdraw if Section 10.2(d) hereof
were applicable, and any Eligible Collateral so furnished which is a
Credit Facility may be reduced by Tenant in an amount equal to the amount
Tenant would be entitled to so reduce if Section 10.2(d) hereof were
applicable, subject, in each case, to the satisfaction of the conditions
precedent to withdrawal of funds or reduction of the Credit Facility set
forth in said Section 10.2(d). In connection with the above-described
quarterly update of the projected stages of completion of the Material
Alteration (as concurred with by an Qualified Architect or Engineer),
Tenant shall increase (or be permitted to decrease, as applicable) the
Eligible Collateral then deposited with the Depositary as necessary to
comply with Section 8.1(i) hereof.
(iii) At any time after final completion of such Alterations, the
whole balance of any Cash deposited with the Depositary pursuant to
Section 8.1(j) then remaining on deposit may be withdrawn by Tenant and
shall be paid by the Depositary to Tenant, and any Eligible Collateral so
deposited shall, to the extent it has not been called upon, reduced or
theretofore released, be released by the Depositary to Tenant, within ten
(10) days after receipt by the Depositary of an application for such
withdrawal and/or release together with an Officer's Certificate, and as
to the following clauses (A) and (B) of this clause also a certificate of
the Qualified Architect or Engineer, setting forth in substance as
follows:
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(A) that such Alteration(s) has been completed substantially
in accordance with any plans and specifications therefor previously
filed with Landlord under Section 8.1(d) hereof;
(B) that, to the knowledge of the certifying Person, (x) such
Alteration(s) has been completed in compliance, in all material
respects, with all Legal Requirements, and (y) to the extent
required for the legal use or occupancy of the portion of the Leased
Property affected by such Alteration(s), Tenant has obtained a
temporary or permanent certificate of occupancy (or similar
certificate) or, if no such certificate is required, a statement to
that effect;
(C) that to the knowledge of the certifying Person, all
amounts that Tenant is or may become liable to pay in respect of
such Alteration(s) through the date of the certification have been
paid in full or adequately provided for and, to the extent that such
are customary and reasonably obtainable by prudent property owners
in the area where the Leased Property is located, that Lien waivers
have been obtained from the general contractor and major
subcontractors performing such Alteration or, at its sole cost and
expense, Tenant shall cause a nationally recognized title insurance
company to deliver to Landlord either (x) an endorsement or other
affirmative coverage with respect to the then-current loan policy in
favor of Landlord's Lender, updating such policy and insuring over
such Liens without further exceptions to such policy other than
Permitted Encumbrances, or (y) owner's and loan title insurance
policies, in such form, in such amounts and with such endorsements
as shall be reasonably satisfactory to Landlord and Landlord's
Lender, which policies shall be dated the date of completion of the
Material Alteration and shall contain no exceptions other than
Permitted Encumbrances; and
(D) that to the knowledge of the certifying Person, no Event
of Default has occurred and is continuing;
provided that if, for any reason, Tenant is unable to deliver the
certification required by clause (C) above with respect to any costs or
expenses relating to the Alteration, then, assuming Tenant is able to
satisfy each of the other requirements set forth in clauses (A), (B), (C)
and (D) above, Tenant shall be entitled to the release of the difference
between the whole balance of such Eligible Collateral and the total of all
costs and expenses to which Tenant is unable to certify.
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8.2 Subletting and Assignment; Warehouse Agreements.
8.2.1 Generally. Except as expressly provided herein, Tenant shall
not, without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion, assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer this Lease or sublease all or any part of the Leased Property
or suffer or permit this Lease or the leasehold estate created hereby or thereby
or any other rights arising under this Lease to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily or involuntarily or by operation of law, or permit the use or
occupancy of the applicable Leased Property to be offered or advertised for
assignment or subletting except as hereinafter provided. For purpose of this
Section 8.2, an assignment of this Lease shall be deemed to include any change
in control of Tenant, as if such change in control or transaction were an
assignment of this Lease.
8.2.2 Certain Sublettings and Assignments. Subject to the provisions
of Section 8.2.3 and any other express conditions or limitations set forth
herein,
(a) without the consent of Landlord, Tenant may (i) assign
this Lease (in whole but not in part) to any of its Affiliates and (ii)
sublet all or any part of the Leased Property to any Affiliates; provided,
in each case, that after giving effect to such assignment or sublease, the
Leased Properties shall continue at all times to be operated and managed
by substantially the same individuals responsible for the same immediately
prior to the applicable assignment or sublease; and
(b) without the consent of Landlord, Tenant may sublet all or
any part of any one or more Leased Property (i) in the normal course of
the Primary Intended Use and (ii) to concessionaires or other third party
users or operators of portions of the Leased Property in furtherance of
the Primary Intended Use.
8.2.3 Landlord's Right to Collect from Assignees and Subtenants. If
this Lease is assigned or if the applicable Leased Property or any part thereof
is sublet (or occupied by any entity other than Tenant and its employees),
Landlord, after an Event of Default occurs and so long as it is continuing, may
collect the rents from such assignee, Subtenant or occupant, as the case may be,
and apply the net amount collected to the Rent herein reserved, but no such
collection shall be deemed (i) a waiver of the provisions set forth in Section
8.2.1, (ii) the acceptance by Landlord of such assignee, Subtenant or
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occupant, as the case may be, as a tenant or (iii) release of Tenant from the
future performance of its covenants, agreements or obligations contained in this
Lease.
8.2.4 No Release. No subletting or assignment shall in any way
impair the continuing primary liability hereunder of the Tenant named herein, as
well as of each subsequent Tenant, and no consent to any subletting or
assignment in any particular instance shall be deemed a waiver of the
prohibition set forth in this Section 8.2. No assignment, subletting or
occupancy shall affect the obligation to use the Leased Property in accordance
with Section 6.1(a)(ii). Any subletting, assignment or other transfer of
Tenant's interest in this Lease in contravention of this Section 8.2 shall be
void at Landlord's option.
8.2.5 Required Assignment and Subletting Provisions. Any assignment
and/or Sublease must provide that:
(a) it shall be subject and subordinate to all of the terms
and conditions of this Lease,
(b) the use of the applicable Leased Property shall be
restricted to the uses and purposes expressly permitted by this Lease and
shall not conflict with any Legal Requirement, Insurance Requirement or
any other provision of this Lease,
(c) no Subtenant or assignee shall be permitted to further
sublet all or any part of the applicable Leased Property or assign this
Lease or its sublease except as expressly provided in this Lease,
(d) in the event of cancellation or termination of this Lease
for any reason whatsoever or of the surrender of this Lease (whether
voluntary, involuntary or by operation of law) prior to the expiration
date of such Sublease, including extensions and renewals granted
thereunder, then, at Landlord's option, the Subtenant shall make full and
complete attornment to Landlord for the balance of the term of the
Sublease, which attornment shall be evidenced by an agreement in form and
substance satisfactory to Landlord and which the Subtenant shall execute
and deliver within five (5) days after request by Landlord and the
Subtenant shall waive the provisions of any law now or hereafter in effect
which may give the Subtenant any right of election to terminate the
Sublease or to surrender possession in the event any proceeding is brought
by Landlord to terminate this Lease, and
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(e) in the event the Subtenant receives a written notice from
Landlord stating that Tenant is in Default under this Lease, the Subtenant
shall thereafter be obligated to pay all rentals accruing under said
sublease directly to Landlord or as such party may direct; all rentals
received from the Subtenant by Landlord shall be credited against the
amounts owing by Tenant under this Lease.
8.2.6 Reimbursement of Landlord's Costs. Tenant shall pay to
Landlord, within ten (10) business days after request therefore, all costs and
expenses, including reasonable attorneys' fees, incurred by Landlord (including,
to the extent Landlord is liable for the same, by Landlord's Lender) in
connection with any request made by Tenant to Landlord to assign this Lease or
sublet the applicable Leased Property.
8.2.7 Warehouse Agreements. The above provisions of this Section 8.2
shall not be applicable to Warehouse Agreements, provided that Tenant shall use
commercially reasonable efforts to include in any Warehouse Agreement entered
into from and after the date hereof that the other party thereto shall permit
the collateral assignment described in Section 8.4 hereof, and the collateral
assignment by Landlord to Landlord's Lender of Landlord's security interests in
respect of each Sublease and Warehouse Agreement and such amounts to secure
Landlord's obligations under Landlord's Loan Documents.
8.2.8 Certain Leases Senior. With respect to those leases listed on
Exhibit 8.2.8, hereto, the parties acknowledge that Landlord is, as of the
Commencement Date, the lessor thereunder (whether by operation of law or
otherwise) and that such leases are, by operation of law, senior to this Lease.
Tenant shall perform and comply with all obligations of lessor under such leases
and, provided no Event of Default shall have occurred and be continuing, Tenant
shall be entitled to the receipt of all amounts payable by the lessees under
such leases.
8.3 REIT Related Limitations on Subleasing and Warehouse Agreement.
Anything contained in this Lease to the contrary notwithstanding, Tenant shall
not sublet the Leased Property, or enter into Warehouse Agreements, on any basis
such that (i) the rental or other consideration to be paid by the Subtenant or
other party thereunder would be based, in whole or in part, on the income or
profits derived by the business activities of the Subtenant or such other Party,
or (ii) any portion of the amounts received or accrued by Landlord hereunder
would fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto.
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8.4 Collateral Assignment of Subleases and Warehouse Agreements to
Landlord. As security for Tenant's obligations under this Lease and not
otherwise, but subject to any limitations pursuant to applicable law or
contracts (including the terms of any existing or future Subleases and Warehouse
Agreements), Tenant hereby assigns, transfers and sets over unto Landlord all of
Tenant's right, title and interest in and to all Subleases and Warehouse
Agreements, and Tenant hereby confers upon Landlord, its agents and
representatives, a right of entry in, and sufficient possession of, the Leased
Property to permit and assure the collection by Landlord of all sums payable to
Tenant, if any, under the Subleases and all sums payable to Tenant pursuant to
the Warehouse Agreements. The exercise of this right of entry and qualified
possession by Landlord shall not constitute an eviction of Tenant from the
Leased Property. Further, Tenant acknowledges that Landlord may collaterally
assign its rights under this Section 8.4 to Landlord's Lender, to secure
Landlord's obligations in respect of Landlord's Debt. This assignment, although
presently effective, is operative only upon the occurrence of an Event of
Default hereunder and not before. Nothing in this Section 8.4, however, shall be
deemed to limit or qualify the rights of any Leasehold Mortgagee pursuant to
Section 8.5 below.
8.5 Leasehold Mortgages.
8.5.1 Landlord's Estate. No Leasehold Mortgage or any extension
thereof made by Tenant shall be a lien or encumbrance upon the estate or
interest of Landlord in and to the Leased Property or any part thereof.
8.5.2 Certain Leasehold Mortgage Requirements. No Leasehold Mortgage
shall be valid or of any force or effect, or be deemed for purposes of this
Lease to be a Leasehold Mortgage, unless and until (a) a true copy of the
original of each instrument creating and effecting such Leasehold Mortgage,
certified by the Leasehold Mortgagee to be a true copy of such instrument, and
written notice containing the name and post office address of the Leasehold
Mortgagee, shall have been delivered to Landlord, (b) any consent required
hereunder by Landlord shall have been given, and (c) the Leasehold Mortgage
shall contain in substance the following provisions:
"This mortgage is executed upon the condition that no purchaser at
any foreclosure sale or assignee under an assignment in lieu of
foreclosure shall acquire any right, title or interest in or to the
lease hereby mortgaged, unless the said purchaser or assignee, or
the person, firm or corporation to whom or to which such purchaser's
or assignee's right has been assigned, shall in the instrument
transferring to such purchaser or to such assignee
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the interest of tenant under the lease hereby mortgaged, assume and
agree to perform all of the terms, covenants and conditions of that
lease thereafter to be observed or performed on the part of such
tenant (subject to the terms of Section 8.5.3(d) and/or Section
8.5.6 thereof, to the extent applicable), that no further or
additional mortgage or assignment of the lease hereby mortgaged
shall be made except in accordance with the provisions contained in
Article VIII of that lease, and that a duplicate original of said
instrument containing such assumption agreement, duly executed and
acknowledged by such purchaser or such assignee and in recordable
form, shall be delivered to the landlord under the hereby mortgaged
lease immediately after the consummation of such sale, or in any
event, prior to taking possession of the premises demised thereby as
"Tenant" under the lease."
8.5.3 Leasehold Mortgagee Provisions.
(a) If Tenant shall enter into a Leasehold Mortgage and complies, in
connection therewith, with the provisions of Section 8.5.1 and 8.5.2, Landlord
shall give to such Leasehold Mortgagee, at the address of such Leasehold
Mortgagee set forth in the notice mentioned in Section 8.5.2, a copy of each
notice of Default by Tenant and each notice of termination of this Lease at the
same time as, and whenever, any such notice of Default or termination shall be
given to Tenant, and no such notice shall be deemed to have been duly given to
Tenant unless and until a copy thereof shall have been so given to each such
Leasehold Mortgagee. Each Leasehold Mortgagee (i) shall thereupon have a period
of ten (10) days more in the case of a monetary Default and twenty (20) days
more in the case of any non-monetary Default, after notice of such Default is
given to the Leasehold Mortgagee, for curing the Default, or causing the same to
be cured by Tenant or otherwise, than is given Tenant after such notice is given
to Tenant, and (ii) shall, within such period and otherwise as herein provided,
have the right to cure such Default, cause the same to be cured by Tenant or
otherwise. Landlord shall accept performance by a Leasehold Mortgagee of any
covenant, condition, or agreement on Tenant's part to be performed hereunder
with the same force and effect as though performed by Tenant.
(b) Notwithstanding the provisions of Section 8.5.3(a) hereof, no
Event of Default shall be deemed to exist as long as a Leasehold Mortgagee, in
good faith, (i) shall have commenced promptly to cure the Default in question
and prosecutes the same to completion with reasonable diligence and continuity,
subject to Unavoidable Delays, which for the purpose of this Section 8.5.3(b)
shall include causes beyond the control of such Leasehold Mortgagee instead of
causes beyond the control of Tenant, or
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(ii) if possession of the Leased Property is required in order to cure the
Default in question, such Leasehold Mortgagee (x) shall have entered into
possession of the Leased Property with the permission of Tenant for such purpose
or (y) shall have notified Landlord of its intention to institute foreclosure
proceedings to obtain possession directly or through a receiver, and within
fourteen (14) days of the giving of such notice commenced such foreclosure
proceedings and thereafter (1) prosecutes such proceedings with reasonable
diligence and continuity (subject to Unavoidable Delays) or (2) receives an
assignment of this Lease in lieu of foreclosure from Tenant, and, upon obtaining
possession pursuant to clause (x) or (y), commences promptly to cure the Default
in question and prosecutes the same to completion with reasonable diligence and
continuity (subject to Unavoidable Delays) or (iii) if the Leasehold Mortgagee
is a collateral assignee or the holder of a security interest in ownership
interests in Tenant and the foreclosure of its collateral assignment or security
interest is required in order to act under (i) or (ii) above, such Leasehold
Mortgagee shall have notified Landlord of its intention to institute proceedings
to foreclose such collateral assignment or pledge and within fourteen (14) days
of the giving of such notice commences such foreclosure proceedings, and
thereafter (1) prosecutes such proceedings with reasonable diligence and
continuity (subject to Unavoidable Delays) or (2) receives a direct and absolute
assignment from the assignor under the collateral assignment of its interest in
the Leasehold Mortgage or of the ownership interest, in lieu of foreclosure, and
upon the completion of such foreclosure, or the obtaining of such assignment,
commences promptly to act under (i) or (ii) above; provided that the Leasehold
Mortgagee shall have delivered to Landlord, in writing, its agreement to take
the action described in clause (i), (ii) or (iii) herein and shall have assumed
the obligation to cure the Default in question and that during the period in
which such action is being taken (and any foreclosure proceedings are pending),
all of the other obligations of Tenant under this Lease, to the extent they are
susceptible of being performed by the Leasehold Mortgagee, are being duly
performed within any applicable grace periods. However, at any time after the
delivery of the aforementioned agreement, the Leasehold Mortgagee may notify
Landlord, in writing, that it has relinquished possession of the Leased Property
or that it will not institute foreclosure proceedings, or if such proceedings
have been commenced, that it has discontinued them, and in such event, the
Leasehold Mortgagee shall have no further liability under such agreement from
and after the date it delivers such notice to Landlord (except for any
obligations assumed by the Leasehold Mortgagee and accruing prior to the date it
delivers such notice), and, thereupon, Landlord shall have the unrestricted
right to terminate this Lease and to take any other action it deems appropriate
by reason of any Default by Tenant, and upon any such termination the provisions
of Section 8.5.4 shall apply. Anything contained in this Section 8.5.3(b) to the
contrary notwithstanding, the provisions of this Section 8.5.3(b) shall not
apply in the case of a Leasehold Mortgagee which is not an Institutional Lender
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unless such Leasehold Mortgagee shall provide Landlord with security for the
performance of the assumed obligation in amount and form reasonably satisfactory
to Landlord, during the period that such Leasehold Mortgagee is taking the
required action to cure the Default in question.
(c) Landlord and Tenant agree that, from and after the date upon
which Landlord receives the notice and documents mentioned in clause (a) of
Section 8.5.2, they shall not modify or amend this Lease in any respect
materially adverse to the right of Tenant or Leasehold Mortgagee or cancel or
terminate this Lease other than as provided herein without the prior written
consent of the Leasehold Mortgagees which have given such notice.
(d) Except as provided in Section 8.5.3(b), no Leasehold Mortgagee
shall become liable under the provisions of this Lease unless and until such
time as it becomes, and then only for as long as it remains, the owner of the
leasehold estate created hereby.
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease.
(a) In case of termination of this Lease by reason of any Event of
Default or for any other reason, Landlord, subject to the provisions of Section
8.5.4(e), shall give prompt notice thereof to each Leasehold Mortgagee under a
mortgage made in compliance with the provisions of Sections 8.5.1 and 8.5.2,
which notice shall be given as provided in Section 8.5.3(a) hereof. Landlord, on
written request of such Leasehold Mortgagee made any time within thirty (30)
days after the giving of such notice by Landlord, shall execute and deliver
within thirty (30) days thereafter a new lease of the Leased Property to the
Leasehold Mortgagee, or its designee or nominee, for the remainder of the Term,
upon all the covenants, conditions, limitations and agreements herein contained,
provided that the Leasehold Mortgagee (i) shall pay to Landlord, simultaneously
with the delivery of such new lease, all unpaid Rent due under this Lease up to
and including the date of the commencement of the term of such new lease and all
expenses including attorneys' fees and disbursements and court costs, incurred
by Landlord in connection with the Default by Tenant, the termination of this
Lease and the preparation of the new lease, and (ii) shall deliver to Landlord a
statement, in writing, acknowledging that Landlord, by entering into a new lease
with the Leasehold Mortgagee or its nominee or designee, shall not have or be
deemed to have waived any rights or remedies with respect to Defaults existing
under this Lease, notwithstanding that any such Defaults existed prior to the
execution of the new lease, and that the breached obligations which gave rise to
the Defaults and which are susceptible of being cured by
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the Leasehold Mortgagee or its nominee or designee are also obligations under
said new lease, but such statement shall be subject to the proviso that the
applicable grace periods, if any, provided under the new lease for curing such
obligations shall begin to run as of the first day of the term of said new
lease.
(b) Any such new lease and the leasehold estate thereby created
shall, subject to the same conditions contained in this Lease, continue to
maintain the same priority as this Lease with regard to any Leasehold Mortgage
or any other lien, charge or encumbrance whether or not the same shall then be
in existence. Concurrently with the execution and delivery of such new lease,
Landlord shall assign to the tenant named therein all of its right, title and
interest in and to moneys received from any Subleases and Warehouse Agreements
that have not been applied to Rent and have not been applied or being held for
application to the costs incurred by Landlord to operate, maintain and repair
the Leased Property.
(c) Upon the execution and delivery of a new lease under this
Section 8.5.4, all Subleases and Warehouse Agreements which theretofore may have
been assigned to Landlord thereupon shall be assigned and transferred, without
recourse, representation or warranty, by Landlord to the tenant named in such
new lease. Between the date of termination of this Lease and the earlier of (i)
the date of execution and delivery of the new lease and (ii) the date of
Leasehold Mortgagee's option to request a new lease pursuant to this Section
8.5.4 expires without the exercise of such option, Landlord shall not enter into
any new Subleases or Warehouse Agreements, cancel or modify any then existing
Subleases or Warehouse Agreements, or accept any cancellation, termination or
surrender thereof (unless such termination shall be effected as a matter of law
on the termination of this Lease) without the written consent of the Leasehold
Mortgagee, except as permitted in the Subleases or Warehouse Agreements.
(d) If there is more than one Leasehold Mortgage, Landlord shall
recognize the Leasehold Mortgagee whose Leasehold Mortgage is junior in lien as
the Leasehold Mortgagee entitled to the rights afforded by Sections 8.5.3, 8.5.4
and 8.5.5 (unless a Leasehold Mortgagee senior in lien requires that the holder
thereof have a superior entitlement to such rights, in which event such
recognition shall be of the holder of that Leasehold Mortgage), provided that
such Leasehold Mortgagee shall have complied with the provision of Sections
8.5.1 and 8.5.2. A security agreement providing for a security interest in the
ownership interests in Tenant and otherwise complying with the terms hereof for
a Leasehold Mortgage shall be treated as a Leasehold Mortgage that is junior in
lien.
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8.5.5 Notice of Arbitration. In any circumstances where arbitration
is provided for under this Lease, Landlord agrees that Landlord shall give any
Leasehold Mortgagee who shall have given Landlord a notice as provided in
Section 8.5.2(a), notice of any demand by Landlord for any arbitration, and
Landlord shall recognize the Leasehold Mortgagee entitled to the rights afforded
hereunder in accordance with Section 8.5.4(d) as the only proper party to
participate in the arbitration. In such case, Tenant agrees not to participate
in such arbitration.
ARTICLE IX
9.1 Maintenance and Repair.
(a) Subject to Landlord's obligation under Section 9.1(b), Tenant,
at its expense, shall keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto and which are under Tenant's control
(and Tenant's Personal Property) in good order and repair, reasonable wear and
tear excepted (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of such Leased Property or
Tenant's Personal Property, or any portion of either) and shall promptly make
all necessary and appropriate repairs and replacements thereto, of every kind
and nature, whether interior or exterior, structural or non-structural, ordinary
or extraordinary, foreseen or unforeseen, arising by reason of a condition
(concealed or otherwise) occurring subsequent or prior to the Commencement Date.
All repairs shall, to the extent reasonably achievable, be made in good,
workmanlike and first-class manner, in accordance with all applicable federal,
state and local statutes, ordinances, by-laws, codes, rules and regulations
relating to such work. Tenant will not take or omit to take any action the
taking or omission of which might materially impair the value or usefulness of
the Leased Property or any part thereof for the Primary Intended Use.
(b) Notwithstanding anything herein to the contrary, Landlord shall
promptly make all necessary and appropriate repairs and replacements to the
Leased Property (other than those repairs and replacements (i) caused by the
negligence or wilfull misconduct of Tenant or any Person claiming by, through or
under Tenant or (ii) required as a result of Casualty or Condemnation to the
Leased Property) the costs of which are required to be depreciated under the
Internal Revenue Code on a 39-year basis (or any successor period of
depreciation for buildings) ("39-Year Property") in an amount not in excess of
the amount specified on Schedule 9.1(b) hereto under the column captioned
"Landlord's Responsibility," provided (x) Landlord's obligation pursuant to the
above terms of the sentence shall be subject to prior reasonable notice from
Tenant as to the
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need to make such repair and replacement, and (y) Landlord may elect that Tenant
perform such repair and replacement, in which event, Landlord shall reimburse or
pay to Tenant, within fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in making such
repairs and replacements. Further,
(1) Tenant shall make all necessary and appropriate repairs
and replacements required in respect of 39-Year Property to the extent the
same exceed the amount specified on said Schedule 9.1(b) under the column
captioned "Landlord's Responsibility", and
(2) Tenant agrees that (A) it shall expend annually for the
repair and replacement of 39-Year Property not less than the amount
specified on Schedule 9.1(b) under the column captioned "Minimum Tenant's
Responsibility", provided that Tenant shall not be deemed to have expended
any amounts in satisfaction of the "Minimum Tenant's Responsibility"
identified on said Schedule 9.1(b) until such time as Tenant shall have
expended all amounts required to be spent by Tenant under Section 2.3 of
the Asset Purchase Agreement in connection with which this Lease is being
executed, to which Tenant (or its Affiliate) is party, (B) to the extent
Tenant shall have spent less than the specified amount in any Lease Year,
such unspent amount shall cumulate and Tenant shall be required to expend
the unspent portion in subsequent Lease Years, and (C) if at the end of
the Term, there shall be any cumulative unspent amounts, Tenant shall pay
such amount to Landlord not later than the end of the Term.
(c) Except as expressly specified in Section 9.1(b), Landlord shall
not under any circumstances be required to build or rebuild any improvements on
the Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or non-structural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, or to
maintain the Leased Property in any way, except as expressly provided herein.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or thereafter enacted.
(d) Nothing contained herein and no action or inaction by Landlord
shall be construed as (i) constituting the consent or request of Landlord,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property
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for the construction, alteration, addition, repair or demolition of or to the
Leased Property, or (ii) giving Tenant any right, power or permission to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against Landlord in respect thereof or to make any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Landlord in the
Leased Property.
(e) Tenant will, upon the expiration or prior termination of the
Term with respect to any Leased Property, vacate and surrender the same to
Landlord in the condition in which the same was originally received from
Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the Term). In addition, Tenant shall
not be permitted to remove any of Tenant's Personal Property from the Leased
Property unless such removal shall not damage the Leased Property in any
material respect.
9.2 Encroachments, Restrictions, etc. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other agreement affecting the Leased
Property, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of any adverse final determination, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment, whether
the same shall affect Landlord or Tenant or (ii) make such changes in the Leased
Improvements, and take such other actions, as Tenant in good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment, and to
end such violation or impairment, including, if necessary, the alteration of any
of the Leased Improvements, and in any event take all such actions as may be
necessary in order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article VIII. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under
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any policy of title or other insurance, and Tenant shall be entitled to a credit
for any sums recovered by Landlord under any such policy of title or other
insurance.
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance. Tenant shall at all times keep the applicable Leased
Property, and all property located in or on the applicable Leased Property,
including Tenant's Personal Property, insured with the kinds and amounts of
insurance described below or with such other insurance as may be reasonably
requested by Landlord (taking into consideration any insurance requirements that
may be required in respect of any Landlord's Debt).
(a) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall keep all of the Leased Property insured and
obtain and maintain policies of insurance insuring against loss or damage
by standard perils included within the classification "All Risks of
Physical Loss", which policy or policies shall cover (by endorsement or
otherwise) warehouse legal liability. Such insurance (i) shall be in an
aggregate amount equal to the then full replacement cost of the Leased
Property and the Equipment (without deduction for physical depreciation)
and (ii) shall have deductibles no greater than $100,000 (as escalated by
the CPI Increase) (with such higher deductibles for wind and earthquake
coverage as the applicable issuer may require). The policies of insurance
carried in accordance with this paragraph shall be paid in accordance with
the agreed upon payment schedule incorporated into such policies and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation.
(b) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall also obtain and maintain the following policies
of insurance:
(i) Flood insurance with respect a Leased Property, if any
part of such Leased Property is located in an area identified by the
Federal Emergency Management Agency as an area federally designated
a "100 year flood plain" and (A) flood insurance is generally
available at reasonable premiums and in such amount as generally
required by institutional lenders for similar properties or (B) if
not so available from a
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private carrier, from the federal government at commercially
reasonable premiums to the extent available. In either case, the
flood insurance shall be in an amount at least equal to the
Termination Amount with respect to such Leased Property or the
maximum limit of coverage available with respect to such Leased
Property under said program, whichever is less;
(ii) Commercial general liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing
minimum limits per occurrence of $1,000,000 for any policy year. In
addition, at least $25,000,000 excess and/or umbrella liability
insurance shall be obtained, and at all times at least $10,000,000
excess and/or umbrella liability insurance shall be available (such
that, at all times, such coverage shall be maintained against which
no claim shall have been asserted) and maintained for any and all
claims, including legal liability imposed upon Tenant and related
court costs and attorneys' fees generally covered by such insurance
policies; provided that if there are one or more claims in
connection with a property other than the Leased Property that
results in the amount of excess and/or umbrella liability insurance
coverage to be less than $25,000,000, Tenant shall give notice to
Landlord that such coverage has so decreased and Tenant shall cause
such coverage to be increased to $25,000,000.
(iii) Rental loss and/or business interruption insurance in an
amount sufficient to avoid any co-insurance penalty and equal to the
greater of (A) the estimated Receipts from the operation of the
Leased Property (including (x) the total payable under the Subleases
and the Warehouse Agreements, and (y) the total amount of all other
amounts to be received by Tenant or third parties that are the legal
obligation of the Subtenants), less non-continuing Operating
Expenses (i.e., Operating Expenses which were incurred in connection
with the ownership, operation and/or maintenance of the Leased
Property prior to the insured event, but which are not incurred
during the period covered by the insurance required pursuant to this
Section 10.1(b)(iii)), for a period of up to the next succeeding
eighteen (18) months, or (B) the projected Operating Expenses
(including debt service) for the maintenance and operation of the
Leased Property for a period of up to the next succeeding eighteen
(18) months as the same may be reduced or increased from time to
time due to changes in such Operating Expenses. The amount of such
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insurance shall be increased from time to time as and when the rents
increase or the estimate of (or the actual) Receipts, as may be
applicable, increases or decreases to the extent rents or the
estimates of gross revenue decrease;
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter
installed in any of the Improvements (without exclusion for
explosions) and insurance against loss of occupancy or use arising
from any breakdown, in such amounts as are generally available at
reasonable premiums and are generally required by institutional
lenders for properties comparable to the Leased Property;
(v) Worker's compensation insurance with respect to all
employees of Tenant, as and to the extent required by any
Governmental Authority or Legal Requirement;
(vi) During any period of repair or restoration costing in
excess of $5,000,000, builder's "all risk" insurance in an amount
equal to not less than the full insurable value of the related
Leased Property against such risks (including fire and extended
coverage and collapse of the Improvements to agreed limits) as
Landlord may reasonably request, in form and substance reasonably
acceptable to Landlord;
(vii) Coverage to compensate for the cost of demolition and
the increased cost of construction for the Leased Property in an
amount satisfactory to Landlord, which amount shall not exceed
$10,000,000;
(viii) If required by Landlord's Lender, in the event any
Leased Property is located in a federal earthquake zone, earthquake
insurance with respect to such Leased Property in an amount equal to
probable maximum loss with respect to such Leased Property, with a
maximum deductible of five percent (5%) of the replacement cost of
such Leased Property; and
(ix) Such other insurance as may from time to time be
reasonably required by Landlord in order to protect its interests,
provided such insurance is generally available at commercially
reasonable premiums.
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(c) All policies of insurance (the "Policies") required pursuant to
Section 10.1 with respect to any Leased Property shall be issued by companies
licensed to do business in the state where such Leased Property is located.
Further, unless otherwise approved by Landlord in writing, the issuer(s) of the
Policies required under Section 10.1(a) for all risk coverage shall have a
claims paying ability rating of "AA" or better by Standard & Poor's and Moody's
or (unless objected to by Landlord's Lender) "A-X" or better by Best's, and (b)
Policies for all other coverage shall have a claims paying ability rating of "A"
or better by Standard & Poor's and Moody's or (unless objected to by Landlord's
Lender) "A-X" or better by Best's. The Policies (i) shall name Landlord and
Landlord's Lender (if any) and its successors and/or assigns, as their interest
may appear, as additional insureds or loss payees (except that in the case of
general liability insurance, Landlord and Landlord's Lender shall be named as
additional insureds and not a loss payee); (ii) shall contain, for the benefit
of Landlord's Lender, a Non-Contributory Standard Lender Clause and, except with
respect to general liability insurance, a Lender's Loss Payable Endorsement, or
their equivalents, naming Landlord's Lender as the person to which all payments
made by such insurance company shall be paid; (iii) shall include effective
waivers by the insurer of all claims for insurance premiums against all loss
payees, additional insureds and named insureds (other than Tenant) and all
rights of subrogation against any loss payee, additional insured or named
insured; (iv) if directed by Landlord, shall be assigned to Landlord's Lender;
(v) except as otherwise provided above, shall be subject to a deductible, if
any, not greater in any material respect, in proportion to the coverage
maintained, than the deductible for such coverage on the date hereof; (vi) shall
contain such provisions as Landlord deems reasonably necessary or desirable to
protect its interest (and that of Landlord's Lender, to the extent so requested
by Landlord on behalf of Landlord's Lender), including endorsements providing
that: none of Tenant, Landlord, Landlord's Lender or any other party shall be a
co-insurer under said Policies and that no modification that would result in
non-compliance with the provisions of this Section 10.1, cancellation,
termination or non-renewal of any of the Policies shall be effective until at
least thirty (30) days after receipt by each named insured, additional insured
and loss payee of written notice thereof or ten (10) days after receipt of such
notice with respect to nonpayment of premium; (vii) shall permit Landlord or
Landlord's Lender to pay the premiums and continue any insurance upon failure of
Tenant to pay premiums when due, upon the insolvency of Tenant or through
foreclosure or other transfer of title to the Leased Property (or any of them)
(it being understood that Tenant's rights to coverage under such policies may
not be assignable without the consent of the insurer); and (viii) shall provide
that the insurance shall not be impaired or invalidated by virtue of (A) any
act, failure to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by Tenant, Landlord,
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Landlord's Lender or any other named insured, additional insured or loss payee,
except for the willful misconduct of Landlord or Landlord's Lender knowingly in
violation of the conditions of such policy, (B) the occupation, use, operation
or maintenance of the Leased Property for purposes more hazardous than permitted
by the terms of the Policy, (C) any foreclosure or other proceeding or notice of
sale relating to the Leased Property or (D) any change in the possession of the
Leased Property without a change in the identity of the holder of actual title
thereto (provided that with respect to items (C) and (D), any notice
requirements of the applicable Policies are satisfied).
(d) Insurance Premiums; Certificates of Insurance.
(i) Tenant shall pay the premiums for such Policies (the "Insurance
Premiums") as the same become due and payable and shall furnish to
Landlord the receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Landlord (provided
Tenant is not required to furnish such evidence of payment if such
Insurance Premiums are to be paid pursuant to the Cash Management
Procedures relating to any Landlord's Debt). Within thirty (30) days after
request by Landlord, Tenant shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested by Landlord,
taking into consideration changes in liability laws, changes in prudent
customs and practices, and the like. In the event Tenant satisfies the
requirements under this Section 10.1 through the use of a Policy covering
properties in addition to the Leased Property, then, at Landlord's
request, Tenant shall provide to Landlord evidence satisfactory to it that
the Insurance Premiums for the Leased Property are separately allocated
under such Policy to the Leased Property and that payment of such
allocated amount shall maintain the effectiveness of such Policy as to the
Leased Property notwithstanding the failure of payment of any other
portion of premiums. If such allocation is required by the immediately
preceding sentence, but such allocation is not available, Landlord shall
have the right to increase any tax and insurance escrow account required
in connection with Landlord's Debt in an amount sufficient to purchase a
non-blanket Policy covering the Leased Property covered by such Policy
from insurance companies which qualify under this Lease.
(ii) Tenant shall deliver to Landlord on or prior to the Closing
Date certificates setting forth in reasonable detail the material terms
(including any applicable notice requirements) of all Policies from the
respective insurance companies (or their authorized agents) that issued
the Policies, including that such Policies may not be modified in a manner
that would result in such Policies not
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complying with the provisions of this Section 10.1, canceled, terminated
or not renewed without thirty (30) days' prior notice to Landlord, or ten
(10) days' notice with respect to nonpayment of premium. Tenant shall
deliver to Landlord, concurrently with each material change in any Policy,
a certificate with respect to such changed Policy certified by the
insurance company issuing that Policy, in substantially the same form and
containing substantially the same information as the certificates required
to be delivered by Tenant pursuant to the first sentence of this clause
(d)(ii) and stating that all premiums then due thereon have been paid to
the applicable insurers and that the same are in full force and effect (or
if such certificate and report shall not be obtainable by Tenant, Tenant
may deliver an Officer's Certificate to such effect in lieu thereof).
(e) Renewal and Replacement of Policies.
(i) Not less than four (4) Business Days prior to the expiration,
termination or cancellation of any Policy, Tenant shall renew such policy
or obtain a replacement policy or policies (or a binding commitment for
such replacement policy or policies), which shall be effective no later
than the date of the expiration, termination or cancellation of the
previous policy, and shall deliver to Landlord (and, if requested by
Landlord, to Landlord's Lender) a certificate in respect of such policy or
policies (A) containing the same information as the certificates required
to be delivered by Tenant pursuant to clause (d)(ii) above, or a copy of
the binding commitment for such policy or policies and (B) confirming that
such policy complies with all requirements hereof.
(ii) If Tenant does not furnish the certificates as required under
clause (e)(i), Landlord may procure, but shall not be obligated to
procure, such replacement policy or policies and pay the Insurance
Premiums therefor, and Tenant agrees to reimburse Landlord for the cost of
such Insurance Premiums promptly on demand.
(iii) Concurrently with the delivery of each replacement policy or a
binding commitment for the same pursuant to this clause (e), Tenant shall
deliver to Landlord a report from a reputable and experienced insurance
broker or from the insurer, setting forth the particulars as to all
insurance obtained by Tenant pursuant to this Section 10.1 and then in
effect and stating that all Insurance Premiums then due thereon have been
paid in full to the applicable insurers and that such insurance policies
are in full force and effect (or if such report shall not be available
after Tenant shall have used its reasonable efforts to provide the
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same, Tenant will deliver to Landlord an Officer's Certificate containing
the information to be provided in such report) and Tenant shall deliver to
Landlord an Officer's Certificate stating that such insurance otherwise
complies in all material respects with the requirements of this Section
10.1.
(f) Separate Insurance. Tenant will not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 10.1 unless such insurance complies with
clause (c) above.
(g) Tenant shall name any Person holding, servicing or administering
Landlord's Debt and reasonably designated by Landlord (including any trustee,
servicer or special servicer) as a loss payee or additional insured with respect
to any Policy under which Landlord's Lender is to be so named hereunder.
10.2 Casualty; Application of Proceeds.
(a) Right to Adjust.
(i) If any Leased Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Tenant shall give prompt
written notice thereof to Landlord generally describing the nature and
extent of such Casualty. Subject to Section 10.2(b), following the
occurrence of a Casualty, Tenant, regardless of whether proceeds are
available, shall in a reasonably prompt manner proceed to restore, repair,
replace or rebuild the affected Leased Property to the extent practicable
to be of at least equal value and of substantially the same character and
quality as prior to the Casualty, all in accordance with the terms hereof
applicable to Alterations.
(ii) Subject to clause (v) below, in the event of a Casualty that
does not exceed $1,000,000, Tenant may settle and adjust such claim;
provided that such adjustment is carried out in a competent and timely
manner.
(iii) Subject to clause (v) below, in the event a Casualty shall
exceed $1,000,000, Tenant may settle and adjust such claim only with the
consent of Landlord (and, if required under the terms of Landlord's Loan
Documents, Landlord's Lender), which consent shall not be unreasonably
withheld or delayed, and Landlord (and Landlord's Lender) shall have the
opportunity to participate, at Tenant's cost, in any such adjustments.
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(iv) The proceeds of any Policy shall be due and payable solely to a
Depositary.
(v) Notwithstanding the terms of clauses (ii) and (iii) above,
Landlord shall have the sole discretion to adjust any claim with respect
to a Casualty and to collect all Proceeds if an Event of Default shall
have occurred and is continuing.
The provisions of this Section 10.2(a) are subject to the terms of any lease
that would be considered a "Superior Interest" (as defined herein) to the
contrary.
(b) Tenant's Right to Proceeds for Certain Casualty. In the event either
of (i) a Casualty that involves a loss of less than thirty percent (30%) of the
Termination Amount with respect to the affected Leased Property or (ii) a
Condemnation where the loss is in an aggregate amount less than twenty percent
(20%) of the Termination Amount with respect to the affected Leased Property,
Tenant be entitled to apply the Proceeds (after reimbursement of any expenses
incurred by Landlord and Landlord's Lender) to reimburse Tenant for the cost of
restoring, repairing, replacing or rebuilding the affected Leased Property (the
"Restoration"), in the manner required hereby, provided and on the condition
that, no Event of Default shall have occurred and be then continuing and, in the
reasonable judgment of Landlord:
(i) the Restoration can be completed by the earliest to occur
of:
(A) the 365th day following the receipt of the
Proceeds, or, with Landlord's written consent, such longer period as
may reasonably be required,
(B) the scheduled maturity date of Landlord's Debt, and
(C) with respect to a Casualty, the expiration of the
payment period on the rental-loss insurance or business interruption
insurance coverage in respect of such Casualty, and
(ii) after receiving reasonably satisfactory evidence to such
effect, during the period of the Restoration, the sum of (A) income
derived from the Leased Properties (taken as a whole), plus (B) proceeds
of rental-loss insurance or business interruption insurance, if any,
payable together with such other monies as Tenant may irrevocably make
available for the Restoration, will equal or exceed the sum required for
Tenant to pay the Minimum Rent, Taxes, Other Charges and
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all other Operating Expenses and required capital expenditures for all of
the Leased Properties (taken as a whole).
Notwithstanding the foregoing, if any of the conditions set forth in the proviso
in this clause (b) is not satisfied, then, notwithstanding anything herein to
the contrary, unless Landlord shall otherwise elect, at its sole option, (w) the
Proceeds shall be paid to Landlord up to the Termination Amount, and the balance
thereof, after payment of all Landlord's and Landlord's Lender's reasonable
expenses in connection therewith, shall be paid to Tenant, (x) this Lease shall
terminate in respect of the affected Leased Property (except for such terms as
are expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set forth on
Exhibit 3.1(a) shall be adjusted to reflect the portion of Minimum Rent
allocated to each Leased Property remaining subject to the terms of this Lease.
Notwithstanding any of the foregoing, in the event of a Casualty or Condemnation
where an Operating Agreement, a Warehouse Agreement with respect to all or
substantially all of a Leased Property, or a Sublease with a Major Subtenant
requires that Tenant restore the affected Leased Property or any affected
portion thereof, Landlord shall permit the application of the Proceeds (after
reimbursement of any expenses incurred by Landlord and Landlord's Lender) to
reimburse Tenant for the cost of Restoration provided no Event of Default shall
have occurred and then be continuing.
(c) Termination of Lease in Certain Circumstances. In any case in which
Tenant is not entitled to the Proceeds for Restoration pursuant to Section
10.2(b), then:
(i) if Landlord's Lender does not permit, pursuant to
Landlord's Loan Documents, the application of the Proceeds to the
Restoration (which Landlord's Lender shall notify Landlord and Tenant
within a reasonable time after the Casualty or Condemnation, and in no
event later than the 40th day after the receipt of Proceeds), then (x)
Landlord shall be entitled to the Proceeds up to the Termination Amount
(and Tenant shall be entitled to any balance, after payment of all
Landlord's and Landlord's Lender's reasonable expenses in connection
therewith), (y) this Lease shall terminate as to the affected Leased
Property (except with respect to those matters that are expressly intended
to survive the expiration or earlier termination of this Lease) and (z)
the Minimum Rent shall be reduced by the portion thereof allocable
thereto, as determined by reference to Exhibit 3.1(a), or
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(ii) if Landlord's Lender is required or elects under the
terms of the Landlord's Loan Documents to permit the application of
Proceeds to Restoration, then the Proceeds shall be so applied provided
that Landlord is reasonably satisfied that, upon the completion of the
Restoration, Tenant shall be able to satisfy its obligations hereunder in
respect of the affected Leased Property (assuming for these purposes a pro
rata Minimum Rent obligation.
(d) Manner of Reimbursement of Restoration Expenses. If Tenant is entitled
pursuant to Section 10.2(b) or (c) hereof to reimbursement of Restoration costs
from Proceeds, such Proceeds shall be disbursed on a monthly basis upon the
Depositary being furnished with (i) such architect's certificates, Lien waivers,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as the
Depositary may reasonably require and approve, and (ii) all plans and
specifications for such Restoration, such plans and specifications to be
approved by Landlord prior to commencement of any work (such approval not to be
unreasonably withheld or delayed). In addition, no payment made prior to the
Final Completion of the Restoration shall exceed ninety-five percent (95%) of
the value of the work performed from time to time; funds other than Proceeds
shall be disbursed prior to disbursement of such Proceeds; and at all times, the
undisbursed balance of such Proceeds remaining in the hands of the Depositary,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Landlord by or on behalf of Tenant for that purpose, shall be at
least sufficient in the reasonable judgment of Landlord to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Prior to any disbursement, Landlord shall have received evidence reasonably
satisfactory to it of the estimated cost of completion of the Restoration (such
estimate to be made by Tenant's architect or contractor and approved by Landlord
in its reasonable discretion), and Tenant shall have deposited with the
Depositary Eligible Collateral in an amount equal to the excess (if any) of such
estimated cost of completion over the net Proceeds. Any surplus which may remain
out of Proceeds received pursuant to a Casualty shall be paid to Tenant after
payment of such costs of Restoration. Any surplus which may remain out of
Proceeds received pursuant to a Condemnation after payment of such costs of
Restoration shall be paid over to and belong to Landlord.
10.3 Condemnation.
(a) Tenant shall promptly give Landlord written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting any Leased Property (a "Condemnation") and shall deliver to Landlord
copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a
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Condemnation, Tenant, regardless of whether Proceeds are available, shall
promptly proceed to restore, repair, replace or rebuild the same to the extent
practicable to be of at least equal value and of substantially the same
character as prior to such Condemnation, all to be effected in accordance with
the terms hereof applicable to Alterations.
(b) Landlord is hereby irrevocably appointed as Tenant's attorney-in-fact,
coupled with an interest, with exclusive power to collect, receive and retain
any Proceeds in respect of a Condemnation and to make any compromise or
settlement in connection with such Condemnation, subject to the provisions of
this Section, and such power shall include the power to substitute Landlord's
Lender in Landlord's discretion. Provided no Event of Default has occurred and
is continuing, (x) in the event of a Condemnation where the loss does not exceed
$1,000,000, Tenant may settle and compromise such Proceeds; provided that the
same is effected in a competent and timely manner, and (y) in the event a
Condemnation, where the loss exceeds $1,000,000, Tenant may settle and
compromise the Proceeds only with the consent of Landlord (and, if required
under the terms of Landlord's Loan Documents, Landlord's Lender), which consent
shall not be unreasonably withheld or delayed, and Landlord shall have the
opportunity to participate, at Tenant's cost, in any litigation and settlement
discussions in respect thereof. Tenant shall cause any Proceeds that are payable
to Tenant to be paid directly to a Depositary to be held and applied in
accordance with the terms hereof.
(c) The Rent shall be subject to adjustment in the manner provided for in
Section 4.2.
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures. Tenant hereby agrees to cooperate with
Landlord and to execute any and all instruments reasonably requested by Landlord
(including, if necessary, the execution of an amendment to this Lease), in the
establishment and maintenance of escrow and/or reserve accounts and cash
management procedures reasonably requested by any Landlord's Lender in
connection with Landlord's Loan Documents (the "Cash Management Procedures");
provided, however, that the Cash Management Procedures shall be no more onerous
than the "Cash Management Procedures" relating to that certain Master Lease
Agreement, dated as of April 22, 1998, between Americold Real Estate, L.P., as
landlord, and Americold Corporation, as tenant.
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ARTICLE XII
12.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) if Tenant shall fail to pay the Minimum Rent when due and
payable hereunder, or
(b) if Tenant shall fail to pay when due any amount (other than
Minimum Rent) when due and payable and such default shall continue for ten
(10) days after notice thereof to Tenant, or
(c) if Tenant shall fail to observe or perform any term, covenant or
condition of this Lease not specifically provided for in this Section 12.1
and such failure is not cured within a period of thirty (30) days after
receipt of notice from Landlord, unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
period of time shall be extended to such period of time as may be
necessary to cure such default with all due diligence, or
(d) if Tenant shall admit in writing its inability to pay its debts
generally as they become due; file a petition in bankruptcy or a petition
to take advantage of any insolvency act; make an assignment for the
benefit of its creditors; consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; or file a
petition or answer seeking reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any State thereof, or
(e) any petition shall be filed by or against Tenant under Federal
bankruptcy laws, or any other proceeding shall be instituted by or against
Tenant or such subsidiary seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian
or other similar official for Tenant, or for any substantial part of the
property of Tenant, and such proceeding is not dismissed within ninety
(90) days after institution thereof, or Tenant shall take any action to
authorize or effect any of the actions set forth above in this paragraph
(e), or
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(f) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding any
the same shall not be vacated or discharged within the later of ninety
(90) days after commencement thereof or thirty (30) days after receipt by
Tenant of notice thereof from Landlord, (unless Tenant shall be contesting
such lien or attachment in good faith in accordance with the terms of this
Lease), or
(g) if an event of default under any of the Other Leases shall have
occurred and be continuing,
then, and in any such event, Landlord may terminate this Lease by giving not
less than ten (10) days' notice of such termination and upon the expiration of
the time fixed in such notice, if any, and the failure of the applicable Event
of Default to be cured within such ten-day period, the Term shall terminate and
all rights of Tenant under this Lease shall cease. Landlord shall have all
rights at law and in equity available to Landlord as a result of Tenant's breach
of this Lease.
Tenant shall, to the maximum extent permitted by law, pay as Additional Charges
all Litigation Costs as a result of any Event of Default hereunder.
12.2 Certain Remedies. Landlord shall have the right to terminate this
Lease, and otherwise exercise remedies, at any time and from time to time, with
respect to one or more, or all, of the Leased Properties, and the termination of
this Lease or other exercise of remedies with respect to one or more Leased
Properties shall in no way constitute a waiver on the part of Landlord to
terminate this Lease on account of such Event of Default, or otherwise exercise
remedies, at any time and from time to time, in one or more other instances,
with respect to the balance of the Leased Properties.
12.3 Damages. Neither (a) the termination of this Lease pursuant to
Section 12.1 with respect to any or all of the Leased Property, (b) the
repossession of the applicable Leased Property or any portion thereof, (c) the
failure of Landlord, notwithstanding reasonable good faith efforts to relet the
applicable Leased Property or any portion thereof, (d) the reletting of all or
any portion thereof, nor (e) the failure of Landlord to collect or receive any
rentals due upon any such reletting, shall relieve Tenant of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event of any such termination, Tenant shall
forthwith pay to Landlord all Rent due and payable with respect to the Leased
Property to and including the date of such termination. Thereafter, Tenant,
until the end of what would have been the Term in the absence of such
termination, and whether or not the
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applicable Leased Property or any portion thereof shall have been re-let, shall
be liable to Landlord for, and shall pay to Landlord, as current damages, the
Rent and other charges which would be payable hereunder for the remainder of the
Term had such termination not occurred, less the net proceeds, if any, of any
reletting of the applicable Leased Property, after deducting all expenses in
connection with such re-letting, including all repossession costs, brokerage
commissions, legal expenses, attorneys' fees, advertising costs, expenses of
employees, alteration costs and expenses of preparation for such reletting.
Tenant shall pay such current damages to Landlord monthly on the days on which
the Minimum Rent would have been payable hereunder if this Lease had not been
terminated.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages and in lieu of
all such current damages beyond the date of such termination, at Landlord's
election, Tenant shall pay to Landlord either, at Landlord's election, (a) an
amount equal to the excess, if any, of the Rent and other charges which would be
payable hereunder from the date of such termination (assuming that, for the
purposes of this paragraph, annual payments by Tenant on account of Taxes and
Other Charges would be the same as payments required for the immediately
preceding twelve calendar months, or if less than twelve calendar months have
expired since the Commencement Date, the payments required for such lesser
period projected to an annual amount) for what would be the then unexpired term
of this Lease if the same remained in effect (with respect to the applicable
Leased Property), over the Fair Market Rental for the same period, or (b) an
amount equal to the lesser of (i) the Rent and other charges that would have
been payable for the balance of the Term had it not been terminated, or (ii) the
aggregate of the Minimum Rent, Additional Charges and other charges accrued in
the twelve (12) months ended next prior to such termination (without reduction
for any free rent or other concession or abatement). In the event this Lease is
so terminated prior the expiration of the first full year of the Term, the
liquidated damages which Landlord may elect to recover pursuant to this Section
shall be calculated as if such termination had occurred on the first anniversary
of the Commencement Date. Nothing contained herein shall, however, limit or
prejudice the right of Landlord to prove and obtain in proceedings for
bankruptcy or insolvency an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater than,
equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet the applicable Leased
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Property or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may, at Landlord's option, be equal to,
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant concessions or free rent to the extent that
Landlord considers advisable and necessary to relet the same, and (b) make such
alterations, repairs and decorations in the applicable Leased Property or any
portion thereof as Landlord, in its sole judgment, considers advisable and
necessary for the purpose of reletting the applicable Leased Property; and the
making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure to relet the
applicable Leased Property, or, in the event that the applicable Leased Property
is relet, for failure to collect the rent under such reletting. To the fullest
extent permitted by law, Tenant hereby expressly waives any and all rights of
redemption granted under any present or future laws in the event of Tenant's
being evicted or dispossessed, or in the event of Landlord's obtaining
possession of the applicable Leased Property, by reason of the violation by
Tenant of any of the covenants and conditions of this Lease.
12.4 Waiver. If this Lease is terminated pursuant to Section 12.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XII, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt (provided nothing herein shall be construed to
limit Tenant's liability hereunder, which is intended to be fully recourse to
Tenant, to its interest in the Leased Property).
12.5 Application of Funds. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State where the applicable Leased Property is located.
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ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, without waiving or releasing
any obligation or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and at
the expense of Tenant, and may, to the extent permitted by law, enter upon the
applicable Leased Property or any portion thereof for such purpose and take all
such action thereon as, in Landlord's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
sums so paid by Landlord and all costs and expenses (including attorneys' fees
and expenses, in each a case, to the extent permitted by law) so incurred,
together with interest thereon (to the extent permitted by law) at the Overdue
Rate from the date on which such sums or expenses are paid or incurred by
Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XIV
14.1 Holding Over. If Tenant shall for any reason remain in possession of
the applicable Leased Property after the expiration of the Term or earlier
termination of the Term, such possession shall be as a month-to-month tenant
during which time Tenant shall pay as rental each month, one and one-half times
the aggregate of (i) one-twelfth of the aggregate Minimum Rent payable with
respect to the last Lease Year of the Term; (ii) all Additional Charges accruing
during the month and (iii) all other sums, if any, payable by Tenant pursuant to
the provisions of this Lease with respect to the applicable Leased Property.
During such period of month-to-month tenancy, Tenant shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to month-to-month tenancies to continue its occupancy and use of the
applicable Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Lease.
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ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance. This Lease and all rights of Tenant
hereunder are subject and subordinate to the Lien affecting the Leased
Properties created pursuant to Lender's Loan Documents, whether now or hereafter
existing, or the interest of any landlord under a lease senior in title to this
Lease, whether now or hereafter existing (all such Liens and interests,
collectively, the "Superior Interests"), and to all renewals, modifications,
consolidations, replacements and extensions of Superior Interests, provided that
the holder of such Superior Interest shall have executed and delivered to Tenant
a "non-disturbance" agreement in favor of Tenant substantially on the same terms
and conditions as are contained in the form attached hereto as Exhibit 15.1.
Subject to the foregoing proviso, this Section shall be self-operative and no
further instrument of subordination shall be required, but in confirmation of
such subordination, Tenant agrees to execute and deliver promptly any
commercially reasonable form of instrument (in recordable form, if requested)
that Landlord or the holder of any Superior Interest (each, a "Superior Party")
may request to evidence such subordination.
15.2 Attornment. If the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of any such Superior Interest, then Tenant shall, at
the option of such purchaser, assignee or any Superior Party, as the case may
be, (x) attorn to such party and perform for its benefit all the terms,
covenants and conditions of this Lease on Tenant's part to be performed with the
same force and effect as if such party were the Landlord originally named in
this Lease, or (y) enter into a new lease with such party, as Landlord, for the
remaining Term and otherwise on the same terms and conditions of this Lease
except that such successor Landlord shall not be (i) liable for any previous
act, omission or negligence of Landlord under this Lease; (ii) subject to any
counterclaim, defense or offset which theretofore shall have accrued to Tenant
against Landlord; (iii) bound by any previous modification or amendment of this
Lease or by any previous prepayment of more than one month's rent in advance of
its due date, unless such modification, amendment or prepayment shall have been
approved in writing by the Superior Party through or by reason of which such
successor Landlord shall have succeeded to the rights of Landlord under this
Lease; or (iv) liable for any security (if any) deposited pursuant to this Lease
unless such security has actually been delivered to such successor Landlord.
Nothing contained in this Section shall be construed to impair any right
otherwise exercisable by any such owner, holder or Tenant.
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15.3 Notice of Default to Landlord's Lender. In the event of any act or
omission by Landlord which would give Tenant the right, either immediately or
after the lapse of a period of time, to terminate this Lease, or to claim a
partial or total eviction, Tenant will not exercise any such right (A) until it
has given written notice of such act or omission to Landlord's Lender, and (B)
until a reasonable period of time (not less than thirty (30) days) for remedying
such act or omission shall have elapsed following giving of such notice and
following the time when Lender shall have become entitled under the Landlord's
Loan Documents to remedy the same, provided Lender, with reasonable diligence,
shall (i) have pursued such remedies as are available to it under Landlord's
Loan Documents so as to be able to remedy the act or omission, and (ii)
thereafter shall have commenced and continued to remedy such act or omission or
cause the same to be remedied. Tenant's agreement herein shall not apply to
those situations specifically set forth herein wherein Tenant has an express
option to cancel and terminate this Lease.
15.4 Modifications to Secure Financing. If any Superior Party or
prospective Superior Party shall request modifications of this Lease as a
condition to the provision, continuance or renewal of any such financing, Tenant
will not unreasonably withhold, delay or defer its consent thereto, provided
that (i) either such modifications do not materially increase the obligations of
Tenant hereunder or materially adversely affect Tenant's rights under this Lease
or (ii) if such modifications would materially increase the obligations of
Tenant hereunder or materially adversely affect Tenant's rights under this
Lease, then Landlord shall compensate Tenant for the same. Disputes as between
Landlord and Tenant regarding whether a proposed modification would materially
increase the obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, and the compensation that would be payable to
Tenant as a result thereof shall be determined by arbitration in accordance with
the terms of Schedule 15.4 hereto.
15.5 Delivery of Notices to Landlord's Lender. Subsequent to the receipt
by Tenant of Notice from Landlord as to the identity and address of any Superior
Party (which Notice shall be accompanied by a copy of the instrument creating
such Superior Interest), no Notice from Tenant to Landlord shall be effective
unless and until a duplicate original of such Notice shall be given to such
Superior Party at the address set forth in the above described Notice. The
curing of any of Landlord's defaults by such Superior Party shall be treated as
performance by Landlord.
15.6 Right of Landlord's Lender to Enforce Lease. To the extent permitted
under the Landlord's Loan Documents, Landlord's Lender may exercise the
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rights of Landlord hereunder, including the right on the part of Landlord to
obtain insurance in the circumstances set forth in Section 10.1(e)(ii) hereof.
15.7 Exercise of Landlord's Discretion. In any instance hereunder in which
Landlord must be reasonable in making a request or granting or withholding an
approval or consent, Tenant acknowledges and agrees that Landlord may take into
account the reasonable objections of Landlord's Lender to the extent Landlord is
required to take such objections into account under Landlord's Loan Documents.
In any instance hereunder in which Landlord may make a request or grant or
withhold an approval in its discretion, Landlord may take into account the views
of Landlord's Lender to the extent Landlord is required to take such views into
account under Landlord's Loan Documents.
ARTICLE XVI
16.1 Indemnification. Notwithstanding the existence of any insurance
required to be provided hereunder, and without regard to the policy limits of
any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord and Landlord's Lender and their respective partners, shareholders,
officers, directors and employees (each, an "Indemnitee") from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and reasonable expenses (including Litigation Costs), to the maximum extent
permitted by law, imposed upon or incurred by or asserted against such
Indemnitee by reason of: (a) any accident, injury to or death of persons or loss
of or damage to property occurring on or about the Leased Property or adjoining
sidewalks, including any claims made by employees at the Leased Property, (b)
any use, misuse, non-use, condition, maintenance or repair by Tenant or anyone
claiming by, through or under Tenant, including agents, contractors, invitees or
visitors of the applicable Leased Property or Tenant's Personal Property, (c)
any Taxes or Other Charges, (d) any failure on the part of Tenant or anyone
claiming by, through or under Tenant to perform or comply with any of the terms
of this Lease, (e) any failure by Tenant to perform its obligations under any
Sublease or Warehouse Agreement and any claims made thereunder, (f) any contest
of any Legal Requirement or Insurance Requirement, regardless whether the same
is conducted in accordance with the terms hereof. Any amounts which become
payable by Tenant under this Section shall be paid within ten (10) days after
liability therefor on the part of Tenant is determined by litigation or
otherwise, and if not timely paid, shall bear interest (to the extent permitted
by law) at the Overdue Rate from the date of such determination to the date of
payment. Tenant, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or
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instituted against Indemnitee or may compromise or otherwise dispose of the same
as Tenant sees fit. Nothing herein shall be construed as indemnifying an
Indemnitee against its own grossly negligent acts or omissions or willful
misconduct. If at any time an Indemnitee shall have notice of a claim, such
Indemnitee shall give reasonably prompt written notice of such claim to Tenant;
provided that (i) such Indemnitee shall have no liability for a failure to give
notice of any claim of which Tenant has otherwise been notified or has knowledge
and (ii) the failure of such Indemnitee to give such a notice to Tenant shall
not limit the rights of such Indemnitee or the obligations of Tenant with
respect to such claim except to the extent that Tenant incurs actual expenses or
suffers actual monetary loss as a result of such failure. Tenant shall have the
right to control the defense or settlement of any Claim, provided that (A)
Tenant shall first confirm in writing to such Indemnitee that such claim is
within the scope of this indemnity and that Tenant shall pay any and all amounts
required to be paid in respect of such claim, (B) if the compromise or
settlement of any such claim shall not result in the complete release of such
Indemnitee from the claim so compromised or settled, the compromise or
settlement shall require the prior written approval of such Indemnitee and (C)
no such compromise or settlement shall include any admission of wrongdoing on
the part of such Indemnitee. An Indemnitee shall have the right to approve
counsel engaged to defend such claim and, at its election and sole cost and
expense, shall have the right, but not the obligation, to participate in the
defense of any claim. Tenant's liability under this Article with respect to
matters arising or accruing during the Term hereof shall survive any termination
of this Lease.
The parties hereto agree that this Article XVI shall not apply to those matters
specifically covered by the provisions of Article XXVI hereof.
ARTICLE XVII
17.1 No Waiver. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
ARTICLE XVIII
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18.1 Remedies Cumulative. Except as otherwise expressly provided herein,
to the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord or Tenant now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Landlord or Tenant or any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord or Tenant of any or all of such other rights, powers and remedies.
ARTICLE XIX
19.1 Acceptance of Surrender. No surrender to Landlord of this Lease or of
any Leased Property, or of any interest therein, shall be valid or effective
unless agreed to and accepted in writing by Landlord and Landlord's Lender (if
any) and no act by Landlord or any representative or agent of Landlord, other
than such a written acceptance by Landlord and Landlord's Lender (if any), shall
constitute an acceptance of any such surrender.
ARTICLE XX
20.1 No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same Person may
acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold
estate created thereby or any interest herein or in such leasehold estate and
(b) the fee estate in the applicable Leased Property.
ARTICLE XXI
21.1 Conveyance by Landlord. If Landlord or any successor owner of the
applicable Leased Property shall convey such Leased Property in accordance with
the terms hereof other than as security for a debt, and the grantee or
transferee of the Leased Property shall expressly assume all obligations of
Landlord hereunder arising or accruing from and after the date of such
conveyance or transfer, Landlord or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and obligations of
Landlord under this Lease arising or accruing from and after the date of such
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conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
ARTICLE XXII
22.1 Quiet Enjoyment. So long as Tenant shall pay all Rent as the same
becomes due and no Event of Default shall have occurred and be continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Landlord or anyone
claiming by, through or under Landlord, but subject to all liens and
encumbrances of record as of the date hereof or otherwise permitted to be
created by Landlord hereunder, liens as to the obligations of Landlord that are
either not yet due or which are being contested in good faith and by proper
proceedings, and liens hereafter consented to by Tenant. No failure by Landlord
to comply with the foregoing covenant shall give Tenant any right to cancel or
terminate this Lease or abate, reduce or make a deduction from or offset against
the Rent or any other sum payable under this Lease, or to fail to perform any
other obligation of Tenant hereunder or thereunder. Notwithstanding the
foregoing, Tenant shall have the right, by separate and independent action to
pursue any claim it may have against Landlord as a result of a breach by
Landlord of the covenant of quiet enjoyment contained in this Section.
ARTICLE XXIII
23.1 Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
AmeriCold Logistics, LLC
10 Glenlake Parkway
9th Floor
Atlanta, Georgia 30328
Attention: Chief Financial Officer
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(b) if to Landlord, to each of them:
c/o Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
Attention: Chief Financial Officer
(c) if required pursuant to Section 15.5 hereof, to Landlord's
Lender, in accordance with the terms of said Section.
or to such other address as either party may hereunder designate, and shall be
effective upon receipt.
ARTICLE XXIV
24.1 Appraisers. In the event that it becomes necessary to determine the
Fair Market Value or Fair Market Rental of any property for any purpose of this
Lease, and the parties cannot agree amongst themselves on such value within
twenty (20) days after the first request made by one of the parties to do so,
then either party may notify the other of a person selected to act as appraiser
on its behalf. Within fifteen (15) days after receipt of any such notice, the
other party shall by notice to the first party appoint a second person as
appraiser on its behalf. The appraisers thus appointed, each of whom must be a
member of The Appraisal Institute/American Institute of Real Estate Appraisers
(or any successor organization thereto), shall, within 45 days after the date of
the notice appointing the first appraiser, proceed to appraise the applicable
Leased Property to determine the Fair Market Value or Fair Market Rental thereof
as of the relevant date; provided that if one appraiser shall have been so
appointed, or if two appraisers shall have been so appointed but only one such
appraiser shall have made such determination within 50 days after the making of
the initial appointment, then the determination of such appraiser shall be final
and binding upon the parties. If two appraisers shall have been appointed and
shall have made their determinations within the respective requisite periods set
forth above and if the difference between the amounts so determined shall not
exceed ten percent (10%) of the lesser of such amounts, then the Fair Market
Value or Fair Market Rental shall be an amount equal to 50% of the sum of the
amounts so determined. If the difference between the amounts so determined shall
exceed ten percent (10%) of the lesser of such amounts, then such two appraisers
shall have 20 days to appoint a third appraiser, but if such appraisers fail to
do so, then either party may request the American Arbitration Association or any
successor organization thereto to
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appoint an appraiser within 20 days of such request, and both parties shall be
bound by any appointment so made within such 20 day period. If no such appraiser
shall have been appointed within such 20 days or within 90 days of the original
request for a determination of Fair Market Value or Fair Market Rental,
whichever is earlier, either Landlord or Tenant may apply to any court having
jurisdiction to have such appointment made by such court. Any appraiser
appointed by the original appraisers, by the American Arbitration Association or
by such court shall be instructed to determine the Fair Market Value or Fair
Market Rental within 30 days after appointment of such Appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determination of the other two appraisers shall be excluded, and 50% of the
sum of the remaining two determinations shall be final and binding upon Landlord
and Tenant as the Fair Market Value or Fair Market Rental for such interest.
This provision for determination by appraisal shall be specifically enforceable
to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties except as
otherwise provided by applicable law. Landlord and Tenant shall each pay the
fees and expenses of the appraiser appointed by it and their own legal fees, and
each shall pay one-half of the fees and expenses of the third appraiser and
one-half of all other cost and expenses incurred in connection with each
appraisal.
ARTICLE XXV
25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or an
Affiliate of Landlord intends to elect to qualify as a real estate investment
trust ("REIT"). Accordingly, unless otherwise notified by Landlord, the
following requirements (the "REIT Requirements") must be satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or a portion of the amounts paid by Tenant to Landlord
hereunder to fail to qualify as "rents from real property" within the
meaning of Section 856(d) of the Code.
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(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and agrees
to use reasonable efforts to cause its Affiliates, to permit the REIT
Requirements to be satisfied. Tenant agrees, and agrees to use reasonable
efforts to cause its Affiliates, to cooperate in good faith with Landlord to
ensure that the REIT Requirements are satisfied, including providing Landlord
with information about the ownership of Tenant and its Affiliates to the extent
that such information is reasonably available. In addition, Tenant agrees, and
agrees to cause its Affiliates, to cooperate with Landlord in connection with
any additional requirements relating to Landlord's qualification as a REIT
arising from and after the date of this Lease. Immediately after becoming aware
that the REIT Requirements are not, or will not be, satisfied, Tenant shall
notify Landlord of such noncompliance.
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions. Tenant hereby agrees to hold
harmless Landlord and Landlord's Lender, any successors to their respective
interests in this Lease, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Landlord or
any other indemnitee or assessed against the Leased Property by virtue of any
claim or lien by any governmental or quasi-governmental unit, body, or agency,
or any third party, for cleanup costs or other costs pursuant to any
Environmental Laws, but only to the extent that the same relate to the period
from and after the date hereof. Tenant's indemnity shall survive the termination
of this Lease, provided, however, Tenant shall have no indemnity obligation with
respect to (i) Hazardous Substances first introduced to the Leased Property
subsequent to the date that Tenant's occupancy of the Leased Property shall have
fully terminated or (ii) Hazardous Substances introduced to the Leased Property
by Landlord, its successors and assigns. Landlord hereby agrees to hold harmless
Tenant and any successors to its interest in this Lease, and the respective
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directors, officers, employees and agents of any of the foregoing from and
against any losses, claims, damages (including consequential damages),
penalties, fines, liabilities (including strict liability), costs (including
cleanup and recovery costs), and expenses (including expenses of litigation and
attorneys' fees) incurred by Tenant or any other indemnitee or assessed against
the Leased Property by virtue of any claim or lien by any governmental or
quasi-governmental unit, body, or agency, or any third party, for cleanup costs
or other costs pursuant to any Environmental Laws, but only to the extent that
the same relate to the period prior to the date hereof.
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination.
27.2 Severability. If any term or provision of this Lease or any
application thereof shall be invalid or unenforceable, the remainder of this
Lease and any other application of such term or provision shall not be affected
thereby.
27.3 Maximum Permissible Rate. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be
determined at the maximum permissible rate.
27.4 Headings. The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
27.5 Exculpation. Landlord's liability hereunder shall be limited solely
to its interest in the Leased Property, and no recourse under or in respect of
this Lease shall be had against any other assets of Landlord whatsoever.
Furthermore, except as otherwise expressly provided herein, in no event shall
Landlord (original or successor) ever be liable to Tenant for any indirect or
consequential damages suffered by Tenant from whatever cause.
27.6 Transfer of Licenses. Upon the expiration or earlier termination of
the Term, Tenant shall use its best efforts to transfer to Landlord or
Landlord's nominee or to cooperate with Landlord or Landlord's nominee in
connection with the processing by
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Landlord or Landlord's nominee of any applications for all licenses, operating
permits and other governmental authorization and all contracts, including
contracts with governmental or quasi-governmental entities which may be
necessary for the operation of the Leased Property; provided that the costs and
expenses of any such transfer or the processing of any such application shall be
paid by Landlord or Landlord's nominee.
27.7 Exhibition of Leased Property. Landlord and Landlord's agent shall
have the right to enter the applicable Leased Property at all reasonable times
for the purpose of exhibiting the Leased Property to others.
27.8 Entire Agreement. This Lease contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof.
27.9 Governing Law. This Lease shall be construed with respect to each
Leased Property under the substantive laws of the State of in which such Leased
Property is situated.
27.10 No Waiver. No waiver of any condition or covenant herein contained,
or of any breach of any such condition or covenant, shall be held or taken to be
a waiver of any subsequent breach of such covenant or condition, or to permit or
excuse its continuance or any future breach thereof or of any condition or
covenant herein construed as a waiver of such default, or of Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing default.
27.11 Successors and Assigns. This Lease shall be binding upon and shall
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
27.12 Modifications in Writing. This Lease may only be modified by a
writing signed by both Landlord and Tenant and, if otherwise required by the
terms hereof, Leasehold Mortgagee and/or Landlord's Lender.
27.13 No Waiver. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
27.14 Claims Against Landlord. In the event that a claim or adjudication
is made that Landlord or its agents have acted unreasonably or unreasonably
delayed (or refrained
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from), acting in any case where by law or under this Lease, Landlord or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Tenant agrees that neither Landlord nor its agents shall be liable for any
monetary damages, and Tenant's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment, except in any instance
in which it has been finally determined that Landlord's action, delay or
inaction has constituted gross negligence, fraud, willful misconduct or an
illegal act. The parties hereto agree that any action or proceeding to determine
whether Landlord has acted reasonably shall be determined by an action seeking
declaratory judgment.
ARTICLE XXVIII
28.1 Memorandum of Lease. Landlord and Tenant shall, promptly upon the
request of either enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the state in which the applicable
Leased Property is located, in which reference to this Lease, and all options
contained therein, shall be made. Tenant shall pay all costs and expenses of
recording such Memorandum of Lease.
ARTICLE XXIX
29.1 Landlord's Option to Purchase Tenant's Personal Property. Tenant
hereby grants Landlord the option to purchase all of the equipment and personal
property (tangible and intangible) that is employed by Tenant in connection with
the use and operation of each of the Properties, and the business conducted
thereat, including any interest of Tenant in the warehousing and customer
contracts (to the extent the same is assignable) and the interest of Tenant in
any equipment leases and the like. Such option shall be exercisable by Landlord
at any time prior to the date of expiration or earlier termination of this Lease
in respect of a Property and the conveyance in respect thereof shall be
consummated (and the payment of the purchase price therefor made) concurrently
with such expiration or earlier termination. The purchase price payable for
Tenant's Personalty shall be the Fair Market Value thereof, determined in
accordance with the terms of Article XXIV hereof (as adjusted to the extent
required to reflect that the subject of the appraisal is Tenant's Personalty
rather than a Leased Property). Tenant agrees to cooperate with Landlord in
effecting the smooth and orderly transfer of Tenant's Personalty in the event of
Landlord's exercise of the Purchase Option. Tenant's Personalty shall be
conveyed free and clear of all liens, encumbrances or rights of other parties,
except as may have been disclosed to the appraisers in the process of
establishing the Fair Market Value thereof.
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[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed as of March 11, 1999.
LANDLORD
VC FREEZER AMARILLO, L.P.
By: VC Freezer Omaha Amarillo L.L.C.,
its general partner
By: VC Omaha Real Estate
Holdings, L.L.C., its sole
member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
VC FREEZER FREMONT L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., its sole member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
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VC FREEZER GARDEN CITY L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., its sole member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
VC FREEZER PHOENIX L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., its sole member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
VC FREEZER SIOUX FALLS L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., its sole member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
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<PAGE> 93
VC FREEZER SPRINGDALE L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., its sole member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
VC FREEZER RUSSELVILLE L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., its sole member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
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<PAGE> 94
VC FREEZER TEXARKANA L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., a managing member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
CARMAR FREEZERS RUSSELVILLE L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., its sole member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
VC FREEZER FORT WORTH L.L.C.
By: VC Omaha Real Estate Holdings,
L.L.C., its sole member
By: VC Omaha Holdings, L.L.C.,
its sole member
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
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<PAGE> 95
CARMAR GROUP, INC.
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
FREEZER SERVICES KENTUCKY, INC.
By: /s/ Daniel F. McNamara
----------------------------
Name: Daniel F. McNamara
Title: President
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<PAGE> 96
TENANT
AMERICOLD LOGISTICS, LLC
By: /s/ Frederick B. Beilstein III
---------------------------------
Name: Frederick B. Beilstein III
Title: Senior Vice President
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Exhibit A
List of Fee Owners
VC Freezer Amarillo, L.P.
VC Freezer Fremont L.L.C.
VC Freezer Garden City L.L.C.
VC Freezer Phoenix L.L.C.
VC Freezer Sioux Falls L.L.C.
VC Freezer Springdale L.L.C.
VC Freezer Russelville L.L.C.
VC Freezer Texarkana L.L.C.
Carmar Freezers Russelville L.L.C.
VC Freezer Fort Worth L.L.C.
Carmar Group, Inc.
Freezer Services-Kentucky, Inc.
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<PAGE> 98
Exhibit A-1
[omitted: legal descriptions of parcels in Amarillo, Texas; Carthage, Missouri;
Fort Worth, Texas; Freemont, Nebraska; Garden City, Kansas; Phoenix, Arizona;
Sioux Falls, South Dakota; Texarkana, Arkansas; Russellville, Arkansas;
Springdale, Arkansas; Valley, Arkansas; and Sebree, Kentucky]
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Exhibit 1.5(b)
List of Ground Leases and Expiration Dates
None
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<PAGE> 100
Exhibit 2.1(a)
<TABLE>
<CAPTION>
Property Release Amount
- -------- --------------
<S> <C>
Amarillo $17,313,382
Carthage $53,657,527
Fort Worth $ 6,160,800
Freemont $15,138,555
Garden City $24,547,864
Phoenix $14,799,682
Sioux Falls $22,328,000
Texarkana $27,533,509
Russellville $23,931,982
Springdale $23,560,773
Valley $20,000,000
Seebre $15,702,555
------------
$264,674,627
</TABLE>
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Exhibit 3.1A
Pro Rata
Reduction in
Fixed Rent &
Property % rent Breakpoint
- -------- -----------------
Amarillo 6.54%
Carthage 20.27%
Fort Worth 2.33%
Freemont 5.72%
Garden City 9.27%
Phoenix 5.59%
Sioux Falls 8.44%
Texarkana 10.40%
Russellville 9.04%
Springdale 8.90%
Valley 7.56%
Seebre 5.93%
------
100.00%
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<PAGE> 102
Exhibit 3.1(b)
CALCULATION OF PERCENTAGE RENT
Percentage Rent, with respect to each Lease, year shall becalculoated annually
as follows:
(a) for the period from Commencement Date through December 31, 2003, the
product of (i) 43.25% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint;
(b) for the period from January 1, 2004 through December 31, 2008, the
product of (i) 46.45% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint; and
(c) for the period from January 1, 2009 through February 28, 2014, the
product of (i) 50.3% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint.
As used herein, the "Breakpoint" with respect to any Lease Year shall be
$49,318,000. The Breakpoint shall be adjusted to account for the termination of
this Lease with respect to any one or more of the Leased Properties in
accordance with the terms of this Lease on a pro rata basis among each Leased
Property based on the percentages set forth next to each Leased Property in
Exhibit 3.1(a) attached to this Lease.
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Exhibit 8.2.8
CERTAIN SUPERIOR LEASES
None.
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<PAGE> 104
Schedule 9.1(b)
<TABLE>
<CAPTION>
Landlord's Responsibility Minimum Tenant's Responsibility
- ------------------------- -------------------------------
<S> <C>
$800,000 per annum, which $903,016 per annum until 12/31/99, increasing
amount increases by 5% every by 5% annually thereafter.
five years.
</TABLE>
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Exhibit 15.1
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of _________, ________ is made by and among
[____________] ("Landlord"), AmeriCold Logistics [II], LLC., a Delaware limited
liability company ("Tenant"), and [LANDLORD'S LENDER], a [___________] (together
with its successors and assigns "Lender") pursuant to that certain Loan
Agreement (the "Loan Agreement"), dated as of [_______________], by and between
Lender and Landlord.
W I T N E S S E T H
WHEREAS, under a certain master lease dated ________ __, 1999 (hereinafter
referred to as the "Lease"), Landlord did lease, let and demise the property
(hereinafter called the "Leased Property"), as described in the Lease to Tenant
for the period of time and upon the covenants, terms and conditions therein
stated; and
WHEREAS, the Lease has not been further amended or modified; and
WHEREAS, by making a mortgage loan, Lender became the owner of an
indebtedness and holder of a certain Note or Notes, secured by first priority
mortgages, deeds of trust and deeds to secure debt (collectively, the
"Mortgages"), which shall constitute liens upon the property described in said
Mortgages and as described in Exhibit A attached hereto (the "Mortgaged
Premises"), and is secured by an assignment of Landlord's interest in the Lease
as more particularly set forth in the Mortgage; and
WHEREAS, Landlord and Tenant acknowledge and agree to the aforesaid
assignment of Landlord's interest in the Lease; and
WHEREAS, Lender desires the Lease and all rights of the Tenant thereunder
to be subordinate to the Mortgage and all rights of Lender thereunder, and the
Tenant desires Lender's assurance not to disturb Tenant's rights of possession
of the Leased Property under the Lease in the event that Lender exercises its
remedies as a Lender under the Mortgages;
NOW THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
<PAGE> 106
Section 1.
The Lease, as the same may heretofore and hereafter be modified, amended
or extended, is and shall be subject and subordinate to the Mortgages on the
Mortgaged Premises, to each and every advance made or hereafter made under the
Loan Agreement, and to all renewals, modifications, consolidations, replacements
and extensions of the Mortgages.
Lender agrees that it shall make available to Tenant the insurance policy
proceeds and condemnation awards (or payments made in anticipation thereof or in
connection therewith) in accordance with the terms of Section 10.2(b) and
10.2(d) of the Lease.
Section 2.
So long as no default by Tenant has occurred and has continued to exist
for such period of time (after notice, if any, required by the Lease) as would
entitle Landlord to terminate the Lease (hereinafter called an "Event of
Default"), (A) Lender shall not, in any foreclosure action or proceeding which
may be instituted or taken by Lender under any Mortgage by reason of any default
thereunder, evict Tenant from the Leased Premises by the Lease, or terminate or
disturb Tenant's leasehold estate under the Lease, and (B) none of Tenant's
rights under the Lease shall be disturbed by reason of any default under any of
the Mortgages.
Section 3.
Tenant shall give Lender copies of all notices and other communications
given by Tenant to the Landlord under the Lease relating to defaults on the part
of the Landlord under the Lease.
Section 4.
In the event of any act or omission by Landlord which would give Tenant
the right, either immediately or after the lapse of a period of time, to
terminate the Lease, or to claim a partial or total eviction, Tenant will not
exercise any such right (A) until it has given written notice of such act or
omission to Lender by delivering such notice of such act or omission by
certified mail, return receipt requested, addressed to Lender at the address
specified under Section 7 hereof, and (B) until a reasonable period of time (not
less than thirty (30) days) for remedying such act or omission shall have
elapsed following giving of such notice and following the time when Lender shall
have become
<PAGE> 107
entitled under the Mortgages or any additional mortgage to remedy the same,
provided Lender, with reasonable diligence, shall (i) have pursued such remedies
as are available to it under the Mortgages so as to be able to remedy the act or
omission, and (ii) thereafter shall have commenced and continued to remedy such
act or omission or cause the same to be remedied.
Section 5.
Without limitation of any of the provisions of the Lease, in the event
that, by reason of any default on the part of the Landlord, Lender or its
assigns shall succeed to the interest of Landlord or any successor to Landlord,
then subject to the provisions of this Agreement the Lease shall nevertheless
continue in full force and effect and Tenant shall attorn to Lender or its
assigns and shall recognize Lender or its assigns as its landlord. Upon request
of Lender, Tenant shall execute and deliver to Lender or its assigns an
agreement of attornment. If Lender or its assigns shall succeed to the interest
of Landlord or any successor to Landlord, in no event shall Lender be obligated
to remedy and default, nor shall Lender or its assigns have any liability under
the Lease prior to the date Lender or its assigns shall succeed to the rights of
Landlord or any successor to Landlord under the Lease, nor any liability for
offsets or defenses which Tenant might have had against Landlord or any
successor to Landlord. Lender and its assigns shall have no personal liability
as successor to Landlord, and Tenant shall look only to the estate and property
of Lender or its assigns (as applicable) in the Mortgaged Premises or the
proceeds thereof for the satisfaction of Tenant's remedies for the collection of
a judgment (or other judicial process) requiring the payment of money in the
event of any default by Lender and its assigns as Landlord under the Lease. No
other property or assets of Lender or its assigns shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to the Lease, the relationship of Landlord and
Tenant thereunder or Tenant's use or occupancy of the Leased Property.
Section 6.
Tenant has not subordinated the Lease or any of its rights under the Lease
to any lien or mortgage other than the Mortgage prior to the date hereof, and it
will not subordinate the Lease or the rights of the Tenant thereunder to any
lien or mortgage other than the Mortgage without the prior written consent of
Lender, unless otherwise permitted under the Lease. If Tenant at any time
acquires the interest of the Landlord under the Lease, the Lease will remain in
full force and effect and the interests of the Tenant and the Landlord under the
Lease will not merge.
<PAGE> 108
Section 7.
All notices, demands, requests, consents, approvals and other
communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
AmeriCold Logistics [II], LLC
10 Glenlake Parkway
9th Floor
Atlanta, Georgia 30328
Attention: Chief Executive Officer
(b) if to Lender:
_________________________
_________________________
_________________________
Attn: ___________________
or as to each party, to such other address as the party may designate by a
notice given in accordance with the requirements contained in this Section 7.
Section 8.
No prepayment of rent or additional rent due under the Lease of more than
one month in advance, and no amendment, modification, surrender or cancellation
of the Lease, shall be binding upon Lender, as holder of the Mortgages or as
Landlord under the Lease if it succeeds to that position, unless consented to in
writing by Lender. In addition, Lender as holder of the Mortgages or as Landlord
under the Lease if it succeeds to that position shall in no event have any
liability for the performance or completion of any work or to make improvements
to the Mortgaged Premises.
Section 9.
<PAGE> 109
If at any time Lender shall notify Tenant that an Event of Default has
occurred under the Mortgage and shall demand that any then unpaid rent or
additional rent and any rent or additional rent thereafter payable under the
Lease be paid directly to Lender, then Tenant shall thenceforth and until
notified by Lender that the matter in default has been paid or remedied pay such
rent or additional rent to Lender as the same becomes due under the Lease,
without the necessity for further notice and without obligation on the part of
Tenant to inquire whether or not default under the Mortgage occurred or has been
remedied. Any such payment made by the Tenant to Lender shall discharge in full
Tenant's obligation to make that payment to Landlord.
Section 10.
This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall apply to, bind and inure to the benefit of the parties hereto
and their respective successors and assigns. As used herein "Lender" shall
include any subsequent holder of the Mortgage. This Agreement shall supersede
and replace any agreement entered into prior to the date hereof by Tenant (or
any predecessor in interest of Tenant under the Lease) with any previous holder
of a mortgage covering the Mortgaged premises, which has been assigned to
Lender.
Section 11.
This Agreement shall be construed in accordance with the laws of the State
in which the Leased Property is situate.
[remainder of page intentionally left blank]
<PAGE> 110
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed, sealed and delivered in their respective names and in their behalf;
and if a corporation, by its officers duly authorized, as of the date first
hereinabove set forth.
Landlord:
[________________________]
By:_______________________
Tenant:
AMERICOLD LOGISTICS [II], LLC, a Delaware
limited liability company
By:
--------------------------------------
Name:
Title:
Lender:
[_________________________________]
By: [_____________________________]
By:___________________________
<PAGE> 111
STATE OF )
) SS.:
COUNTY OF )
On this day of , 1999, before me
personally came to me known, who being by me
duly sworn, did depose and say that he resides at ,
that he is the of , the trust described in and
which executed the foregoing as authorized signatory and on behalf of ;
that he knows the seal of said trust,that the seal affixed to said instrument is
such trust seal, that it was so affixed by order of the board of trustees of
said trust, and that he signed his name thereto by like order. In witness
whereof I hereunto set my hand and official seal.
____________________
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this day of , 1999, before
me personally came to me known, who by me being
duly sworn, did depose and say that he resides at ,
that he is the of ., the
of , the limited partnership described
in and which executed the foregoing instrument; that it was executed by
authority of the board of directors of said corporation and that he signed his
name thereto by like authority; and he acknowledged to me that said instrument
was executed by said corporation for and on behalf of said limited partnership
for the purposes therein mentioned.
<PAGE> 112
____________________
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this day of , 1999, before me
personally came to me known, who being by me duly sworn,
did depose and say that he resides at , that he is the
of , the corporation described in and which
executed the foregoing instrument; that he knows the seal of said corporation,
that such corporate seal was affixed to the foregoing instrument; that it was so
affixed by order of the Board of Directors of said Corporation, and who
thereupon signed his name thereto by like order. In witness whereof I hereunto
set my hand and official seal.
____________________
Notary Public
(Notarial Seal)
<PAGE> 113
Schedule 15.4
Arbitration Procedures
Arbitration shall be held in the city of Atlanta, Georgia in accordance with the
rules of the American Arbitration Association then in effect. There shall be one
arbitrator appointed in accordance with those rules. As part of the award, the
arbitrator shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. The arbitration
shall commence within thirty (30) days after demand for arbitration is made by a
party hereto. The arbitrator shall render his/her award within thirty (30) days
after the completion of the arbitration and the arbitration shall be held on
consecutive Business Days. Failure by either party to submit to arbitration as
required under this Lease shall result in the arbitrator ruling in favor of the
other party is such other party has submitted to arbitration under this Lease.
Judgement may be entered on the arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction of the
Georgia courts for that purpose. The arbitrator may grant injunctive or other
equitable relief.
<PAGE> 1
Exhibit 10.11
================================================================================
MASTER LEASE AGREEMENT
Dated as of March 11, 1999
Between
VC OMAHA HOLDINGS, L.L.C.
and
CARMAR FREEZERS THOMASVILLE L.L.C.,
together as Landlord,
and
AMERICOLD LOGISTICS, LLC,
as Tenant
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
1.1 Leased Property..........................................................1
1.2 Release of Unimproved Parcels. .........................................2
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.........3
1.4 Initial Term.............................................................5
1.5 Renewal Terms............................................................5
1.6 Limitation of Term as a Result of Ground Lease Terms.....................6
1.7 Condition of the Leased Property.........................................6
ARTICLE II
2.1 Definitions..............................................................7
ARTICLE III
3.1 Rent....................................................................22
3.2 Net Lease...............................................................26
ARTICLE IV
4.1 No Termination, Abatement, etc..........................................26
4.2 Abatement Procedures....................................................27
ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property........................................28
5.2 Tenant's Personal Property..............................................28
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants........................................................28
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<PAGE> 3
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants.............................................35
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations.............................................................36
8.2 Subletting and Assignment; Warehouse Agreements.........................40
8.2.1 Generally.........................................................40
8.2.2 Certain Sublettings and Assignments...............................40
8.2.3 Landlord's Right to Collect from Assignees and Subtenants.........41
8.2.4 No Release........................................................41
8.2.5 Required Assignment and Subletting Provisions.....................41
8.2.6 Reimbursement of Landlord's Costs.................................42
8.2.7 Warehouse Agreements..............................................42
8.2.8 Certain Leases Senior. ..........................................42
8.3 REIT Related Limitations on Subleasing and Warehouse Agreement..........43
8.4 Collateral Assignment of Subleases and Warehouse Agreements
to Landlord ............................................................43
8.5 Leasehold Mortgages.....................................................43
8.5.1 Landlord's Estate................................................43
8.5.2 Certain Leasehold Mortgage Requirements..........................43
8.5.3 Leasehold Mortgagee Provisions...................................44
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease......46
8.5.5 Notice of Arbitration. ..........................................47
ARTICLE IX
9.1 Maintenance and Repair..................................................48
9.2 Encroachments, Restrictions, etc........................................50
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance...............................................................51
10.2 Casualty; Application of Proceeds.......................................56
10.3 Condemnation............................................................59
-ii-
<PAGE> 4
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures..............................................60
ARTICLE XII
12.1 Events of Default.......................................................61
12.2 Certain Remedies........................................................62
12.3 Damages.................................................................62
12.4 Waiver..................................................................64
12.5 Application of Funds....................................................64
ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default...............................64
ARTICLE XIV
14.1 Holding Over............................................................65
ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance.......................................65
15.2 Attornment.............................................................65
15.3 Notice of Default to Landlord's Lender.................................66
15.4 Modifications to Secure Financing......................................66
15.5 Delivery of Notices to Landlord's Lender...............................67
15.6 Right of Landlord's Lender to Enforce Lease............................67
15.7 Exercise of Landlord's Discretion......................................67
ARTICLE XVI
16.1 Indemnification.........................................................67
ARTICLE XVII
17.1 No Waiver...............................................................68
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<PAGE> 5
ARTICLE XVIII
18.1 Remedies Cumulative.....................................................69
ARTICLE XIX
19.1 Acceptance of Surrender.................................................69
ARTICLE XX
20.1 No Merger of Title......................................................69
ARTICLE XXI
21.1 Conveyance by Landlord..................................................69
ARTICLE XXII
22.1 Quiet Enjoyment.........................................................70
ARTICLE XXIII
23.1 Notices.................................................................70
ARTICLE XXIV
24.1 Appraisers..............................................................71
ARTICLE XXV
25.1 General REIT Provisions.................................................72
25.1.1 REIT Requirements................................................72
25.1.2 Satisfaction of REIT Requirements................................72
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions.......................................73
-iv-
<PAGE> 6
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims.......................................................73
27.2 Severability.............................................................73
27.3 Maximum Permissible Rate.................................................73
27.4 Headings.................................................................74
27.5 Exculpation.............................................................74
27.6 Transfer of Licenses....................................................74
27.7 Exhibition of Leased Property...........................................74
27.8 Entire Agreement........................................................74
27.9 Governing Law...........................................................74
27.10 No Waiver..............................................................74
27.11 Successors and Assigns..................................................74
27.12 Modifications in Writing...............................................75
27.13 No Waiver..............................................................75
27.14 Claims Against Landlord................................................75
ARTICLE XXVIII
28.1 Memorandum of Lease.....................................................75
ARTICLE XXIX
29.1 Landlord's Option to Purchase Tenant's Personal Property................75
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<PAGE> 7
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A-1 - Legal Description of the Land
EXHIBIT 1.5(b) - List of Ground Leases and Expiration Dates
EXHIBIT 2.1(a) - Release Amounts
EXHIBIT 3.1(a) - Minimum Rent Allocations
EXHIBIT 3.1(b) - Calculation of Percentage Rent
EXHIBIT 8.2.8 - Certain Superior Leases
SCHEDULE 9.1(b) - Capital Expenditure Responsibilities
EXHIBIT 15.1 - Form of Non-Disturbance Agreement
SCHEDULE 15.4 - Arbitration Procedures
-vi-
<PAGE> 8
MASTER LEASE AGREEMENT (this "Lease"), dated as of the 11th day of March,
1999, among VC OMAHA HOLDINGS, L.L.C. and CARMAR FREEZERS THOMASVILLE L.L.C.
(collectively, "Landlord"), having offices c/o Vornado Realty Trust, Park 80
West, Plaza II, Saddle Brook, New Jersey 07663 Attention: Chief Financial
Officer, and AMERICOLD LOGISTICS, LLC, a Delaware limited liability company
("Tenant"), having its principal offices at 10 Glenlake Parkway, 9th Floor,
Atlanta, Georgia 30328, Attention: Chief Executive Officer.
RECITALS
WHEREAS, Landlord has agreed to let to Tenant, and Tenant has agreed to
lease from Landlord, certain parcels of real property and improvements each for
use and operation as dry and cold warehousing facilities and related uses,
defined hereinbelow as the "Leased Property" (all capitalized terms used but not
elsewhere defined herein shall have the meaning provided therefor in Article II
hereof).
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE I
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following
(collectively, the "Leased Property"):
(i) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibit A attached hereto and made a part hereof
(collectively, the "Land");
(ii) all buildings, structures, Fixtures and other improvements of
every kind, including alleyways and connecting tunnels, sidewalks, utility
pipes, conduits and lines (on-site and off-site), parking areas and
roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased
Improvements");
<PAGE> 9
(iii) all easements, rights and appurtenances relating to the Land
and the Leased Improvements; and
(iv) all permanently affixed equipment, machinery, fixtures, and
other items of real and/or personal property, including all components
thereof, now and hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air- and
water-pollution-control, waste-disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire-and theft-protection
equipment, and built-in oxygen and vacuum systems, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto
to constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but excluding all items included within
Tenant's Personal Property (collectively the "Fixtures").
1.2 Release of Unimproved Parcels. Notwithstanding anything herein to the
contrary, Landlord shall have the right from time to time to terminate this
Lease, with respect to any Unimproved Parcels located at the Leased Property as
well as grant in connection therewith in respect of the Leased Property
remaining subject to this Lease reasonable easements, restrictions, covenants,
reservations and rights of way for, among other things, traffic circulation,
ingress, egress, parking, access, water and sewer lines, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes at no
cost to Landlord and with no adjustment in Rent; provided, in each such case,
(x) such Unimproved Parcel shall be used either for the purpose of erecting,
maintaining and operating cold or dry storage warehouses or other structures and
improvements not inconsistent with the use of the related Leased Property, and
(y) such termination will not materially adversely affect either the value of
the remaining portion of the related Leased Property (as distinguished from the
value of the entire Leased Property) or the net operating income of the
remaining portion of the Leased Property (taking into account, to the extent
applicable, any potential loss of revenue resulting if the transfer and
development of the Unimproved Parcel by Landlord were not to occur), as
supported by the Officer's Certificate of Landlord described below. As used
herein, "Unimproved Parcel" shall mean, with respect to a Leased Property, one
or more land areas comprising such Leased Property on which no improvements
generating Receipts are situate, and not materially required for the generation
of Receipts. In connection with any termination permitted pursuant to this
Section, Tenant agrees to execute and deliver any instrument reasonably
necessary or appropriate to facilitate said action, subject to Tenant's receipt
of:
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<PAGE> 10
1. a plot plan identifying the location of the applicable Unimproved
Parcel;
2. a metes and bounds description of the portion of such Unimproved
Parcel; and
3. an amendment to the legal description attached as an exhibit to this
Lease implementing the proposed release, including a metes and
bounds description of the portion of the Land at the relevant Leased
Property that will continue to be subject to this Lease after the
proposed termination.
1.3 Uneconomic Property; Tenant Option to Purchase Leased Properties.
(a) Subject to the terms of this Section, if, at any time during the Term,
in the good faith judgment of Tenant (as evidenced by an Officer's Certificate
on behalf of Tenant which describes the basis for such judgment), (x) any Leased
Property becomes or imminently will become uneconomic or unsuitable for its
Primary Intended Use, and will remain uneconomic or unsuitable for such use for
the foreseeable future, and Tenant undertakes to cease its operation of such
Leased Property for its Primary Intended Use as soon as is reasonably
practicable or (y) a Default hereunder relating to a particular Leased Property
has occurred and is continuing and Tenant, notwithstanding the exercise of
reasonable diligence, is unable to cure such Event of Default other than by
terminating this Lease with respect to the Leased Property in question (in each
case, any such Leased Property, an "Uneconomic Property"), then, unless
otherwise prohibited by the terms of any Landlord's Debt, Tenant shall have the
right, so long as (i) no Event of Default shall have occurred and be continuing
(other than one arising from the Default described in clause (y) above), and
(ii) any other requirements relating to the substitution of such Uneconomic
Property under any applicable Landlord's Loan Document have been satisfied, to
purchase such Uneconomic Property described in clause (x) above in accordance
with the terms of this Section. Tenant shall signify its election to exercise
such purchase option by giving notice of the election to Landlord, accompanied
by the Officer's Certificate described in the immediately preceding sentence.
Tenant's restoration of the operations at any Uneconomic Property as a result of
events which are not within the control of Tenant and were not foreseeable by
Tenant at the time such Officer's Certificate was delivered shall not be deemed
to evidence Tenant's bad faith in making the determination which is the subject
of such Officer's Certificate.
(b) In the event Tenant elects to exercise its right to purchase a Leased
Property pursuant to this Section, Tenant shall, as described in clause (x)
above, either:
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<PAGE> 11
(i) offer to Landlord a property owned by Tenant of like kind and
quality to the Leased Property proposed to be purchased by Tenant (each a
"New Leased Property"), which New Leased Property, if accepted by Landlord
(in Landlord's reasonable discretion), would serve as consideration for
Tenant's purchase of the Leased Property in question (each a "New Property
Purchase"); or
(ii) offer to pay Landlord the Termination Amount for the Uneconomic
Property in question (each a "Cash Purchase"). Landlord shall have sixty
days from the date of such offer to either accept or reject Tenant's offer
to make a Cash Purchase. Upon the closing of the Cash Purchase or
Landlord's rejection thereof, (x) this Lease shall terminate in respect of
the Uneconomic Property in question (except for such terms as are
expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set
forth on Exhibit 3.1(a) shall be adjusted to reflect the portion of
Minimum Rent allocated to each Leased Property remaining subject to the
terms of this Lease (except to the extent otherwise indicated on said
Exhibit 3.1(a)).
(c) As a condition to any New Property Purchase, Tenant shall deliver to
Landlord (i) a deed evidencing the transfer of the fee interest in the New
Leased Property to Landlord, (ii) a Title Policy with respect to the New Leased
Property, (iii) a survey of the New Leased Property, (iv) environmental reports
relating to the New Leased Property, (iv) an amendment to this Lease (x)
terminating this Lease with respect to the Uneconomic Property and (y) causing
the New Leased Property to become a Leased Property hereunder and (v) any and
all other documents, reports, legal opinions or other items reasonably requested
by Landlord. Upon any such purchase, the Uneconomic Property removed will no
longer be a Leased Property hereunder and this Lease, as such relates to the
Uneconomic Property in question, will be terminated. Upon any New Property
Purchase, the applicable New Leased Property shall be a Leased Property
hereunder and the percentage of Minimum Rent (as set forth on Exhibit 3.1(a)
hereto) assigned to the applicable Uneconomic Property shall be assigned to such
New Leased Property.
(d) As a condition to any Cash Purchase, Tenant shall pay to Landlord (in
immediately available federal funds) the applicable Termination Amount and shall
deliver to Landlord (i) an amendment to this Lease terminating this Lease with
respect to the Uneconomic Property (ii) any and all other documents, reports,
legal opinions or other items reasonably requested by Landlord. Upon any such
purchase, the Uneconomic Property removed will no longer be a Leased Property
hereunder and this Lease, as such
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<PAGE> 12
relates to the Uneconomic Property in question, will be terminated in accordance
with the last sentence of Section 1.3(b)(ii) herein.
(e) Tenant hereby covenants and agrees that any purchase of an Uneconomic
Property pursuant to this Section shall not in any way impair the obligations of
Tenant to make payments of Rent hereunder.
(f) Tenant hereby agrees to pay all expenses in connection with any
actions taken pursuant to this Section, including all out-of-pocket expenses and
costs incurred by Landlord or Landlord's Lender (or any of their respective
affiliates), regardless whether a substitution is ultimately effected, including
fees and costs of: audits; travel; accounting services; environmental and
engineering reports; credit reports; appraisals; property evaluations;
preparation, negotiation, execution and delivery of any amendments of or
documents supplemental to this Lease or Landlord's Loan Documents; attorneys'
fees and expenses of Landlord and Landlord's Lender; transfer, transfer gains,
intangibles, deed and mortgage recording taxes; title insurance; survey; and
document recordings and filings.
1.4 Initial Term. The initial term of this Lease (the "Initial Term")
shall commence on the Commencement Date and shall expire on February 28, 2014,
unless otherwise terminated as provided herein, subject to the terms of Section
1.6.
1.5 Renewal Terms. (a) Subject to Section 1.6, provided (i) no Event of
Default shall have occurred and be continuing hereunder or under the Other
Leases and (ii) the tenant under each of the Other Leases shall have exercised
its respective renewal option under the applicable Other Lease to the extent the
same is available, Tenant shall have the right to renew this Lease (as to all,
but not less than all, the Leased Property subject to this Lease at such time)
for two (2) successive five (5) year terms ("Extended Terms") upon giving
written notice to Landlord of each such renewal at least eighteen (18) months
prior to the termination of the then current Term. During each such Extended
Term, all of the terms and conditions of this Lease shall continue in full force
and effect, except that the Minimum Rent for and during each Extended Term shall
be the greater of (i) the then current fair market rental ("Fair Market
Rental"), which unless otherwise mutually agreed to by Landlord and Tenant shall
be determined by the appraisal procedure set forth in Article XXIV and (ii) the
Minimum Rent for the Lease Year immediately preceding the Extended Term plus
five percent (5%). Tenant's failure to exercise its renewal option as to the
first Extended Term shall result in the loss of its renewal option as to the
second Extended Term.
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(b) Subject to Section 1.6, Landlord shall exercise renewal rights (if
any) that are available under each Ground Lease so as to provide Tenant, to the
greatest extent possible, with an Extended Term described in Section 1.5(a),
provided that (without waiving Landlord's rights under Section 1.6) Landlord
shall not be required to exercise any renewal option in respect of any Ground
Lease unless prior to such time Tenant shall have duly exercised its renewal
option hereunder.
(c) If Landlord or any Affiliate of Landlord shall purchase any fee or
other interest in a Leased Property that is superior to the interest of
Landlord, such as the ground lessor's interest in a Ground Leased Property, then
the estate of Landlord and such superior interest shall not merge and, without
limiting the foregoing, Tenant shall continue to be liable hereunder to pay any
ground rent and perform any other obligations of the lessee under such Ground
Lease. Further, in the event Landlord or any Affiliate of Landlord acquires a
ground lessor's interest in a Ground Leased Property and the term of the related
Ground Lease shall have expired, then Landlord or such Affiliate shall have the
right to enter into a new Ground Lease and receive from Tenant reimbursement (or
payment) of ground rent in an amount equal to the same ground rent as was
payable under the expired Ground Lease, increased by 5 percent, and increased
again by 5 percent every fifth anniversary of the commencement of the new Ground
Lease.
1.6 Limitation of Term as a Result of Ground Lease Terms. With respect to
any Ground Leased Property the Ground Lease for which has an expiration date
(taking into account any renewal options thereunder as of the date hereof or
hereafter exercised) prior to the expiration of Term (taking into account any
exercised renewal options hereunder), (i) this Lease shall expire with respect
to such Ground Leased Property on the business day immediately preceding such
Ground Lease expiration date (taking into account the terms of the following
clause (ii)), and (ii) if a Ground Lease renewal option is not exercised as of
the date hereof and Landlord has not (in its sole discretion) determined to
exercise such renewal option, then Tenant may require Landlord to exercise such
renewal term on the following terms and conditions: (1) no default on the part
of Tenant hereunder or Event of Default shall have occurred and be continuing,
(2) Tenant shall notify Landlord, on a date reasonably prior to the date on
which such renewal option must be exercised, that Tenant wishes Landlord to
exercise such renewal option, and (3) such notice shall constitute Tenant's
agreement to pay to Landlord (as and when the same become due and payable) all
base and additional rent and other sums due and payable under the affected
Ground Lease during such renewal term (including the portion thereof extending
beyond the Term), provided that Landlord shall credit against amounts due under
this clause (3), in respect of the portion of the Ground Lease renewal term,
extending beyond the Term any rent and similar payments Landlord receives from
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any third party in consideration for the lease of the premises in respect of
such portion of the Ground Lease renewal term.
1.7 Condition of the Leased Property. Tenant acknowledges (a) receipt and
delivery of possession of the Leased Property, (b) that Tenant has inspected and
otherwise has knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease and (c) that Tenant has found the same to
be in good order and repair and satisfactory for its purposes hereunder. Tenant
is leasing the Leased Property "AS IS" in its present condition. Tenant waives
any claim or action against Landlord in respect of the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, AS TO ACCESS TO THE LEASED
PROPERTY OR AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, OR AS TO THE ABSENCE OF ANY DEFECT, LATENT OR PATENT, IT BEING AGREED
THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
ARTICLE II
2.1 Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, (iv) the words "herein," hereof" and "hereunder" and other words of
similar import refer to this Lease as a whole and not to any particular Article,
Section or other subdivision, (v) the term "including" and words of similar
import shall be deemed to be followed by the phrase "without limitation," (vi)
the term "attorneys' fees" and "attorneys' fees and expenses" and words of
similar import shall be deemed preceded with the word "reasonable," and (vii)
the phrase "Leased Property" shall be deemed to mean a specific Leased Property
or all of the Leased Property, as the context may require, and shall be deemed
to be followed by the phrase "or any portion thereof".
Additional Charges: As defined in Article III.
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Affiliate: A Person or Persons directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with the
Person or Persons in question. The term "control", as used in the immediately
preceding sentence, shall mean, with respect to a Person that is a corporation,
the right to exercise, directly or indirectly, more than 50% of the voting
rights attributable to the shares of the controlled corporation and, with
respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled Person.
Aggregate Threshold Amount: As defined in Article VIII.
Alteration: As defined in Section 8.1.
Annual Budget: Tenant's annual budget setting forth, in reasonable detail,
Tenant's good faith estimates of the anticipated results of operations of the
Leased Property (taken as a whole), including Receipts, all Operating Expenses,
management fees and capital expenditures, approved by Landlord in accordance
with Section 6.1(h)(4) hereof.
Business Day: Any day other than a Saturday, Sunday or any other day on
which national banks in New York, New York are not open for business.
Cash: Coin or currency of the United States of America or immediately
available federal funds, including such funds delivered by wire transfer.
Cash Management Procedures: As defined in Article XI.
Casualty: As defined in Section 10.2.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: The date of this Lease.
Condemnation: As defined in Section 10.3.
CPI Increase: When used to qualify a fixed dollar amount set forth herein
at the date in question, such fixed dollar amount, as increased by the
percentage by which the Consumer Price Index for All Items, Urban Consumers
published by the United States Department of Labor, applicable to the United
States (all items) (base year 1982-84 =
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100) (the "Consumer Price Index"), or any successor index thereof as such
successor index may be appropriately adjusted to establish substantial
equivalence with the Consumer Price Index, shall have increased over such
Consumer Price Index (or successor, equivalent or comparable index, as
applicable) for the month in 1998 in which the Commencement Date occurs. If the
Consumer Price Index is converted to a different standard reference base or
otherwise revised, then whenever the determination of a CPI Increase figure is
called for herein, the Consumer Price Index shall be converted in accordance
with the conversion factors published by the United States Department of Labor,
Bureau of Labor Statistics, or, if said Bureau shall not publish the same, as
the same may be published by Prentice-Hall, Inc. or any other nationally
recognized publisher of similar statistical information selected by Landlord. If
the Consumer Price Index ceases to be published and there is no successor
thereto, such other index as Landlord shall reasonably select shall be
substituted for the Consumer Price Index.
Credit Facility: Shall mean a clean, irrevocable, unconditional
transferable letter of credit, payable on sight draft only, which shall not be
secured by any Leased Property, for the benefit of Landlord (or, at Landlord's
option, Landlord's Lender) and entitling such beneficiary to draw thereon in New
York, New York or in such other city as Landlord's office may be located (or, at
Landlord's option, the corporate trust office of Landlord's Lender) may be
located at the time of the issuance of such letter of credit, issued by a
domestic bank or the U.S. agency or branch of a foreign bank the long-term
unsecured debt rating of which at the time such letter of credit is delivered
and throughout the term of such letter of credit is not less than the then
Required Rating, or, if the Required Rating is "AAA" and there are no domestic
banks or U.S. agencies or branches of a foreign bank having such long-term
unsecured debt rating then issuing letters of credit, then such letter of credit
may be issued by a domestic bank the long-term unsecured debt rating of which is
not lower than "AA" by the Rating Agencies. Such Credit Facility shall provide
that (i) it will automatically renew unless the issuer of such Credit Facility
delivers written notice to the beneficiary (and to Landlord, if Landlord is not
the beneficiary) at least thirty (30) days prior to its expiration that such
Credit Facility will not be renewed and (ii) if not so renewed, the beneficiary
shall be entitled to draw upon the full amount thereof. Without in any way
limiting the generality of the foregoing, if any Credit Facility is not renewed
or replaced with another Credit Facility prior to the date that is thirty (30)
days prior to its expiration, the beneficiary shall be entitled to draw upon the
full amount thereof.
Crescent Realty: Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership.
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Crescent Trust: Crescent Real Estate Equities Company, a Texas real estate
investment trust.
Default: The occurrence of any event hereunder which, but for the giving
of notice or passage of time, or both, would be an Event of Default hereunder.
Depositary: Landlord or, at Landlord's election, Landlord's Lender or a
depositary selected by Landlord, it being agreed that different Persons may
serve as Depositary at any one time and from time to time.
Eligible Collateral: U.S. Government Securities, Debt Securities, a Credit
Facility, Cash and Cash Equivalents, and a guaranty of payment and performance
(in form and substance reasonably satisfactory to Landlord) by Vornado Trust or
Vornado Realty (provided Vornado Trust or Vornado Realty, as applicable, has a
long-term unsecured debt rating at least equal to the Investment Grade rating)
and/or Crescent Trust or Crescent Realty (provided Crescent Trust or Crescent
Realty, as applicable, has a long-term unsecured debt rating at least equal to
the Investment Grade rating), or any combination of the foregoing.
Environmental Laws: Any and all of the following as applicable to Tenant
and/or the Leased Property: present and future federal, state and local laws
(whether under common law, statute, ordinance, rule, regulation or otherwise),
court or administrative orders or decrees, requirements of permits issued with
respect thereto, and other requirements of governmental authorities relating to
any Hazardous Substances or Hazardous Substances Activity (including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss.ss.9601, et seq.) as heretofore or hereafter amended from time to
time).
Event of Default: As defined in Article XII.
Extended Term: As defined in Article I.
Fair Market Rental: With respect to a particular Leased Property, the
rental that a willing tenant not compelled to rent would pay a willing landlord
not compelled to let for such Leased Property, excluding all capital
improvements (as distinguished from necessary repairs and replacements) paid for
by Tenant, determined in accordance with the appraisal procedures set forth in
Article XXIV or in such other manner as shall be mutually acceptable to Landlord
and Tenant.
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Fair Market Value: With respect to a particular Leased Property, the price
that a willing buyer not compelled to buy would pay a willing seller not
compelled to sell for such Leased Property, excluding all capital improvements
(as distinguished from necessary repairs and replacements) paid for by Tenant,
and (a) assuming the same is unencumbered by this Lease, (b) determined in
accordance with the appraisal procedures set forth in Article XXIV or in such
other manner as shall be mutually acceptable to Landlord and Tenant, and (c) not
taking into account any reduction in value resulting from any indebtedness to
which such Leased Property is subject except as expressly provided hereinbelow.
In determining such Fair Market Value, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions of
any encumbrance which is not removed at or prior to the closing of the
transaction as to which such Fair Market Value determination is being made shall
be taken into account.
Fiscal Year: Each twelve (12) month period from January 1 to December 31.
Fixtures: As defined in Article I.
Governmental Authority: Any court, board, agency, commission, office or
authority of any nature whatsoever of or for any governmental unit (federal,
state, county, district, municipal, city or otherwise), whether now or hereafter
in existence.
Ground Lease: Each of the ground leases identified on Exhibit 1.5(b)
hereto.
Ground Leased Property: Collectively, the Leased Property identified on
Exhibit 1.5(b) hereto.
Hazardous Substances: Any of the following: (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance", "hazardous material", "hazardous waste", "extremely hazardous
waste", "infectious waste", "toxic substance", "toxic pollutant" or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity" and (ii) any
petroleum, natural gas, natural gas liquid, liquefied natural gas, synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas), ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters, and other wastes associated with
the exploration, development or reduction of crude oil, natural gas, or
geothermal resources. Without limiting the foregoing, Hazardous
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Substances shall also include asbestos and asbestos-containing materials and
polychlorinated biphenyls.
Initial Term: As defined in Article I.
Institutional Lender: Any one or more of the following: a bank, investment
bank, trust company, broker-dealer, insurance company, separate account, pension
fund, retirement plan, governmental agency, real estate investment trust,
investment company, investment company adviser or pension fund adviser, or any
Affiliate of any of the foregoing, in each case, whether acting for its own
account or as a trustee, fiduciary or agent of others.
Insurance Premiums: As defined in Section 10.1(d).
Interest Rate: A rate equal to 90-day U.S. Treasuries plus 2.00%.
Insurance Requirements: All terms of any insurance policy required
hereunder covering or applicable to the Leased Property, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Leased Property or
any use of the Leased Property.
Land: As defined in Article I with respect to the Leased Property.
Landlord: Collectively, VC Omaha Holdings, L.L.C. and Carmar Freezers
Thomasville L.L.C., and their respective successors and assigns.
Landlord Liens: Liens on or against the Leased Property or this Lease or
any payment of Rent (i) in favor of any taxing authority by reason of any tax
excluded from the definition of "Taxes" hereunder owed by Landlord or (ii)
securing Landlord's Debt.
Landlord's Debt: The outstanding principal amount borrowed by Landlord
from time to time, together with all interest accrued and unpaid thereon, and
all other sums due in connection therewith, including any yield-maintenance
payments or other prepayment premium or penalty, the payment of which may be
secured by Landlord's interest in the Leased Property and the Rent and other
amounts payable hereunder.
Landlord's Lender: The holder of Landlord's Debt from time to time,
provided that if Landlord's Debt shall be held legally or beneficially by more
than one Person, then
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Landlord's Lender shall be deemed to refer to only one such Person as selected
by Landlord in a notice to Tenant or, failing such selection, as selected by
Tenant.
Landlord's Loan Documents: The instrument(s) and agreement(s) evidencing,
establishing and securing Landlord's Debt, including (to the extent applicable)
a promissory note, loan agreement, a mortgage, deed of trust or deed to secure
debt and assignment of leases and rents.
Lease Year: Any Fiscal Year or portion thereof during the Term, commencing
with the 1999 Fiscal Year.
Leased Improvements; Leased Property: Each as defined in Article I.
Leasehold Mortgage: Any mortgage, deed of trust or other security interest
encumbering Tenant's leasehold estate hereunder, or direct or indirect ownership
interests in Tenant, which has been granted to secure repayment of debt of
Tenant or the holders of such ownership interests.
Leasehold Mortgagee: The holder of a Leasehold Mortgage from time to time.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Landlord, Tenant
or the Leased Property, or the construction, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Tenant, at any time in force affecting the Leased Property
(other than any subleases, this Lease, and service contracts and other similar
agreements now in effect or hereafter entered into in the ordinary course of
Tenant's business), including any which may (i) require repairs, modifications
or alterations in or to the Leased Property, or (ii) in any way limit the use
and enjoyment thereof.
Litigation Costs: All costs reasonably incurred by Landlord in connection
with the enforcement of any provision of this Lease, including attorneys' fees
and expenses, court costs and reasonable consultants' fees and expenses.
Lien: Any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting the Leased Property or Tenant, or any interest therein,
including any conditional sale or other
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title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
notice or other instrument and mechanics', materialmen's and other similar liens
and encumbrances.
Major Subtenant: A tenant under a Sublease for all or substantially all of
a Leased Property.
Material Agreement: Operating Agreements and agreements (i) requiring
payment by Tenant of more than $2,000,000 per annum and not cancellable without
a penalty of $500,000 or more, or (ii) pursuant to which Tenant is entitled to
receive more than $2,000,000 per year, relating, in each case, to the ownership,
development, use, operation, leasing, maintenance or repair of the Leased
Property, provided "Material Agreements" shall not include agreements pursuant
to which either party thereto may discontinue the provision of, or request for,
services, or the delivery of goods to Tenant for storage, without payment of any
penalty or without notice to the other party (regardless whether the agreement
is formally terminated) .
Material Alteration: Any Alteration to be performed by or on behalf of
Tenant at a Leased Property (other than an Alteration the cost of which a
Subtenant is obligated to reimburse to Tenant and which Tenant reasonably
believes will be so reimbursed), the cost of which as reasonably estimated by a
Qualified Architect or Engineer exceeds the Threshold Amount.
Material Casualty: As defined in Section 10.2.
Material Condemnation: As defined in Section 10.2.
Minimum Rent: As defined in Article III.
Net Operating Income: Operating Income less Operating Expenses.
New Leased Property: As defined in Article I.
Notice: As defined in Article XXIII (regardless whether the same is
capitalized herein).
Officer's Certificate: A certificate made by an individual authorized to
act on behalf of Tenant and, to the extent applicable, any constituent Person
with respect to Tenant. Without limiting the foregoing, if the individual
signing the certificate is doing
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so on behalf of a corporation, then such individual shall hold the office of
President, Vice President or Chief Financial Officer (or the equivalent) with
respect to such corporation.
Operating Agreements: Reciprocal easement and/or operating agreements;
covenants, conditions and restrictions; and similar agreements affecting any
Leased Property and binding upon and/or benefitting Landlord or Tenant and other
third parties. Without limiting the foregoing, "Operating Agreements" shall not
include any Warehouse Agreements.
Operating Expenses: For any specified period, on an accrual basis, all
expenses paid (or due and payable, except to the extent that the same constitute
Trade Payables that are not more than 60 days outstanding) by Tenant during such
period in connection with the operation of the Leased Property, as well as
bookkeeping, accounting, insurance costs, wages and other costs and expenses
incurred for the Leased Property and legal expenses incurred in connection with
the operation of the Leased Property, determined, in each case, consistently
with GAAP. "Operating Expenses" shall not include (1) depreciation or
amortization or other noncash items (other than expenses that are due and
payable but not yet paid), (2) the principal of and interest on any indebtedness
(except for any payments required under any Permitted Equipment Leases), (3)
income taxes or other taxes in the nature of income taxes, (4) any expenses
(including legal, accounting and other professional fees, expenses and
disbursements) incurred in connection with and allocable to any indebtedness
(except for any of the same in connection with any Permitted Equipment Leases),
(5) the cost of any capital expenditures (except for any payments required under
any Permitted Equipment Leases), (6) distributions to the shareholders, members
or partners in Tenant or any asset management fees or similar compensation
payable to any Affiliate of Tenant, and (7) any item of expense which otherwise
would be considered within Operating Expenses but is paid directly by any
Subtenant. Expenses that are accrued as Operating Expenses during any period
shall not be included in Operating Expenses when paid during any subsequent
period.
Operating Income: For any specified period, on an accrual basis, all
income received or accrued by Tenant during such period in connection with the
operation of the Leased Property, determined consistent with GAAP, including the
following, but without duplication:
(i) all rents, rent equivalents, moneys payable as damages pursuant
to a Lease or in lieu of rent or rent equivalents, royalties (including
all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and
other deposits), accounts, cash, issues,
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profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or
benefit of Tenant or its agents or employees from any and all sources
arising from or attributable to the Leased Property, including any
obligations now existing or hereafter arising or created out of the lease,
sublease, license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Tenant;
(ii) charges received by Tenant for electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any other energy,
telecommunications, telephone, utility or similar items, including
overtime usage, HVAC equipment charges, sprinkler charges, escalation
charges, license fees, maintenance fees, charges for improvements, Taxes
and other amounts payable to Tenant, under any Lease or other agreement
relating to the Leased Property pursuant to which any portion of the
Leased Property, utilities, facilities, equipment, parking facilities or
other services are furnished by Tenant, but excluding any security
deposits received;
(iii) condemnation awards to the extent that such awards are
compensation for lost rent;
(iv) business interruption and loss of "rental value" insurance
proceeds;
(v) income from cash holdings and interest from notes in lieu of
rent; and
(vi) all other amounts received by Tenant during such period in
respect of items which in accordance with GAAP would be included in
Tenant's annual financial statements for such period or any other period
as operating income of the Leased Property and which are reasonably
expected to recur during the next two (2) years following the date on
which Net Cash Flow or Net Operating Income is being calculated.
Notwithstanding the foregoing clauses (i) through (vi), Operating Income shall
not include (A) any condemnation or insurance proceeds (other than of the types
described in clauses (i), (ii) and (iii) above), (B) any proceeds resulting from
the sale, exchange, transfer, financing or refinancing of all or any part of the
Tenant's interest in the Leased Property or any interest therein (other than of
the types described in clause (iii) above), (C) any repayments received from
Subtenants of principal loaned or advanced to Subtenants by Tenant, or (D) any
type of income that would otherwise be considered
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Operating Income pursuant to the provisions above but is paid directly by any
Subtenant to a Person other than Tenant or its agent.
Other Charges: All ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including vault charges and license fees for
the use of vaults, chutes and similar areas adjoining a Leased Property, now or
hereafter levied or assessed or imposed against any Leased Property or any part
thereof (subject to the same exclusion set forth in the proviso in the
definition of "Taxes").
Other Leases: Collectively, (i) that certain Master Lease Agreement, dated
as of April 22, 1998, between URS Real Estate, L.P., as Landlord, and URS
Logistic, Inc., as amended, (ii) that certain Master Lease Agreement, dated as
of April 22, 1998, between Americold Real Estate, L.P., as landlord, and
Americold Corporation, as tenant, as amended, (iii) that certain Master Lease
Agreement, dated as of February 28, 1999, between Americold Corporation, as
landlord, and AmeriCold Logistics, LLC, as tenant, as amended, (iv) that certain
Master Lease Agreement, dated as of the date hereof, between URS Logistics,
Inc., as landlord, and AmeriCold Logistics II, LLC, as tenant, as amended, and
(v) that certain Master Lease Agreement, dated as of the date hereof, among VC
Omaha Holdings, L.L.C. and certain of its Affiliates, collectively as landlord,
and AmeriCold Logistics, LLC, as tenant, as amended.
Overdue Rate: On any date, a rate equal to the Interest Rate plus 2%, but
in no event greater than the maximum rate then permitted under applicable law.
Percentage Rent: As set forth in Exhibit 3.1(b) attached hereto.
Permitted Encumbrances: Collectively, (a) all Liens disclosed in the Title
Policy, (b) Liens, if any, for Taxes or Other Charges not yet payable or
delinquent or which are being diligently contested in good faith in accordance
with this Lease, (c) Liens in respect of property or assets imposed by law which
were incurred in the ordinary course of business, such as carriers',
warehousemen's, landlord's, mechanics', materialmen's, repairmen's and other
similar Liens arising in the ordinary course of business, and Liens for workers'
compensation, unemployment insurance and similar programs, in each case arising
in the ordinary course of business which are being diligently contested in good
faith in accordance with the terms hereof, (d) Subleases, (e) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances (including any of such matters incurred or
entered into by Tenant in the ordinary course of business) which in each case do
not diminish in any material respect the value of the affected Leased Property
or affect in any material respect the validity,
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enforceability or priority of this Lease or the Liens created by Landlord's Loan
Documents, and (f) such other title and survey exceptions as Landlord has
approved or may approve in writing. In addition, "Permitted Encumbrances" shall
include any Landlord Liens.
Permitted Equipment Leases means capital and/or operating lease
obligations in respect of equipment used at the Leased Property with an
aggregate annual rent obligation reasonable and customary for facilities such as
the Leased Properties, as mutually agreed upon by Landlord and Tenant.
Permitted Investments: The following, subject to qualifications
hereinafter set forth:
1. Obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or instrumentality
thereof, when such obligations are backed by the full faith and
credit of the U.S. These obligations include, but are not limited
to:
o U.S. Treasury obligations All direct or fully guaranteed
obligations
o Farmers Home Administration Certificates of beneficial
ownership
o General Services Administration Participation
certificates
o U.S. Maritime Administration Guaranteed Title XI
financing
o Small Business Administration Guaranteed participation
certificates Guaranteed pool certificates
o U.S. Department of Housing and Urban Development Local
authority bonds
o Washington Metropolitan Area Transit Authority
Guaranteed transit bonds
2. Federal Housing Administration debentures.
3. Obligations of government-sponsored agencies that are not backed by
the full faith and credit of the U.S., where the obligation is
limited to those
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instruments that have a predetermined fixed dollar amount of
principal due at maturity that cannot vary or change. These
obligations are limited to:
o Federal Home Loan Mortgage Corp. (FHLMC) Debt
obligations
o Farm Credit System (formerly: Federal land Banks,
Federal Intermediate Credit Banks, and Banks for
Cooperatives) Consolidated systemwide bonds and notes
o Federal Home Loan Banks (FHL Banks) Consolidated debt
obligations
o Federal National Mortgage Association (FNMA) Debt
obligations
o Student Loan Marketing Association (SLMA) Debt
obligations
o Financing Corp. (FICO) Debt obligations
o Resolution Funding Corp. (REFCORP) Debt obligations.
4. Federal funds, unsecured certificates of deposit, time deposits,
banker's acceptances, and repurchase agreements having maturities of
not more than 365 days of any bank, the short-term debt obligations
of which are rated "A-1+" (or the equivalent) by the Rating Agencies
or secured by U.S. Treasury obligations (as described in Paragraph 1
above).
5. Deposits that are fully insured by the Federal Deposit Insurance
Corp. (FDIC).
6. Debt obligations maturing in 365 days or less that are rated AAA or
higher (or the equivalent) by the Rating Agencies.
7. Commercial paper rated "A-1+" (or the equivalent) by the Rating
Agencies and maturing in 365 days or less.
8. Investments in certain short-term debt of issuers rated "A-1" (or
the equivalent) by the Rating Agencies may be permitted with certain
restrictions. The total amount of debt from "A-1" issuers must be
limited to the investment of an amount equal to Monthly Debt Service
Payment Amount. The total amount of "A-1" investments should not
represent more than 20% of the rated issue's outstanding principal
amount and each investment should not mature beyond 30 days.
Investment in "A-1" (or
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the equivalent) rated securities are not eligible for reserve
accounts, cash collateral accounts, or other forms of credit
enhancement. Short-term debt for purposes of this definition
includes: commercial paper, federal funds, repurchase agreements,
unsecured certificates of deposit, time deposits, and banker's
acceptances.
9. Investment in money market funds rated "AAAm" or "AAm-G" (or the
equivalent) by the Rating Agencies.
10. Such other investments as shall be approved in writing by Landlord.
Notwithstanding the foregoing, "Permitted Investments": (i) shall exclude any
security with the Standard & Poor's "r" symbol (or any other Rating Agency's
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
"strips"; (ii) shall not have maturities in excess of one year; (iii) as to the
investments described in (1), (3), (4), (5), (6), (7) and (8): the obligations
shall be limited to those instruments that have a predetermined fixed dollar of
principal due at maturity that cannot vary or change; interest may either be
fixed or variable; and any variable interest should be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index; and (iv) shall exclude any investment where the right to receive
principal and interest derived from the underlying investment provide a yield to
maturity in excess of 120 percent of the yield to maturity at par of such
underlying investment. No investment shall be made which requires a payment
above par for an obligation if the obligation may be prepaid at the option of
the issuer thereof prior to its maturity. All investments shall mature or be
redeemable upon the option of the holder thereof on or prior to the earlier of
(x) three (3) months from the date of their purchase or (y) the Business Day
preceding the day before the date such amounts are required to be applied
hereunder.
Person: Any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.
Policies: As defined in Section 10.1.
Primary Intended Use: As defined in Section 6.1.
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Qualified Architect or Engineer: Any experienced architect, engineer or
construction manager licensed or registered in the jurisdiction where the
applicable Leased Property is located, if required by the laws of such
jurisdiction.
Rating Agencies: Any one or more of the following designated by Landlord:
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA, Inc. or
any other nationally-recognized statistical rating agency selected by Landlord.
Receipts: The items described in Operating Income, determined, however, on
a cash basis.
REIT: As defined in Article XXV.
REIT Requirements: As defined in Article XXV.
Release Amount: With respect to each Leased Property, shall refer to the
applicable "Release Amount" as set forth on Exhibit 2.1(a) hereto. Tenant hereby
agrees that in connection with any new Landlord's Debt, the Release Amount in
respect of any Leased Property shall be the greater of the amount set forth on
Exhibit 2.1(a) and the amount required to be paid by Landlord to Lender to
obtain the release of the lien affecting such Leased Property.
Rent: Collectively, (i) the Minimum Rent, (ii) Percentage Rent and (iii)
Additional Charges.
Rental Period. As defined in Article III.
Rent Payment Date. As defined in Article III.
Restoration: As defined in Section 10.2.
State: The State or Commonwealth in which the particular Leased Property
in located.
Sublease. Any lease, sublease, license agreement or occupancy agreement
entered into by Tenant affecting all or any portion of the Leased Property,
provided that Warehouse Agreements shall not be included within the definition
of Subleases.
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Subtenant: A subtenant, licensee, occupant or other party to any Sublease.
Superior Interests: As defined in Article XV.
Superior Party: As defined in Article XV.
Taxes: All real estate and personal property taxes, assessments, fees,
taxes on rents or rentals, water rates or sewer rents and other governmental
charges now or hereafter levied or assessed or imposed against Landlord, Tenant
or the Leased Property or rents therefrom or which may become Liens, provided
that Taxes shall not include any income, franchise, estate, inheritance or gift
taxes, or any other tax imposed on or measured by the net income of Landlord,
except to the extent that the same is in direct substitution for a tax that
would otherwise be included within the definition of "Taxes" hereunder.
Tenant's Personal Property: All motor vehicles, machinery, equipment,
furniture, furnishings, movable walls or partitions, computers or trade fixtures
or all other personal property, and consumable inventory and supplies, now owned
or hereafter acquired by Tenant and located on the applicable Leased Property or
used or useful in Tenant's business on such Leased Property, including all
modifications, replacements, alterations and additions to such personal property
installed at the expense of Tenant, except items, if any, included within the
definition of Fixtures.
Term: Collectively, the Fixed Term and any Extended Terms, to the extent
properly exercised by Tenant pursuant to the provisions of Article I, unless
earlier terminated pursuant to the provisions of this Lease.
Termination Amount: With respect to a specified Leased Property, the
greater of the Fair Market Value thereof and the Release Amount therefor.
Threshold Amount: Two million dollars ($2,000,000).
Title Policy: The ALTA (or equivalent) title insurance policy acquired by
Landlord most recently prior to the date hereof (i) naming Landlord as the
insured and (ii) insuring Landlord's ownership of the Leased Property subject to
the exceptions and exclusions set forth therein.
Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil
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commotion, fire, unavoidable casualty or other causes beyond the control of the
party responsible for performing an obligation hereunder, provided that lack of
funds shall not be deemed a cause beyond the control of either party hereto
unless such lack of funds is caused by the failure of the other party hereto to
perform any obligations of such party under this Lease.
Uneconomic Property. As defined in Article I.
Unimproved Parcel. As defined in Article I.
Unsuitable for Its Primary Intended Use: A state or condition at a Leased
Property such that by reason of damage or destruction, or a partial taking by
condemnation, in the good faith judgment of Tenant, reasonably exercised, the
Leased Property cannot by operated on a commercially practicable basis for its
Primary Intended Use.
Vornado Realty: Vornado Realty L.P., a Delaware limited partnership.
Vornado Trust: Vornado Realty Trust, a Maryland real estate investment
trust.
Warehouse Agreements: Warehousing agreements, logistics and services
agreements, distribution agreements, handling agreements and other similar
agreements in connection with the Primary Intended Use to the extent (but only
to the extent) the same are for goods stored or services rendered at any Leased
Property, in such forms and on such terms as are customarily entered into by
Tenant, together with any amendments and modifications to such agreements.
ARTICLE III
3.1 Rent. Tenant will pay to Landlord, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, at Landlord's address set forth above or at such other place or
to such other person, firms or corporations as Landlord may designate in writing
from time to time, (i) Minimum Rent (as defined below), and (ii) Percentage
Rent. In addition, Tenant will pay to Landlord or the Person otherwise entitled
thereto all Additional Charges during the Term on or before the same are
delinquent.
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(a) Minimum Rent:
For the period commencing on the Commencement Date through February
28, 2014, the sum of SIX MILLION TWO HUNDRED TWENTY-NINE THOUSAND
AND 00/100 DOLLARS ($6,229,000.00) per annum.
Minimum Rent shall be prorated among each Leased Property pursuant to the
percentages set forth next to each Leased Property on Exhibit 3.1(a) attached
hereto. Minimum Rent for each Fiscal Year shall be payable (a) for the period
from the Commencement Date through (and including) the Rent Payment Date (as
defined herein) occurring in September, 2000, in arrears, and, (b) for the
period from (and including) the Rent Payment Date occurring in September, 2000,
through the balance of the Term, in advance, in either case in twelve (12) equal
installments on the eleventh (11th) day of each calendar month of the Initial
Term and each Extended Term (the "Rent Payment Date"); provided that if such
11th day is not a Business Day, then the Rent Payment Date shall be the next
preceding Business Day. Minimum Rent shall be paid for the period of the
eleventh (11th) of each month (or, if applicable, the Commencement Date) through
the tenth (10th) of the next month (or, if applicable, the expiration of the
Term) (each, a "Rental Period"), provided that the first and last payments of
Minimum Rent shall be prorated as to any partial Rental Period, based on the
number of days within the Term during such Rental Period and the number of days
in such Rental Period. Tenant hereby agrees to make reasonable changes with
respect to the definition of "Rental Period" as may be requested in connection
with any Landlord's Debt. The first installment payment of Minimum Rent shall be
payable on March 11, 1999, for the Rental Period beginning with the Commencement
Date and ending March 10, 1999.
Notwithstanding the foregoing, for the period commencing with the
date hereof and expiring on the third (3rd) anniversary of the date hereof, to
the extent that Available Cash is less than the amount of Fixed Rent and
Percentage Rent, as certified by Tenant (together with reasonable documentation
thereof) and agreed to by Landlord, the Fixed Rent and Percentage Rent shall
accrue, and the payment thereof (together with interest at the Interest Rate)
shall be deferred to, the earlier of (A) the third (3rd) anniversary of the date
hereof and (B) such date as Available Cash shall be available, to the extent of
such Available Cash (and Available Cash shall be applied first to interest, then
to the accrued Fixed Rent and then to the accrued Percentage Rent), provided
that the maximum amount of Fixed Rent that may be deferred under this paragraph
shall be twenty percent (20%) of the stated Fixed Rent obligation. As used
herein, Available Cash shall be Receipts less Operating Expenses. In no event,
however, shall the rent deferral
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permitted hereunder be such that Landlord will have insufficient cash flow to
service Landlord's Debt.
(b) Percentage Rent:
(i) Generally; Payment in Installments. In addition to the Minimum
Rent payable with respect to the Leased Property, Tenant shall pay
Percentage Rent for each Lease Year. Percentage Rent shall be payable
quarterly in arrears in four (4) installments, on the Rent Payment Date
occurring in April, July, August and January of each Lease Year, in
respect of the quarter ending in the prior month, commencing in 2000. Each
quarterly installment shall be based on, and accompanied by, an Officer's
Certificate setting forth Tenant's current estimated Receipts for the
Leased Property (on a Leased Property-by-Leased Property basis) on a
cumulative basis for the period commencing with the Lease Year through the
end of the quarter in question, and shall take into account previous
installments paid in respect of such Lease Year.
(ii) Presentation of Certificate and Audit. Not later than the 25th
day following the end of each Lease Year, Tenant shall deliver to Landlord
an Officer's Certificate setting forth (i) the Receipts for the Leased
Property (on a Leased Property-by-Leased Property basis) and (ii) the
computation made by Tenant in determining Percentage Rent, in each case
(a) for such Lease Year and (b) for each individual calendar quarter
during such Lease Year, together with an audit of such Receipts conducted
by a "Big Six" firm of independent certified public accountants proposed
by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed). Tenant shall utilize, or cause to be
utilized, an accounting system for the Leased Property in accordance with
its usual and customary practices and in accordance with GAAP, which will
accurately record Receipts for the Leased Property. Tenant shall retain
such records, for at least three (3) years after the expiration of each
Lease Year.
(iii) Confirmation of Percentage Rent. Landlord, at its own expense,
except as provided herein below, shall have the right, exercisable by
Notice to Tenant within two (2) years after receipt of the applicable
Officer's Certificate referred to in clause (ii) above, by its accountants
or representatives to audit the information set forth in such Officer's
Certificate and, in connection with such audits, to examine Tenant's books
and records with respect thereto (including supporting data and sales and
excise tax returns).
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(iv) Adjustments of Percentage Rent. If the certificate or audit
described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a deficiency in the payment of Percentage Rent and
any differences between the parties are resolved (which, absent the
parties' agreement shall be determined pursuant to arbitration in
accordance with Schedule 15.4), Tenant shall forthwith pay to Landlord the
amount of the deficiency, as finally agreed or determined, together with
interest at the Interest Rate, from the date such payment should have been
made to the date of payment thereof. If such deficiency, as determined or
agreed upon or compromised as aforesaid, is more than four percent (4%) of
the Receipts reported by Tenant for such Lease Year and, as a result,
Landlord did not receive at least ninety-five percent (95%) of the
Percentage Rent payable with respect to such Lease Year, Tenant shall pay
the reasonable cost of such audit and examination. If the certificate or
audit described in Section 3.1(b)(ii), or any audit described in Section
3.1(b)(iii), discloses a overpayment of Percentage Rent and any
differences between the parties are resolved (which, absent the parties'
agreement shall be determined pursuant to arbitration in accordance with
Schedule 15.4), then (provided no Event of Default has occurred and is
continuing) Landlord shall grant Tenant a credit equal to the amount of
such overpayment against the Rent next coming due in the amount of such
difference, as finally agreed or determined, together with interest at the
Interest Rate accruing from the date of payment by Tenant until the date
such credit is applied. If such credit cannot be made because the Term has
expired prior to application in full thereof, then (provided no Event of
Default has occurred and is continuing and provided Tenant has paid all
amounts required under this Lease), Landlord shall repay the unapplied
balance of such credit to Tenant.
(v) Maximum Adjustments of Percentage Rent. Notwithstanding the
foregoing, (A) in no event shall Tenant be permitted under Section
3.1(b)(iv) a credit or refund in respect of Percentage Rent in excess of
15 percent of the aggregate installments of Percentage Rent paid in
respect of any Lease Year pursuant to Section 3.1(b)(i) and (B) in no
event shall Tenant be permitted under Section 3.1(b)(i) a credit or refund
in respect of Percentage Rent in excess of 15 percent of the aggregate
installments of Percentage Rent paid in respect of immediately preceding
calendar quarter pursuant to Section 3.1(b)(i).
(vi) Confidentiality. Any information obtained by Landlord with
respect to Receipts, Operating Income and Operating Expenses pursuant to
the provisions of this Lease shall be treated as confidential, except that
such information may be (1) disclosed to the extent that it otherwise
becomes public
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information, (2) disclosed to the extent that Landlord is advised by
counsel that Landlord is required to disclose such information by
subpoena, court order, securities laws and regulations, any other laws or
regulations or stock-exchange requirements, (3) used in any litigation
between the parties (subject to such confidentiality safeguards as Tenant
may request and the courts may impose), (4) disclosed to Landlord's direct
and indirect lenders and investors (and prospective direct and indirect
lenders and investors), and (5) disclosed to the extent permitted in
Landlord's Loan Documents relating to any Landlord's Debt, provided that,
with respect to the disclosures permitted under clause (4), Landlord shall
obtain the agreement of the Persons to whom disclosure is made to maintain
such information as confidential in accordance with terms of this
Subsection (iv) and in no event shall public or Rule 144A holders of
Landlord's Debt be permitted to receive such information on an individual
Leased Property basis.
(vii) Survival. The obligations of Tenant and Landlord contained in
this Section 3.1 shall survive the expiration or earlier termination of
this Lease.
(c) Additional Charges. In addition to the Minimum Rent and Percentage
Rent payable with respect to the Leased Property, Tenant shall pay and discharge
as and when due and payable the following (collectively, "Additional Charges"):
(1) Taxes and Other Charges. Tenant shall pay all Taxes and Other
Charges as set forth in Section 6.1(b) herein.
(2) Utility Charges. Tenant shall pay all charges for electricity,
power, gas, oil, water, sanitary and storm sewer, refuse collection and
other utilities used or consumed in connection with the applicable Leased
Property during the Term.
(3) Insurance Premiums. Tenant shall pay, as Additional Charges, all
premiums for the insurance coverage required to be maintained pursuant to
Article VIII hereof.
(4) Other Charges. Tenant shall pay, as Additional Charges, all
other amounts, liabilities and obligations that Tenant assumes or agrees
to pay under this Lease, including all of its indemnification obligations
set forth herein.
(5) Late Payment of Rent. If any installment of Minimum Rent,
Percentage Rent or Additional Charges (but only as to those Additional
Charges which are payable directly to Landlord, if any) shall not be paid
within five (5)
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Business Days after its due date, Tenant will pay to Landlord on demand,
as Additional Charges, a late charge (to the extent permitted by law)
computed at the Overdue Rate (or at the maximum rate permitted by law,
whichever is the lesser) on the amount of such installment, from the due
date of such installment to the date of payment thereof.
To the extent that Tenant timely pays any Additional Charges to Landlord
pursuant to any requirement of this Lease, Tenant shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due. If Landlord's Loan Documents shall so require, or if any
Additional Charges shall not be paid to a third party payee within five (5)
Business Days after its due date, Landlord may at any time thereafter, at
Landlord's option, require Tenant to deposit into an escrow account under the
sole dominion and control of Landlord (or the applicable Landlord's Lender), on
the first day of each month (or such other day(s) as Landlord shall reasonably
specify), an amount which, together with similar escrow deposits on succeeding
deposit dates, is sufficient to ensure that such escrow account shall contain an
amount sufficient to make such payment on its next due date, in which event
Landlord shall make all future payments for such expense from the escrow
account. In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost that may be added for non-payment or late
payment of such items. Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Lease or by statute or
otherwise in the case of non-payment of the Rent. Landlord shall have the right
to have such escrows held with a Depositary.
3.2 Net Lease. The Minimum Rent and Percentage Rent, as well as such
Additional Charges as are due and payable to Landlord, shall be paid absolutely
net to Landlord, so that this Lease shall throughout the Term yield to Landlord
the full amount of the installments of Minimum Rent and Percentage Rent, as well
as any payments of Additional Charges payable to Landlord, subject to any other
provisions of this Lease which expressly provide for adjustment or abatement of
Rent or other charges.
ARTICLE IV
4.1 No Termination, Abatement, etc. Except as otherwise specifically
provided herein, Tenant, to the extent permitted by law, shall remain bound by
this Lease in accordance with its terms and shall neither take any action
without the consent of Landlord to modify, surrender or terminate the same, nor
seek nor be entitled to any
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abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent, nor shall the respective obligations of Landlord and Tenant be otherwise
affected by reason of (a) any damage to, or destruction of, any Leased Property
from whatever cause or any taking of the Leased Property, (b) the interruption
or discontinuance of any service or utility servicing the applicable Leased
Property, (c) the lawful or unlawful prohibition of, or restriction upon,
Tenant's use of the Leased Property, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title, (d) any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties, (e) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee or transferee of Landlord, or (f)
for any other cause whether similar or dissimilar to any of the foregoing other
than a discharge of Tenant from any such obligations as a matter of law. Tenant
hereby specifically waives all rights, arising from any occurrence whatsoever,
which may now or hereafter be conferred upon it by law to (i) modify, surrender
or terminate this Lease or quit or surrender the Leased Property, or (ii)
entitle Tenant to any abatement, reduction, suspension or deferment of the Rent
or other sums payable by Tenant hereunder, except as otherwise specifically
provided in this Lease. The obligations of Landlord and Tenant hereunder shall
be separate and independent covenants and agreements and the Rent and all other
sums payable by Tenant hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions this Lease. In any instance where, after the occurrence of an
Event of Default, Landlord retains funds which, but for the occurrence of such
Event of Default, would be payable to Tenant, Landlord shall refund such funds
to Tenant to the extent the amount thereof exceeds the amount necessary to
compensate Landlord for any cost, loss or damage incurred in connection with
such Event of Default.
4.2 Abatement Procedures. In the event of a partial taking or temporary
taking, which taking does not render the Leased Property Unsuitable for its
Primary Intended Use, this Lease shall not terminate, but the Rent shall be
abated in the manner and to the extent that is fair, just and equitable to both
Tenant and Landlord. If Landlord and Tenant are unable to agree upon the amount
of such abatement within thirty (30) days after such taking, the matter may be
submitted by either party to a court of competent jurisdiction for resolution.
Pending such resolution, Tenant shall remain bound to pay Rent based upon the
amounts asserted by Landlord to be due and payable, provided Landlord shall
remain liable for the repayment to Tenant of amounts ultimately determined to be
overpaid to Landlord.
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ARTICLE V
OWNERSHIP OF THE LEASED PROPERTY
5.1 Ownership of the Leased Property. Tenant acknowledges that the Leased
Property is the property of Landlord and that Tenant has only the right to the
exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease, provided that, until the expiration or earlier
termination of this Lease, all capital improvements and additions made by
Tenant, at Tenant's expense, to any Leased Property shall be the property of
Tenant and, upon the expiration or earlier termination of this Lease, title to
such improvements, additions and replacements shall vest in Landlord.
5.2 Tenant's Personal Property. Tenant may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements any items of Tenant's Personal
Property, and Tenant may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Tenant shall
provide and maintain during the entire Lease Term all such Tenant's Personal
Property as shall be necessary to operate each Leased Property in compliance
with all applicable Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Primary Intended
Use. All of Tenant's Personal Property not removed by Tenant within thirty (30)
days following the expiration or earlier termination of this Lease with respect
to such Leased Property where such Tenant's Personal Property is located shall
be considered abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account
therefor.
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ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Tenant Covenants. Tenant hereby covenants and agrees with Landlord
that:
(a) Existence; Use of Leased Property; Legal Compliance; Insurance.
(i) Tenant shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with
all Legal Requirements applicable to it and the Leased Property. Tenant
shall at all times maintain and preserve the Leased Property and shall
keep the Leased Property in good working order and repair, reasonable wear
and tear excepted, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto; provided that Tenant shall, without the consent of
Landlord, make no Alteration to any Leased Property which constitutes
"Nonseverable Improvements" as such term is used in Section 4(4).03 of IRS
Revenue Procedure 75-21, as modified by IRS Revenue Procedure 79-48,
unless the conditions of Section 4(4).03(B) are satisfied and the
alteration is described in at least one of the subparagraphs of Section
4(4).03(C). Tenant will operate, maintain, repair and improve the Leased
Property in material compliance with all Legal Requirements, and will not
cause or allow the same to be misused or wasted or to deteriorate,
reasonable wear and tear excepted.
(ii) After the Commencement Date and throughout the entire Term,
Tenant shall use the applicable Leased Property and the Leased
Improvements thereof as a dry and cold storage warehousing facility and
for such other uses as may be necessary or incidental to such use,
including the provision of distribution services (such use, the "Primary
Intended Use") and, notwithstanding any restrictions on subletting
contained herein, Landlord hereby agrees that Tenant shall have the right
to enter into Warehouse Agreements. Tenant shall not use the applicable
Leased Property or any portion thereof for any other use without the prior
written consent of Landlord, which consent shall not be unreasonably
withheld or delayed (taking into account, among other things, the
provisions hereof relating to Percentage Rent). No use shall be made or
permitted to be made of a Leased Property, and no acts shall be done, that
will cause the cancellation of any insurance policy covering such Leased
Property, nor shall Tenant sell or
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otherwise provide, or permit to be kept, used or sold in or about such
Leased Property any article which may be prohibited by law or by Insurance
Requirements. Tenant shall, at its sole cost, comply with all of the
requirements pertaining to the Leased Property or other improvements of
any insurance board, association, organization or company necessary for
the maintenance of insurance, as herein provided, covering the Leased
Property and Tenant's Personal Property. Absent force majeure and any
other event beyond the reasonable control of Tenant, and except during a
period following a Casualty or Condemnation or in which an Alteration is
being performed, Tenant shall continuously operate the Leased Property for
its Primary Intended Use.
(b) Taxes and Other Charges; Contest for Taxes and Other Charges, Legal
Requirements and Liens.
(i) Subject to the provisions of Section 6.1(b)(ii), Tenant shall
pay all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Leased Property prior to the date on which such sums
become delinquent. Tenant will deliver to Landlord, upon request, receipts
for payment or other evidence satisfactory to Landlord that the Taxes and
Other Charges have been so paid (provided Tenant shall not be required to
furnish such receipts for payment of Taxes in the event such Taxes have
been (or were to have been) paid by Landlord's Lender pursuant to
Landlord's Loan Documents). Subject to the provisions of Section
6.1(b)(ii) and other than Permitted Encumbrances, Tenant shall not suffer
and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Leased
Property, and shall promptly pay for all utility services provided to the
Leased Property. Subject to Section 6.1(b)(ii), Tenant shall pay, bond or
otherwise discharge, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers and others that, if
unpaid, might result in, or permit the creation of, a lien or encumbrance
on any Leased Property, or on the rents arising therefrom.
(ii) After prior written notice to Landlord, Tenant, at its own
expense, may contest by appropriate legal, administrative or other
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges or Lien therefor or any Legal Requirement or
Insurance Requirement or the application of any instrument of record
affecting the Leased Property (other than this Lease or Landlord's Loan
Documents) or any claims or judgments of mechanics,
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materialmen, suppliers, vendors or other Persons or any Lien therefor, and
may withhold payment of the same pending such proceedings if permitted by
law; provided that (A) no Event of Default has occurred and remains
uncured, except for an Event of Default caused by the matter being
contested, (B) such proceeding shall suspend any collection of the
contested Taxes, Other Charges or Liens from the Leased Property, Tenant
or Landlord, or adequate time shall at all times remain prior to such
collection, (C) such proceeding shall be permitted under and be conducted
in accordance with the provisions of any other instrument to which Tenant
is subject and shall not constitute a default thereunder, (D) neither any
Leased Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost, (E) to the extent
not already reserved with Landlord (or Landlord's Lender) or bonded or
otherwise deposited or paid in connection with such proceedings, Tenant
shall have furnished Landlord with security (in an amount reasonably
approved by Landlord) to insure the payment of any such Taxes or Other
Charges, or the cost of the contested Legal Requirement or Insurance
Requirement or the removal of the Lien, in each case together with all
reasonably anticipated interest and penalties thereon, (F) in the case of
an Insurance Requirement, the failure of Tenant to comply therewith shall
not impair the validity of any insurance required to be maintained by
Tenant hereunder or the right to full payment of any claims thereunder,
(G) in the case of any essential or significant service with respect to
any Leased Property, any contest or failure to pay will not result in a
discontinuance of any such service, (H) in the case of any instrument of
record affecting any Leased Property or any part thereof, the contest or
failure to perform under any such instrument shall not result in the
placing of any Lien on any Leased Property or any part thereof (except if
such Lien would be removed upon completion of such proceedings and the
compliance by the parties with the terms of the resulting order, decision
or determination and the removal costs for such Lien have been escrowed
with Landlord or in the proceeding or bonded or otherwise deposited or
paid in connection with such proceedings), (I) except to the extent Tenant
has provided sufficient Eligible Collateral therefor or bonded or
otherwise deposited or paid in connection with such proceedings, neither
the failure to pay or perform any obligation which Tenant is permitted to
contest under this Section nor an adverse determination of any such
contest shall result in a material adverse effect on the utility, value or
operation of the applicable Leased Property, and (J) Tenant shall promptly
upon final determination thereof pay the amount of any such Taxes, Other
Charges or Liens, together with all costs, interest and penalties which
may be payable in connection therewith. Landlord may pay over any such
cash deposit or part thereof held by or on behalf of Landlord to the
claimant entitled thereto at any time when, in the
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judgment of Landlord, the entitlement of such claimant is finally
established, and Landlord shall otherwise remit any remaining such amounts
to Tenant. Landlord shall give Tenant written notice of any such payments
promptly following the making thereof. Subject to the foregoing, at
Tenant's timely request, Landlord shall not pay and shall not cause to be
paid from any tax or insurance escrow account that may be maintained in
connection with Landlord's Debt the contested Taxes or Other Charges being
contested.
(c) Litigation. Tenant shall give prompt written notice to Landlord of any
litigation or governmental proceedings pending or threatened in writing against
Landlord, Tenant or against or affecting the Leased Property which, if
determined adversely to Landlord, Tenant or the Leased Property, might
reasonably be expected to materially adversely affect Landlord, or Tenant's
condition (financial or otherwise) or business or the operation or value of the
Leased Property.
(d) Inspection. Tenant shall permit agents, representatives and employees
of Landlord and/or Landlord's Lender (including any servicer or special servicer
on behalf of Landlord's Lender) to inspect the Leased Property on any Business
Day at reasonable hours upon reasonable advance notice.
(e) Notice of Default. Tenant shall promptly advise Landlord of any
material adverse change in Tenant's condition (financial or otherwise) that
could reasonably be expected to materially impair the ability of Tenant to
comply with its obligations hereunder, or of the occurrence of any Default or
Event of Default under this Lease of which Tenant has knowledge.
(f) Cooperate in Legal Proceedings. Tenant shall cooperate fully with
Landlord (and with Landlord's Lender) with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the
rights of Landlord (or Landlord's Lender, as the case may be) hereunder or in
respect of the Leased Property and, in connection therewith, permit Landlord
(and Landlord's Lender, as applicable), at its election, to participate in any
such proceedings.
(g) Insurance Benefits. Tenant shall cooperate with Landlord (and
Landlord's Lender) in obtaining for Landlord (and Landlord's Lender, as
applicable) the benefits of any insurance proceeds lawfully or equitably payable
in connection with the Leased Property, and Landlord (and Landlord's Lender, as
applicable) shall be reimbursed for any out-of-pocket expenses reasonably
incurred in connection therewith (including attorneys' fees and disbursements,
and, if reasonably necessary to collect such proceeds,
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the expense of an appraisal on behalf of Landlord in case of a fire or other
casualty affecting any Leased Property) out of such insurance proceeds.
(h) Financial Reporting and Other Information.
1. Generally. Tenant will keep and maintain or will cause to be kept
and maintained on a Fiscal Year basis proper and accurate books, records and
accounts reflecting all of the financial affairs of Tenant and all items of
Operating Income, Operating Expenses and capital expenditures. Landlord and/or
Landlord's Lender shall have the right from time to time at all times during
normal business hours upon reason able notice to examine such books, records and
accounts at the office of Tenant set forth in Article XXIII or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof, at Landlord's expense, as Landlord and/or Landlord's Lender shall
desire, provided, after the occurrence of an Event of Default, Tenant shall pay
any reasonable out-of-pocket costs and expenses incurred by Landlord and/or
Landlord's Lender in any such examination and copying (or extraction).
2. Annual Reports. Tenant will use reasonable efforts to furnish to
Landlord within sixty (60) days (and in no event later than seventy-five (75)
days) following the end of each Fiscal Year of Tenant, a complete copy of
Tenant's annual financial statements, audited by an Approved Accounting Firm, in
accordance with GAAP, covering the Properties (and, to the extent prepared by
Tenant, each Property individually) for such Fiscal Year and containing balance
sheets for Tenant and statements of profit and loss for Tenant and the
Properties in such detail as Landlord may reasonably request. Tenant's annual
financial statements shall be accompanied by a certificate signed by an
authorized officer of tenant certifying that such annual financial statement
presents fairly, in all material respects, the financial condition of the
Properties and has been prepared in accordance with GAAP. Together with Tenant's
annual financial statements, Tenant shall furnish to Landlord (A) a certificate
signed by an authorized officer of the Tenant certifying as of the date thereof
whether, to Tenant's knowledge, there exists a Default or Event of Default, and
if such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same, and (B)
an annual report for the most recently completed fiscal year, which report shall
contain (y) a summary of capital expenditures made by or on behalf of Tenant
with respect to each Property during such fiscal year, and (z) a description of
anticipated capital expenditures during the subsequent fiscal year. Reports with
respect to the operations of a particular Property that are delivered to
Landlord pursuant to this Section, or pursuant to any other provision in this
Lease, shall be kept
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confidential, and shall not be disclosed in any Securities Exchange Commission
or similar filings.
3. Monthly Reports. Tenant will furnish, or cause to be furnished,
to Landlord on or before the fifteenth (15th) day after the end of each calendar
month, a monthly operating statement, including a comparison of the actual
income, expense and net cash flow to the Annual Budget. The reports delivered to
Landlord pursuant to this Section need not include such statements or
comparisons with respect to the operations of individual Properties.
4. Quarterly Reports. Tenant will furnish, or cause to be furnished,
to Landlord on or before the fifteenth (15th) day after the end of each calendar
quarter, the following items, accompanied by a certificate signed by an
authorized officer of Tenant, certifying that such items are true, correct,
accurate and complete, in all material respects, and fairly present, in all
material respects, the financial condition and results of the operations of
Tenant and the Properties (and, to the extent prepared by Tenant, each Property
individually) in a manner consistent with GAAP (subject to normal year-end
adjustments): (y) quarterly and year-to-date statements prepared for such
calendar quarter with respect to Tenant, including a comparison of the actual
income, expense and net cash flow to the Annual Budget, together with a balance
sheet for such quarter and (z) a summary of capital expenditures made by or on
behalf of Tenant with respect to each Property during such calendar quarter. To
the extent that such reports are available and in final form prior to the date
set forth above, Tenant shall use good faith efforts to deliver such statements
to Landlord within forty (40) days after the end of the applicable calendar
quarter. Reports with respect to the operations of a particular Property that
are delivered to Landlord pursuant to this Section, or pursuant to any other
provision in this Lease, shall be kept confidential, and shall not be disclosed
in any Securities Exchange Commission or similar filings
5. Supplemental Information. Tenant shall furnish to Landlord,
within seven (7) days after request, such further detailed information with
respect to the operation of the Properties (or any of them) and the financial
affairs of Tenant as may be reasonably requested by Landlord.
6. Governmental Notices. Tenant shall furnish to Landlord, promptly
after receipt, a copy of any notice received by or on behalf of Tenant from any
Governmental Authority having jurisdiction over any Property with respect to any
material violation of Legal Requirements or any condition existing or alleged to
exist or emanate therefrom or thereat involving Hazardous Substances.
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7. Landlord's Lender. Tenant agrees to furnish to Landlord, at such
time as may be required pursuant to any Landlord's Loan Documents or as may
reasonably be requested by Landlord, such financial reports (including annual
and quarterly financial statements and monthly operating statements, including a
comparison of the actual income, expense and Net Cash Flow to the Annual
Budget), and other information relating in each case to Tenant or the Leased
Properties as may reasonably be requested by Landlord.
8. Annual Budget. Tenant shall prepare and deliver to Landlord, for
Landlord's approval, which approval shall not be unreasonably withheld or
delayed, forty-five (45) days prior to the commencement of each year, a proposed
Annual Budget in respect of the Leased Property (and, to the extent otherwise
prepared by Tenant, each Leased Property individually) for the ensuing Fiscal
Year.
(i) Business and Operations. Tenant will continue to engage in the
businesses currently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management, subleasing and operation of the
Leased Property. Tenant will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the conduct of its business (including the operation and management
of the Leased Property as refrigerated warehousing facilities and related uses).
(j) Intentionally Omitted.
(k) Intentionally Omitted.
(l) Material Agreements. Tenant shall:
(i) promptly perform and/or observe all of the material covenants
and agreements required to be performed and observed by it under any
Material Agreement, and do all things necessary to preserve and to keep
unimpaired its material rights thereunder;
(ii) promptly notify Landlord of the giving of any notice of any
material default by any party under any Material Agreement of which it is
aware; and
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(iii) promptly enforce the performance and observance of all of the
material covenants and agreements required to be performed and/or observed
by the other party under each Material Agreement.
(m) Ground Leased Property. With respect to the Ground Leased Property,
Tenant shall observe and perform all of the obligations of Landlord under each
Ground Lease.
ARTICLE VII
NEGATIVE COVENANTS
7.1 Tenant's Negative Covenants. Tenant covenants and agrees with Landlord
that it will not do, directly or indirectly, any of the following:
(a) Operation of Property. Tenant shall not, without Landlord's prior
consent, which consent shall not be unreasonably withheld or delayed (except as
elsewhere herein expressly provided): (i) surrender or terminate any Material
Agreement (unless the other party thereto is in material default and the
termination of such agreement would be commercially reasonable), (ii) increase
or consent to the increase of the amount of any charges payable by Tenant or
Landlord under any Material Agreement, except as provided therein or on an
arms'-length basis and commercially reasonable terms; or (iii) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under any Material Agreement in any material respect that is materially
adverse to the interests of Landlord, except on an arms'-length basis and
commercially reasonable terms.
(b) Liens. Subject to Section 6.1(b)(ii), Tenant shall not, without the
prior written consent of Landlord, create, incur, assume, permit or suffer to
exist any Lien on any portion of the Leased Property (or any of them), except
(i) Permitted Encumbrances, (ii) Liens created by or permitted pursuant to
Landlord's Loan Documents and (iii) Liens for Taxes or Other Charges not yet
delinquent.
(c) Affiliate Transactions. Tenant shall not enter into, or be a party to,
any transaction with an Affiliate of Tenant except in the ordinary course of
business and on terms which are fully disclosed to Landlord in advance and are
no less favorable to Tenant or such Affiliate than would be obtained in a
comparable arms'-length transaction with an unrelated third party.
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(d) Zoning and Uses. Tenant shall not (i) initiate or support any limiting
change in the permitted uses of any Leased Property (or to the extent
applicable, limiting zoning reclassification of any Leased Property), (ii) seek
any variance under existing land use restrictions, laws, rules or regulations
(or, to the extent applicable, zoning ordinances) applicable to any Leased
Property or use or permit the use of any Leased Property in each case in a
manner that would result in the existing use becoming a non-conforming use under
applicable land-use restrictions (and, if any, zoning ordinances) with any
materially adverse effect on the value of the Leased Property or that would
violate the terms of any Lease, Operating Agreement, Legal Requirements or any
Permitted Encumbrance, (iii) modify, amend or supplement any of the terms of any
Permitted Encumbrance in a manner adverse in any material respect to the
interests of Landlord, (iv) impose or permit or suffer the imposition of any
restrictive covenants, easements or encumbrances upon the Leased Property in any
manner that adversely affects in any material respect the value or utility of
the Leased Property, (v) execute or file any subdivision plat affecting any
Leased Property, institute, or permit the institution of, proceedings to alter
any tax lot comprising any Leased Property or (vi) permit or suffer any Leased
Property to be used by the public or any Person in such manner as might make
possible a claim of adverse usage or possession or of any implied dedication or
easement.
(e) Nonexempt ERISA Transactions. Tenant shall not engage in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Tenant, or in any transaction that would cause
any obligation or action taken or to be taken hereunder (or the exercise by
Landlord's Lender of any of its rights under the Lender's Loan Documents (if
applicable)) to be a non-exempt prohibited transaction under ERISA.
ARTICLE VIII
ALTERATIONS; LEASING
8.1 Alterations. Tenant will not make any demolition, alteration,
installation, improvement, expansion, reduction or decoration (each, an
"Alteration") of or to any Leased Property or any part thereof, except in
accordance with the following terms and conditions:
(a) The Alteration shall be undertaken in accordance with the applicable
provisions of this Lease, Landlord's Loan Documents, the Operating Agreements,
the Leases and all Legal Requirements.
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(b) No Event of Default shall have occurred and be continuing and no
Default shall occur as a result of such action.
(c) The Alteration shall not materially adversely affect the (i) Primary
Intended Use or (ii) fair market value of the Leased Property in question.
(d) A Material Alteration shall be conducted under the supervision of a
Qualified Architect or Engineer and shall not be undertaken until ten (10)
Business Days after there shall have been delivered to Landlord, for information
purposes only and not for approval by Landlord, detailed plans and
specifications and cost estimates therefor, prepared and approved in writing by
such Qualified Architect or Engineer. Such plans and specifications may be
revised at any time and from time to time, provided that material revisions of
such plans and specifications shall be delivered to Landlord for information
purposes only.
(e) Other than in connection with any Restoration, the Alteration may not,
in and of itself, either during the Alteration or upon completion, materially
adversely affect the Receipts derived from the Leased Property in question,
taking into account the Percentage Rent requirements hereunder; provided that
if, as reasonably determined by Landlord, such Alteration would materially
adversely affect the Net Operating Income at such Leased Property (taking into
account any amount then in any reserve account funded pursuant to any Cash
Management Procedures and permitted to be used in connection with such Material
Alteration), then in order to proceed with the Alteration, Tenant shall deliver
to a Depositary Eligible Collateral in the total amount of the estimated
reduction in Net Operating Income resulting from the Alteration, which Eligible
Collateral shall be returned to Tenant after substantial completion of the
Alteration if the reduction in Net Operating Income has been restored and no
Event of Default has occurred and is continuing.
(f) All work done in connection with any Alteration shall be performed
with due diligence in a good and workmanlike manner, all materials used in
connection with any Alteration shall be not less than the standard of quality of
the materials generally used at the applicable Leased Property as of the date
hereof (or, if greater, the then-current customary quality in the submarket in
which such Leased Property is located) and all work shall be performed and all
materials used in accordance with all applicable Legal Requirements and
Insurance Requirements.
(g) The cost of any Alteration shall be promptly and fully paid for by
Tenant, subject to the next succeeding sentence. No payment made prior to the
Final Completion
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of an Alteration or Restoration to any contractor, subcontractor, materialman,
supplier, engineer, architect, project manager or other Person who renders
services or furnishes materials in connection with such Alteration shall exceed
ninety five percent (95%) of the value of the work performed from time to time
and materials furnished and incorporated into the Improvements.
(h) All items (other than Eligible Collateral) to be delivered to the
Depositary hereunder shall also be delivered to Landlord (if Landlord is not the
Depositary), and, if required under Section 15.5, Landlord's Lender (if
Landlord's Lender is not the Depositary).
(i) For any Material Alteration (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner), Tenant shall be obligated to deliver to a Depositary Eligible
Collateral in an amount that, when taken together with any amount then in any
reserve account funded pursuant to any Cash Management Procedures and permitted
to be used in connection with such Material Alteration, shall be sufficient to
pay all of the costs of the Material Alteration in excess of the Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant as such work progresses in accordance with Section 8.1(j). In
addition, if all Material Alterations (other than a Material Alteration the cost
of which one or more Subtenants are obligated to pay for or reimburse to Tenant
and which Tenant reasonably believes will be so paid or reimbursed in a timely
manner) then being performed exceeds $10,000,000 (the "Aggregate Threshold
Amount"), Tenant shall be obligated to deliver to the Depositary Eligible
Collateral in amount that, when taken together with (x) any Eligible Collateral
previously delivered under this subsection (i) and (y) any amounts then in any
reserve funded pursuant to any Cash Management Procedures and permitted to be
used in connection with such Material Alteration, shall be sufficient to pay all
of the costs of the Material Alteration in excess of the Aggregate Threshold
Amount, which Eligible Collateral shall be held by the Depositary and released
to Tenant at such time as the remaining costs of the Material Alteration are
less than the Aggregate Threshold Amount.
(j) With respect to any Material Alteration as to which Tenant shall have
delivered Eligible Collateral in accordance with Section 8.1(i):
(i) Tenant shall deliver to the Depositary a schedule (which shall
be concurred in by the Qualified Architect or Engineer) setting forth the
projected stages of completion of such Alteration(s) and the corresponding
amounts
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expected to be due and payable by or on behalf of Tenant in connection
with such completion, such schedule to be updated quarterly by Tenant (and
concurred with by a Qualified Architect or Engineer) during the
performance of such Alteration(s).
(ii) Any Eligible Collateral that Tenant delivers to the Depositary
pursuant hereto (and the proceeds of any such Eligible Collateral) shall
be invested (to the extent such Eligible Collateral can be invested) by
the Depositary in Permitted Investments for a period of time consistent
with the date on which Tenant notifies the Depositary that Tenant expects
to request a release of such Eligible Collateral in accordance with the
next succeeding sentence. From time to time as the Alteration progresses,
the amount of any Eligible Collateral so furnished may, upon the written
request of Tenant to the Depositary, be withdrawn by Tenant and paid or
otherwise applied by or returned to Tenant in an amount equal to the
amount Tenant would be entitled to so withdraw if Section 10.2(d) hereof
were applicable, and any Eligible Collateral so furnished which is a
Credit Facility may be reduced by Tenant in an amount equal to the amount
Tenant would be entitled to so reduce if Section 10.2(d) hereof were
applicable, subject, in each case, to the satisfaction of the conditions
precedent to withdrawal of funds or reduction of the Credit Facility set
forth in said Section 10.2(d). In connection with the above-described
quarterly update of the projected stages of completion of the Material
Alteration (as concurred with by an Qualified Architect or Engineer),
Tenant shall increase (or be permitted to decrease, as applicable) the
Eligible Collateral then deposited with the Depositary as necessary to
comply with Section 8.1(i) hereof.
(iii) At any time after final completion of such Alterations, the
whole balance of any Cash deposited with the Depositary pursuant to
Section 8.1(j) then remaining on deposit may be withdrawn by Tenant and
shall be paid by the Depositary to Tenant, and any Eligible Collateral so
deposited shall, to the extent it has not been called upon, reduced or
theretofore released, be released by the Depositary to Tenant, within ten
(10) days after receipt by the Depositary of an application for such
withdrawal and/or release together with an Officer's Certificate, and as
to the following clauses (A) and (B) of this clause also a certificate of
the Qualified Architect or Engineer, setting forth in substance as
follows:
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(A) that such Alteration(s) has been completed substantially
in accordance with any plans and specifications therefor previously
filed with Landlord under Section 8.1(d) hereof;
(B) that, to the knowledge of the certifying Person, (x) such
Alteration(s) has been completed in compliance, in all material
respects, with all Legal Requirements, and (y) to the extent
required for the legal use or occupancy of the portion of the Leased
Property affected by such Alteration(s), Tenant has obtained a
temporary or permanent certificate of occupancy (or similar
certificate) or, if no such certificate is required, a statement to
that effect;
(C) that to the knowledge of the certifying Person, all
amounts that Tenant is or may become liable to pay in respect of
such Alteration(s) through the date of the certification have been
paid in full or adequately provided for and, to the extent that such
are customary and reasonably obtainable by prudent property owners
in the area where the Leased Property is located, that Lien waivers
have been obtained from the general contractor and major
subcontractors performing such Alteration or, at its sole cost and
expense, Tenant shall cause a nationally recognized title insurance
company to deliver to Landlord either (x) an endorsement or other
affirmative coverage with respect to the then-current loan policy in
favor of Landlord's Lender, updating such policy and insuring over
such Liens without further exceptions to such policy other than
Permitted Encumbrances, or (y) owner's and loan title insurance
policies, in such form, in such amounts and with such endorsements
as shall be reasonably satisfactory to Landlord and Landlord's
Lender, which policies shall be dated the date of completion of the
Material Alteration and shall contain no exceptions other than
Permitted Encumbrances; and
(D) that to the knowledge of the certifying Person, no Event
of Default has occurred and is continuing;
provided that if, for any reason, Tenant is unable to deliver the
certification required by clause (C) above with respect to any costs or
expenses relating to the Alteration, then, assuming Tenant is able to
satisfy each of the other requirements set forth in clauses (A), (B), (C)
and (D) above, Tenant shall be entitled to the release of the difference
between the whole balance of such Eligible Collateral and the total of all
costs and expenses to which Tenant is unable to certify.
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8.2 Subletting and Assignment; Warehouse Agreements.
8.2.1 Generally. Except as expressly provided herein, Tenant shall
not, without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion, assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer this Lease or sublease all or any part of the Leased Property
or suffer or permit this Lease or the leasehold estate created hereby or thereby
or any other rights arising under this Lease to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily or involuntarily or by operation of law, or permit the use or
occupancy of the applicable Leased Property to be offered or advertised for
assignment or subletting except as hereinafter provided. For purpose of this
Section 8.2, an assignment of this Lease shall be deemed to include any change
in control of Tenant, as if such change in control or transaction were an
assignment of this Lease.
8.2.2 Certain Sublettings and Assignments. Subject to the provisions
of Section 8.2.3 and any other express conditions or limitations set forth
herein,
(a) without the consent of Landlord, Tenant may (i) assign
this Lease (in whole but not in part) to any of its Affiliates and (ii)
sublet all or any part of the Leased Property to any Affiliates; provided,
in each case, that after giving effect to such assignment or sublease, the
Leased Properties shall continue at all times to be operated and managed
by substantially the same individuals responsible for the same immediately
prior to the applicable assignment or sublease; and
(b) without the consent of Landlord, Tenant may sublet all or
any part of any one or more Leased Property (i) in the normal course of
the Primary Intended Use and (ii) to concessionaires or other third party
users or operators of portions of the Leased Property in furtherance of
the Primary Intended Use.
8.2.3 Landlord's Right to Collect from Assignees and Subtenants. If
this Lease is assigned or if the applicable Leased Property or any part thereof
is sublet (or occupied by any entity other than Tenant and its employees),
Landlord, after an Event of Default occurs and so long as it is continuing, may
collect the rents from such assignee, Subtenant or occupant, as the case may be,
and apply the net amount collected to the Rent herein reserved, but no such
collection shall be deemed (i) a waiver of the provisions set forth in Section
8.2.1, (ii) the acceptance by Landlord of such assignee, Subtenant or
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occupant, as the case may be, as a tenant or (iii) release of Tenant from the
future performance of its covenants, agreements or obligations contained in this
Lease.
8.2.4 No Release. No subletting or assignment shall in any way
impair the continuing primary liability hereunder of the Tenant named herein, as
well as of each subsequent Tenant, and no consent to any subletting or
assignment in any particular instance shall be deemed a waiver of the
prohibition set forth in this Section 8.2. No assignment, subletting or
occupancy shall affect the obligation to use the Leased Property in accordance
with Section 6.1(a)(ii). Any subletting, assignment or other transfer of
Tenant's interest in this Lease in contravention of this Section 8.2 shall be
void at Landlord's option.
8.2.5 Required Assignment and Subletting Provisions. Any assignment
and/or Sublease must provide that:
(a) it shall be subject and subordinate to all of the terms
and conditions of this Lease,
(b) the use of the applicable Leased Property shall be
restricted to the uses and purposes expressly permitted by this Lease and
shall not conflict with any Legal Requirement, Insurance Requirement or
any other provision of this Lease,
(c) no Subtenant or assignee shall be permitted to further
sublet all or any part of the applicable Leased Property or assign this
Lease or its sublease except as expressly provided in this Lease,
(d) in the event of cancellation or termination of this Lease
for any reason whatsoever or of the surrender of this Lease (whether
voluntary, involuntary or by operation of law) prior to the expiration
date of such Sublease, including extensions and renewals granted
thereunder, then, at Landlord's option, the Subtenant shall make full and
complete attornment to Landlord for the balance of the term of the
Sublease, which attornment shall be evidenced by an agreement in form and
substance satisfactory to Landlord and which the Subtenant shall execute
and deliver within five (5) days after request by Landlord and the
Subtenant shall waive the provisions of any law now or hereafter in effect
which may give the Subtenant any right of election to terminate the
Sublease or to surrender possession in the event any proceeding is brought
by Landlord to terminate this Lease, and
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(e) in the event the Subtenant receives a written notice from
Landlord stating that Tenant is in Default under this Lease, the Subtenant
shall thereafter be obligated to pay all rentals accruing under said
sublease directly to Landlord or as such party may direct; all rentals
received from the Subtenant by Landlord shall be credited against the
amounts owing by Tenant under this Lease.
8.2.6 Reimbursement of Landlord's Costs. Tenant shall pay to
Landlord, within ten (10) business days after request therefore, all costs and
expenses, including reasonable attorneys' fees, incurred by Landlord (including,
to the extent Landlord is liable for the same, by Landlord's Lender) in
connection with any request made by Tenant to Landlord to assign this Lease or
sublet the applicable Leased Property.
8.2.7 Warehouse Agreements. The above provisions of this Section 8.2
shall not be applicable to Warehouse Agreements, provided that Tenant shall use
commercially reasonable efforts to include in any Warehouse Agreement entered
into from and after the date hereof that the other party thereto shall permit
the collateral assignment described in Section 8.4 hereof, and the collateral
assignment by Landlord to Landlord's Lender of Landlord's security interests in
respect of each Sublease and Warehouse Agreement and such amounts to secure
Landlord's obligations under Landlord's Loan Documents.
8.2.8 Certain Leases Senior. With respect to those leases listed on
Exhibit 8.2.8, hereto, the parties acknowledge that Landlord is, as of the
Commencement Date, the lessor thereunder (whether by operation of law or
otherwise) and that such leases are, by operation of law, senior to this Lease.
Tenant shall perform and comply with all obligations of lessor under such leases
and, provided no Event of Default shall have occurred and be continuing, Tenant
shall be entitled to the receipt of all amounts payable by the lessees under
such leases.
8.3 REIT Related Limitations on Subleasing and Warehouse Agreement.
Anything contained in this Lease to the contrary notwithstanding, Tenant shall
not sublet the Leased Property, or enter into Warehouse Agreements, on any basis
such that (i) the rental or other consideration to be paid by the Subtenant or
other party thereunder would be based, in whole or in part, on the income or
profits derived by the business activities of the Subtenant or such other Party,
or (ii) any portion of the amounts received or accrued by Landlord hereunder
would fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto.
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8.4 Collateral Assignment of Subleases and Warehouse Agreements to
Landlord. As security for Tenant's obligations under this Lease and not
otherwise, but subject to any limitations pursuant to applicable law or
contracts (including the terms of any existing or future Subleases and Warehouse
Agreements), Tenant hereby assigns, transfers and sets over unto Landlord all of
Tenant's right, title and interest in and to all Subleases and Warehouse
Agreements, and Tenant hereby confers upon Landlord, its agents and
representatives, a right of entry in, and sufficient possession of, the Leased
Property to permit and assure the collection by Landlord of all sums payable to
Tenant, if any, under the Subleases and all sums payable to Tenant pursuant to
the Warehouse Agreements. The exercise of this right of entry and qualified
possession by Landlord shall not constitute an eviction of Tenant from the
Leased Property. Further, Tenant acknowledges that Landlord may collaterally
assign its rights under this Section 8.4 to Landlord's Lender, to secure
Landlord's obligations in respect of Landlord's Debt. This assignment, although
presently effective, is operative only upon the occurrence of an Event of
Default hereunder and not before. Nothing in this Section 8.4, however, shall be
deemed to limit or qualify the rights of any Leasehold Mortgagee pursuant to
Section 8.5 below.
8.5 Leasehold Mortgages.
8.5.1 Landlord's Estate. No Leasehold Mortgage or any extension
thereof made by Tenant shall be a lien or encumbrance upon the estate or
interest of Landlord in and to the Leased Property or any part thereof.
8.5.2 Certain Leasehold Mortgage Requirements. No Leasehold Mortgage
shall be valid or of any force or effect, or be deemed for purposes of this
Lease to be a Leasehold Mortgage, unless and until (a) a true copy of the
original of each instrument creating and effecting such Leasehold Mortgage,
certified by the Leasehold Mortgagee to be a true copy of such instrument, and
written notice containing the name and post office address of the Leasehold
Mortgagee, shall have been delivered to Landlord, (b) any consent required
hereunder by Landlord shall have been given, and (c) the Leasehold Mortgage
shall contain in substance the following provisions:
"This mortgage is executed upon the condition that no purchaser at
any foreclosure sale or assignee under an assignment in lieu of
foreclosure shall acquire any right, title or interest in or to the
lease hereby mortgaged, unless the said purchaser or assignee, or
the person, firm or corporation to whom or to which such purchaser's
or assignee's right has been assigned, shall in the instrument
transferring to such purchaser or to such assignee
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the interest of tenant under the lease hereby mortgaged, assume and
agree to perform all of the terms, covenants and conditions of that
lease thereafter to be observed or performed on the part of such
tenant (subject to the terms of Section 8.5.3(d) and/or Section
8.5.6 thereof, to the extent applicable), that no further or
additional mortgage or assignment of the lease hereby mortgaged
shall be made except in accordance with the provisions contained in
Article VIII of that lease, and that a duplicate original of said
instrument containing such assumption agreement, duly executed and
acknowledged by such purchaser or such assignee and in recordable
form, shall be delivered to the landlord under the hereby mortgaged
lease immediately after the consummation of such sale, or in any
event, prior to taking possession of the premises demised thereby as
"Tenant" under the lease."
8.5.3 Leasehold Mortgagee Provisions.
(a) If Tenant shall enter into a Leasehold Mortgage and complies, in
connection therewith, with the provisions of Section 8.5.1 and 8.5.2, Landlord
shall give to such Leasehold Mortgagee, at the address of such Leasehold
Mortgagee set forth in the notice mentioned in Section 8.5.2, a copy of each
notice of Default by Tenant and each notice of termination of this Lease at the
same time as, and whenever, any such notice of Default or termination shall be
given to Tenant, and no such notice shall be deemed to have been duly given to
Tenant unless and until a copy thereof shall have been so given to each such
Leasehold Mortgagee. Each Leasehold Mortgagee (i) shall thereupon have a period
of ten (10) days more in the case of a monetary Default and twenty (20) days
more in the case of any non-monetary Default, after notice of such Default is
given to the Leasehold Mortgagee, for curing the Default, or causing the same to
be cured by Tenant or otherwise, than is given Tenant after such notice is given
to Tenant, and (ii) shall, within such period and otherwise as herein provided,
have the right to cure such Default, cause the same to be cured by Tenant or
otherwise. Landlord shall accept performance by a Leasehold Mortgagee of any
covenant, condition, or agreement on Tenant's part to be performed hereunder
with the same force and effect as though performed by Tenant.
(b) Notwithstanding the provisions of Section 8.5.3(a) hereof, no
Event of Default shall be deemed to exist as long as a Leasehold Mortgagee, in
good faith, (i) shall have commenced promptly to cure the Default in question
and prosecutes the same to completion with reasonable diligence and continuity,
subject to Unavoidable Delays, which for the purpose of this Section 8.5.3(b)
shall include causes beyond the control of such Leasehold Mortgagee instead of
causes beyond the control of Tenant, or
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(ii) if possession of the Leased Property is required in order to cure the
Default in question, such Leasehold Mortgagee (x) shall have entered into
possession of the Leased Property with the permission of Tenant for such purpose
or (y) shall have notified Landlord of its intention to institute foreclosure
proceedings to obtain possession directly or through a receiver, and within
fourteen (14) days of the giving of such notice commenced such foreclosure
proceedings and thereafter (1) prosecutes such proceedings with reasonable
diligence and continuity (subject to Unavoidable Delays) or (2) receives an
assignment of this Lease in lieu of foreclosure from Tenant, and, upon obtaining
possession pursuant to clause (x) or (y), commences promptly to cure the Default
in question and prosecutes the same to completion with reasonable diligence and
continuity (subject to Unavoidable Delays) or (iii) if the Leasehold Mortgagee
is a collateral assignee or the holder of a security interest in ownership
interests in Tenant and the foreclosure of its collateral assignment or security
interest is required in order to act under (i) or (ii) above, such Leasehold
Mortgagee shall have notified Landlord of its intention to institute proceedings
to foreclose such collateral assignment or pledge and within fourteen (14) days
of the giving of such notice commences such foreclosure proceedings, and
thereafter (1) prosecutes such proceedings with reasonable diligence and
continuity (subject to Unavoidable Delays) or (2) receives a direct and absolute
assignment from the assignor under the collateral assignment of its interest in
the Leasehold Mortgage or of the ownership interest, in lieu of foreclosure, and
upon the completion of such foreclosure, or the obtaining of such assignment,
commences promptly to act under (i) or (ii) above; provided that the Leasehold
Mortgagee shall have delivered to Landlord, in writing, its agreement to take
the action described in clause (i), (ii) or (iii) herein and shall have assumed
the obligation to cure the Default in question and that during the period in
which such action is being taken (and any foreclosure proceedings are pending),
all of the other obligations of Tenant under this Lease, to the extent they are
susceptible of being performed by the Leasehold Mortgagee, are being duly
performed within any applicable grace periods. However, at any time after the
delivery of the aforementioned agreement, the Leasehold Mortgagee may notify
Landlord, in writing, that it has relinquished possession of the Leased Property
or that it will not institute foreclosure proceedings, or if such proceedings
have been commenced, that it has discontinued them, and in such event, the
Leasehold Mortgagee shall have no further liability under such agreement from
and after the date it delivers such notice to Landlord (except for any
obligations assumed by the Leasehold Mortgagee and accruing prior to the date it
delivers such notice), and, thereupon, Landlord shall have the unrestricted
right to terminate this Lease and to take any other action it deems appropriate
by reason of any Default by Tenant, and upon any such termination the provisions
of Section 8.5.4 shall apply. Anything contained in this Section 8.5.3(b) to the
contrary notwithstanding, the provisions of this Section 8.5.3(b) shall not
apply in the case of a Leasehold Mortgagee which is not an Institutional Lender
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unless such Leasehold Mortgagee shall provide Landlord with security for the
performance of the assumed obligation in amount and form reasonably satisfactory
to Landlord, during the period that such Leasehold Mortgagee is taking the
required action to cure the Default in question.
(c) Landlord and Tenant agree that, from and after the date upon
which Landlord receives the notice and documents mentioned in clause (a) of
Section 8.5.2, they shall not modify or amend this Lease in any respect
materially adverse to the right of Tenant or Leasehold Mortgagee or cancel or
terminate this Lease other than as provided herein without the prior written
consent of the Leasehold Mortgagees which have given such notice.
(d) Except as provided in Section 8.5.3(b), no Leasehold Mortgagee
shall become liable under the provisions of this Lease unless and until such
time as it becomes, and then only for as long as it remains, the owner of the
leasehold estate created hereby.
8.5.4 Leasehold Mortgagee's Rights upon Termination of this Lease.
(a) In case of termination of this Lease by reason of any Event of
Default or for any other reason, Landlord, subject to the provisions of Section
8.5.4(e), shall give prompt notice thereof to each Leasehold Mortgagee under a
mortgage made in compliance with the provisions of Sections 8.5.1 and 8.5.2,
which notice shall be given as provided in Section 8.5.3(a) hereof. Landlord, on
written request of such Leasehold Mortgagee made any time within thirty (30)
days after the giving of such notice by Landlord, shall execute and deliver
within thirty (30) days thereafter a new lease of the Leased Property to the
Leasehold Mortgagee, or its designee or nominee, for the remainder of the Term,
upon all the covenants, conditions, limitations and agreements herein contained,
provided that the Leasehold Mortgagee (i) shall pay to Landlord, simultaneously
with the delivery of such new lease, all unpaid Rent due under this Lease up to
and including the date of the commencement of the term of such new lease and all
expenses including attorneys' fees and disbursements and court costs, incurred
by Landlord in connection with the Default by Tenant, the termination of this
Lease and the preparation of the new lease, and (ii) shall deliver to Landlord a
statement, in writing, acknowledging that Landlord, by entering into a new lease
with the Leasehold Mortgagee or its nominee or designee, shall not have or be
deemed to have waived any rights or remedies with respect to Defaults existing
under this Lease, notwithstanding that any such Defaults existed prior to the
execution of the new lease, and that the breached obligations which gave rise to
the Defaults and which are susceptible of being cured by
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the Leasehold Mortgagee or its nominee or designee are also obligations under
said new lease, but such statement shall be subject to the proviso that the
applicable grace periods, if any, provided under the new lease for curing such
obligations shall begin to run as of the first day of the term of said new
lease.
(b) Any such new lease and the leasehold estate thereby created
shall, subject to the same conditions contained in this Lease, continue to
maintain the same priority as this Lease with regard to any Leasehold Mortgage
or any other lien, charge or encumbrance whether or not the same shall then be
in existence. Concurrently with the execution and delivery of such new lease,
Landlord shall assign to the tenant named therein all of its right, title and
interest in and to moneys received from any Subleases and Warehouse Agreements
that have not been applied to Rent and have not been applied or being held for
application to the costs incurred by Landlord to operate, maintain and repair
the Leased Property.
(c) Upon the execution and delivery of a new lease under this
Section 8.5.4, all Subleases and Warehouse Agreements which theretofore may have
been assigned to Landlord thereupon shall be assigned and transferred, without
recourse, representation or warranty, by Landlord to the tenant named in such
new lease. Between the date of termination of this Lease and the earlier of (i)
the date of execution and delivery of the new lease and (ii) the date of
Leasehold Mortgagee's option to request a new lease pursuant to this Section
8.5.4 expires without the exercise of such option, Landlord shall not enter into
any new Subleases or Warehouse Agreements, cancel or modify any then existing
Subleases or Warehouse Agreements, or accept any cancellation, termination or
surrender thereof (unless such termination shall be effected as a matter of law
on the termination of this Lease) without the written consent of the Leasehold
Mortgagee, except as permitted in the Subleases or Warehouse Agreements.
(d) If there is more than one Leasehold Mortgage, Landlord shall
recognize the Leasehold Mortgagee whose Leasehold Mortgage is junior in lien as
the Leasehold Mortgagee entitled to the rights afforded by Sections 8.5.3, 8.5.4
and 8.5.5 (unless a Leasehold Mortgagee senior in lien requires that the holder
thereof have a superior entitlement to such rights, in which event such
recognition shall be of the holder of that Leasehold Mortgage), provided that
such Leasehold Mortgagee shall have complied with the provision of Sections
8.5.1 and 8.5.2. A security agreement providing for a security interest in the
ownership interests in Tenant and otherwise complying with the terms hereof for
a Leasehold Mortgage shall be treated as a Leasehold Mortgage that is junior in
lien.
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8.5.5 Notice of Arbitration. In any circumstances where arbitration
is provided for under this Lease, Landlord agrees that Landlord shall give any
Leasehold Mortgagee who shall have given Landlord a notice as provided in
Section 8.5.2(a), notice of any demand by Landlord for any arbitration, and
Landlord shall recognize the Leasehold Mortgagee entitled to the rights afforded
hereunder in accordance with Section 8.5.4(d) as the only proper party to
participate in the arbitration. In such case, Tenant agrees not to participate
in such arbitration.
ARTICLE IX
9.1 Maintenance and Repair.
(a) Subject to Landlord's obligation under Section 9.1(b), Tenant,
at its expense, shall keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto and which are under Tenant's control
(and Tenant's Personal Property) in good order and repair, reasonable wear and
tear excepted (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of such Leased Property or
Tenant's Personal Property, or any portion of either) and shall promptly make
all necessary and appropriate repairs and replacements thereto, of every kind
and nature, whether interior or exterior, structural or non-structural, ordinary
or extraordinary, foreseen or unforeseen, arising by reason of a condition
(concealed or otherwise) occurring subsequent or prior to the Commencement Date.
All repairs shall, to the extent reasonably achievable, be made in good,
workmanlike and first-class manner, in accordance with all applicable federal,
state and local statutes, ordinances, by-laws, codes, rules and regulations
relating to such work. Tenant will not take or omit to take any action the
taking or omission of which might materially impair the value or usefulness of
the Leased Property or any part thereof for the Primary Intended Use.
(b) Notwithstanding anything herein to the contrary, Landlord shall
promptly make all necessary and appropriate repairs and replacements to the
Leased Property (other than those repairs and replacements (i) caused by the
negligence or wilfull misconduct of Tenant or any Person claiming by, through or
under Tenant or (ii) required as a result of Casualty or Condemnation to the
Leased Property) the costs of which are required to be depreciated under the
Internal Revenue Code on a 39-year basis (or any successor period of
depreciation for buildings) ("39-Year Property") in an amount not in excess of
the amount specified on Schedule 9.1(b) hereto under the column captioned
"Landlord's Responsibility," provided (x) Landlord's obligation pursuant to the
above terms of the sentence shall be subject to prior reasonable notice from
Tenant as to the
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need to make such repair and replacement, and (y) Landlord may elect that Tenant
perform such repair and replacement, in which event, Landlord shall reimburse or
pay to Tenant, within fifteen (15) days after Tenant's submission to Landlord of
reasonable evidence of the out-of-pocket costs incurred by Tenant in making such
repairs and replacements. Further,
(1) Tenant shall make all necessary and appropriate repairs
and replacements required in respect of 39-Year Property to the extent the
same exceed the amount specified on said Schedule 9.1(b) under the column
captioned "Landlord's Responsibility", and
(2) Tenant agrees that (A) it shall expend annually for the
repair and replacement of 39-Year Property not less than the amount
specified on Schedule 9.1(b) under the column captioned "Minimum Tenant's
Responsibility", provided that Tenant shall not be deemed to have expended
any amounts in satisfaction of the "Minimum Tenant's Responsibility"
identified on said Schedule 9.1(b) until such time as Tenant shall have
expended all amounts required to be spent by Tenant under Section 2.3 of
the Asset Purchase Agreement in connection with which this Lease is being
executed, to which Tenant (or its Affiliate) is party, (B) to the extent
Tenant shall have spent less than the specified amount in any Lease Year,
such unspent amount shall cumulate and Tenant shall be required to expend
the unspent portion in subsequent Lease Years, and (C) if at the end of
the Term, there shall be any cumulative unspent amounts, Tenant shall pay
such amount to Landlord not later than the end of the Term.
(c) Except as expressly specified in Section 9.1(b), Landlord shall
not under any circumstances be required to build or rebuild any improvements on
the Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or non-structural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, or to
maintain the Leased Property in any way, except as expressly provided herein.
Tenant hereby waives, to the extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect at the time of the
execution of this Lease or thereafter enacted.
(d) Nothing contained herein and no action or inaction by Landlord
shall be construed as (i) constituting the consent or request of Landlord,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property
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for the construction, alteration, addition, repair or demolition of or to the
Leased Property, or (ii) giving Tenant any right, power or permission to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against Landlord in respect thereof or to make any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Landlord in the
Leased Property.
(e) Tenant will, upon the expiration or prior termination of the
Term with respect to any Leased Property, vacate and surrender the same to
Landlord in the condition in which the same was originally received from
Landlord, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease and except for ordinary
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the Term). In addition, Tenant shall
not be permitted to remove any of Tenant's Personal Property from the Leased
Property unless such removal shall not damage the Leased Property in any
material respect.
9.2 Encroachments, Restrictions, etc. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other agreement affecting the Leased
Property, or shall impair the rights of others under any easement or
right-of-way to which the Leased Property is subject, then promptly upon the
request of Landlord or at the behest of any person affected by any such
encroachment, violation or impairment, Tenant shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment
and in such case, in the event of any adverse final determination, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment, whether
the same shall affect Landlord or Tenant or (ii) make such changes in the Leased
Improvements, and take such other actions, as Tenant in good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment, and to
end such violation or impairment, including, if necessary, the alteration of any
of the Leased Improvements, and in any event take all such actions as may be
necessary in order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation or encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article VIII. Tenant's obligations under this
Section 9.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under
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any policy of title or other insurance, and Tenant shall be entitled to a credit
for any sums recovered by Landlord under any such policy of title or other
insurance.
ARTICLE X
CASUALTY AND CONDEMNATION
10.1 Insurance. Tenant shall at all times keep the applicable Leased
Property, and all property located in or on the applicable Leased Property,
including Tenant's Personal Property, insured with the kinds and amounts of
insurance described below or with such other insurance as may be reasonably
requested by Landlord (taking into consideration any insurance requirements that
may be required in respect of any Landlord's Debt).
(a) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall keep all of the Leased Property insured and
obtain and maintain policies of insurance insuring against loss or damage
by standard perils included within the classification "All Risks of
Physical Loss", which policy or policies shall cover (by endorsement or
otherwise) warehouse legal liability. Such insurance (i) shall be in an
aggregate amount equal to the then full replacement cost of the Leased
Property and the Equipment (without deduction for physical depreciation)
and (ii) shall have deductibles no greater than $100,000 (as escalated by
the CPI Increase) (with such higher deductibles for wind and earthquake
coverage as the applicable issuer may require). The policies of insurance
carried in accordance with this paragraph shall be paid in accordance with
the agreed upon payment schedule incorporated into such policies and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation.
(b) Tenant, at its sole cost and expense, for the mutual benefit of
Tenant and Landlord, shall also obtain and maintain the following policies
of insurance:
(i) Flood insurance with respect a Leased Property, if any
part of such Leased Property is located in an area identified by the
Federal Emergency Management Agency as an area federally designated
a "100 year flood plain" and (A) flood insurance is generally
available at reasonable premiums and in such amount as generally
required by institutional lenders for similar properties or (B) if
not so available from a
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private carrier, from the federal government at commercially
reasonable premiums to the extent available. In either case, the
flood insurance shall be in an amount at least equal to the
Termination Amount with respect to such Leased Property or the
maximum limit of coverage available with respect to such Leased
Property under said program, whichever is less;
(ii) Commercial general liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing
minimum limits per occurrence of $1,000,000 for any policy year. In
addition, at least $25,000,000 excess and/or umbrella liability
insurance shall be obtained, and at all times at least $10,000,000
excess and/or umbrella liability insurance shall be available (such
that, at all times, such coverage shall be maintained against which
no claim shall have been asserted) and maintained for any and all
claims, including legal liability imposed upon Tenant and related
court costs and attorneys' fees generally covered by such insurance
policies; provided that if there are one or more claims in
connection with a property other than the Leased Property that
results in the amount of excess and/or umbrella liability insurance
coverage to be less than $25,000,000, Tenant shall give notice to
Landlord that such coverage has so decreased and Tenant shall cause
such coverage to be increased to $25,000,000.
(iii) Rental loss and/or business interruption insurance in an
amount sufficient to avoid any co-insurance penalty and equal to the
greater of (A) the estimated Receipts from the operation of the
Leased Property (including (x) the total payable under the Subleases
and the Warehouse Agreements, and (y) the total amount of all other
amounts to be received by Tenant or third parties that are the legal
obligation of the Subtenants), less non-continuing Operating
Expenses (i.e., Operating Expenses which were incurred in connection
with the ownership, operation and/or maintenance of the Leased
Property prior to the insured event, but which are not incurred
during the period covered by the insurance required pursuant to this
Section 10.1(b)(iii)), for a period of up to the next succeeding
eighteen (18) months, or (B) the projected Operating Expenses
(including debt service) for the maintenance and operation of the
Leased Property for a period of up to the next succeeding eighteen
(18) months as the same may be reduced or increased from time to
time due to changes in such Operating Expenses. The amount of such
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insurance shall be increased from time to time as and when the rents
increase or the estimate of (or the actual) Receipts, as may be
applicable, increases or decreases to the extent rents or the
estimates of gross revenue decrease;
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter
installed in any of the Improvements (without exclusion for
explosions) and insurance against loss of occupancy or use arising
from any breakdown, in such amounts as are generally available at
reasonable premiums and are generally required by institutional
lenders for properties comparable to the Leased Property;
(v) Worker's compensation insurance with respect to all
employees of Tenant, as and to the extent required by any
Governmental Authority or Legal Requirement;
(vi) During any period of repair or restoration costing in
excess of $5,000,000, builder's "all risk" insurance in an amount
equal to not less than the full insurable value of the related
Leased Property against such risks (including fire and extended
coverage and collapse of the Improve ments to agreed limits) as
Landlord may reasonably request, in form and substance reasonably
acceptable to Landlord;
(vii) Coverage to compensate for the cost of demolition and
the increased cost of construction for the Leased Property in an
amount satisfactory to Landlord, which amount shall not exceed
$10,000,000;
(viii) If required by Landlord's Lender, in the event any
Leased Property is located in a federal earthquake zone, earthquake
insurance with respect to such Leased Property in an amount equal to
probable maximum loss with respect to such Leased Property, with a
maximum deductible of five percent (5%) of the replacement cost of
such Leased Property; and
(ix) Such other insurance as may from time to time be
reasonably required by Landlord in order to protect its interests,
provided such insurance is generally available at commercially
reasonable premiums.
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(c) All policies of insurance (the "Policies") required pursuant to
Section 10.1 with respect to any Leased Property shall be issued by companies
licensed to do business in the state where such Leased Property is located.
Further, unless otherwise approved by Landlord in writing, the issuer(s) of the
Policies required under Section 10.1(a) for all risk coverage shall have a
claims paying ability rating of "AA" or better by Standard & Poor's and Moody's
or (unless objected to by Landlord's Lender) "A-X" or better by Best's, and (b)
Policies for all other coverage shall have a claims paying ability rating of "A"
or better by Standard & Poor's and Moody's or (unless objected to by Landlord's
Lender) "A-X" or better by Best's. The Policies (i) shall name Landlord and
Landlord's Lender (if any) and its successors and/or assigns, as their interest
may appear, as additional insureds or loss payees (except that in the case of
general liability insurance, Landlord and Landlord's Lender shall be named as
additional insureds and not a loss payee); (ii) shall contain, for the benefit
of Landlord's Lender, a Non-Contributory Standard Lender Clause and, except with
respect to general liability insurance, a Lender's Loss Payable Endorsement, or
their equivalents, naming Landlord's Lender as the person to which all payments
made by such insurance company shall be paid; (iii) shall include effective
waivers by the insurer of all claims for insurance premiums against all loss
payees, additional insureds and named insureds (other than Tenant) and all
rights of subrogation against any loss payee, additional insured or named
insured; (iv) if directed by Landlord, shall be assigned to Landlord's Lender;
(v) except as otherwise provided above, shall be subject to a deductible, if
any, not greater in any material respect, in proportion to the coverage
maintained, than the deductible for such coverage on the date hereof; (vi) shall
contain such provisions as Landlord deems reasonably necessary or desirable to
protect its interest (and that of Landlord's Lender, to the extent so requested
by Landlord on behalf of Landlord's Lender), including endorsements providing
that: none of Tenant, Landlord, Landlord's Lender or any other party shall be a
co-insurer under said Policies and that no modification that would result in
non-compliance with the provisions of this Section 10.1, cancellation,
termination or non-renewal of any of the Policies shall be effective until at
least thirty (30) days after receipt by each named insured, additional insured
and loss payee of written notice thereof or ten (10) days after receipt of such
notice with respect to nonpayment of premium; (vii) shall permit Landlord or
Landlord's Lender to pay the premiums and continue any insurance upon failure of
Tenant to pay premiums when due, upon the insolvency of Tenant or through
foreclosure or other transfer of title to the Leased Property (or any of them)
(it being understood that Tenant's rights to coverage under such policies may
not be assignable without the consent of the insurer); and (viii) shall provide
that the insurance shall not be impaired or invalidated by virtue of (A) any
act, failure to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by Tenant, Landlord,
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Landlord's Lender or any other named insured, additional insured or loss payee,
except for the willful misconduct of Landlord or Landlord's Lender knowingly in
violation of the conditions of such policy, (B) the occupation, use, operation
or maintenance of the Leased Property for purposes more hazardous than permitted
by the terms of the Policy, (C) any foreclosure or other proceeding or notice of
sale relating to the Leased Property or (D) any change in the possession of the
Leased Property without a change in the identity of the holder of actual title
thereto (provided that with respect to items (C) and (D), any notice
requirements of the applicable Policies are satisfied).
(d) Insurance Premiums; Certificates of Insurance.
(i) Tenant shall pay the premiums for such Policies (the "Insurance
Premiums") as the same become due and payable and shall furnish to
Landlord the receipts for the payment of the Insurance Premiums or other
evidence of such payment reasonably satisfactory to Landlord (provided
Tenant is not required to furnish such evidence of payment if such
Insurance Premiums are to be paid pursuant to the Cash Management
Procedures relating to any Landlord's Debt). Within thirty (30) days after
request by Landlord, Tenant shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested by Landlord,
taking into consideration changes in liability laws, changes in prudent
customs and practices, and the like. In the event Tenant satisfies the
requirements under this Section 10.1 through the use of a Policy covering
properties in addition to the Leased Property, then, at Landlord's
request, Tenant shall provide to Landlord evidence satisfactory to it that
the Insurance Premiums for the Leased Property are separately allocated
under such Policy to the Leased Property and that payment of such
allocated amount shall maintain the effectiveness of such Policy as to the
Leased Property notwithstanding the failure of payment of any other
portion of premiums. If such allocation is required by the immediately
preceding sentence, but such allocation is not available, Landlord shall
have the right to increase any tax and insurance escrow account required
in connection with Landlord's Debt in an amount sufficient to purchase a
non-blanket Policy covering the Leased Property covered by such Policy
from insurance companies which qualify under this Lease.
(ii) Tenant shall deliver to Landlord on or prior to the Closing
Date certificates setting forth in reasonable detail the material terms
(including any applicable notice requirements) of all Policies from the
respective insurance companies (or their authorized agents) that issued
the Policies, including that such Policies may not be modified in a manner
that would result in such Policies not
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complying with the provisions of this Section 10.1, canceled, terminated
or not renewed without thirty (30) days' prior notice to Landlord, or ten
(10) days' notice with respect to nonpayment of premium. Tenant shall
deliver to Landlord, concurrently with each material change in any Policy,
a certificate with respect to such changed Policy certified by the
insurance company issuing that Policy, in substantially the same form and
containing substantially the same information as the certificates required
to be delivered by Tenant pursuant to the first sentence of this clause
(d)(ii) and stating that all premiums then due thereon have been paid to
the applicable insurers and that the same are in full force and effect (or
if such certificate and report shall not be obtainable by Tenant, Tenant
may deliver an Officer's Certificate to such effect in lieu thereof).
(e) Renewal and Replacement of Policies.
(i) Not less than four (4) Business Days prior to the expiration,
termination or cancellation of any Policy, Tenant shall renew such policy
or obtain a replacement policy or policies (or a binding commitment for
such replacement policy or policies), which shall be effective no later
than the date of the expiration, termination or cancellation of the
previous policy, and shall deliver to Landlord (and, if requested by
Landlord, to Landlord's Lender) a certificate in respect of such policy or
policies (A) containing the same information as the certificates required
to be delivered by Tenant pursuant to clause (d)(ii) above, or a copy of
the binding commitment for such policy or policies and (B) confirming that
such policy complies with all requirements hereof.
(ii) If Tenant does not furnish the certificates as required under
clause (e)(i), Landlord may procure, but shall not be obligated to
procure, such replacement policy or policies and pay the Insurance
Premiums therefor, and Tenant agrees to reimburse Landlord for the cost of
such Insurance Premiums promptly on demand.
(iii) Concurrently with the delivery of each replacement policy or a
binding commitment for the same pursuant to this clause (e), Tenant shall
deliver to Landlord a report from a reputable and experienced insurance
broker or from the insurer, setting forth the particulars as to all
insurance obtained by Tenant pursuant to this Section 10.1 and then in
effect and stating that all Insurance Premiums then due thereon have been
paid in full to the applicable insurers and that such insurance policies
are in full force and effect (or if such report shall not be available
after Tenant shall have used its reasonable efforts to provide the
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same, Tenant will deliver to Landlord an Officer's Certificate containing
the information to be provided in such report) and Tenant shall deliver to
Landlord an Officer's Certificate stating that such insurance otherwise
complies in all material respects with the requirements of this Section
10.1.
(f) Separate Insurance. Tenant will not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 10.1 unless such insurance complies with
clause (c) above.
(g) Tenant shall name any Person holding, servicing or administering
Landlord's Debt and reasonably designated by Landlord (including any trustee,
servicer or special servicer) as a loss payee or additional insured with respect
to any Policy under which Landlord's Lender is to be so named hereunder.
10.2 Casualty; Application of Proceeds.
(a) Right to Adjust.
(i) If any Leased Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Tenant shall give prompt
written notice thereof to Landlord generally describing the nature and
extent of such Casualty. Subject to Section 10.2(b), following the
occurrence of a Casualty, Tenant, regardless of whether proceeds are
available, shall in a reasonably prompt manner proceed to restore, repair,
replace or rebuild the affected Leased Property to the extent practicable
to be of at least equal value and of substantially the same character and
quality as prior to the Casualty, all in accordance with the terms hereof
applicable to Alterations.
(ii) Subject to clause (v) below, in the event of a Casualty that
does not exceed $1,000,000, Tenant may settle and adjust such claim;
provided that such adjustment is carried out in a competent and timely
manner.
(iii) Subject to clause (v) below, in the event a Casualty shall
exceed $1,000,000, Tenant may settle and adjust such claim only with the
consent of Landlord (and, if required under the terms of Landlord's Loan
Documents, Landlord's Lender), which consent shall not be unreasonably
withheld or delayed, and Landlord (and Landlord's Lender) shall have the
opportunity to participate, at Tenant's cost, in any such adjustments.
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(iv) The proceeds of any Policy shall be due and payable solely to a
Depositary.
(v) Notwithstanding the terms of clauses (ii) and (iii) above,
Landlord shall have the sole discretion to adjust any claim with respect
to a Casualty and to collect all Proceeds if an Event of Default shall
have occurred and is continuing.
The provisions of this Section 10.2(a) are subject to the terms of any lease
that would be considered a "Superior Interest" (as defined herein) to the
contrary.
(b) Tenant's Right to Proceeds for Certain Casualty. In the event either
of (i) a Casualty that involves a loss of less than thirty percent (30%) of the
Termination Amount with respect to the affected Leased Property or (ii) a
Condemnation where the loss is in an aggregate amount less than twenty percent
(20%) of the Termination Amount with respect to the affected Leased Property,
Tenant be entitled to apply the Proceeds (after reimbursement of any expenses
incurred by Landlord and Landlord's Lender) to reimburse Tenant for the cost of
restoring, repairing, replacing or rebuilding the affected Leased Property (the
"Restoration"), in the manner required hereby, provided and on the condition
that, no Event of Default shall have occurred and be then continuing and, in the
reasonable judgment of Landlord:
(i) the Restoration can be completed by the earliest to occur
of:
(A) the 365th day following the receipt of the
Proceeds, or, with Landlord's written consent, such longer period as
may reasonably be required,
(B) the scheduled maturity date of Landlord's Debt, and
(C) with respect to a Casualty, the expiration of the
payment period on the rental-loss insurance or business interruption
insurance coverage in respect of such Casualty, and
(ii) after receiving reasonably satisfactory evidence to such
effect, during the period of the Restoration, the sum of (A) income
derived from the Leased Properties (taken as a whole), plus (B) proceeds
of rental-loss insurance or business interruption insurance, if any,
payable together with such other monies as Tenant may irrevocably make
available for the Restoration, will equal or exceed the sum required for
Tenant to pay the Minimum Rent, Taxes, Other Charges and
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all other Operating Expenses and required capital expenditures for all of
the Leased Properties (taken as a whole).
Notwithstanding the foregoing, if any of the conditions set forth in the proviso
in this clause (b) is not satisfied, then, notwithstanding anything herein to
the contrary, unless Landlord shall otherwise elect, at its sole option, (w) the
Proceeds shall be paid to Landlord up to the Termination Amount, and the balance
thereof, after payment of all Landlord's and Landlord's Lender's reasonable
expenses in connection therewith, shall be paid to Tenant, (x) this Lease shall
terminate in respect of the affected Leased Property (except for such terms as
are expressly intended to survive the termination of this Lease), (y) the
Minimum Rent shall be reduced by the portion thereof allocable thereto, as
determined by reference to Exhibit 3.1(a) and (z) the percentages set forth on
Exhibit 3.1(a) shall be adjusted to reflect the portion of Minimum Rent
allocated to each Leased Property remaining subject to the terms of this Lease.
Notwithstanding any of the foregoing, in the event of a Casualty or Condemnation
where an Operating Agreement, a Warehouse Agreement with respect to all or
substantially all of a Leased Property, or a Sublease with a Major Subtenant
requires that Tenant restore the affected Leased Property or any affected
portion thereof, Landlord shall permit the application of the Proceeds (after
reimbursement of any expenses incurred by Landlord and Landlord's Lender) to
reimburse Tenant for the cost of Restoration provided no Event of Default shall
have occurred and then be continuing.
(c) Termination of Lease in Certain Circumstances. In any case in which
Tenant is not entitled to the Proceeds for Restoration pursuant to Section
10.2(b), then:
(i) if Landlord's Lender does not permit, pursuant to
Landlord's Loan Documents, the application of the Proceeds to the
Restoration (which Landlord's Lender shall notify Landlord and Tenant
within a reasonable time after the Casualty or Condemnation, and in no
event later than the 40th day after the receipt of Proceeds), then (x)
Landlord shall be entitled to the Proceeds up to the Termination Amount
(and Tenant shall be entitled to any balance, after payment of all
Landlord's and Landlord's Lender's reasonable expenses in connection
therewith), (y) this Lease shall terminate as to the affected Leased
Property (except with respect to those matters that are expressly intended
to survive the expiration or earlier termination of this Lease) and (z)
the Minimum Rent shall be reduced by the portion thereof allocable
thereto, as determined by reference to Exhibit 3.1(a), or
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(ii) if Landlord's Lender is required or elects under the
terms of the Landlord's Loan Documents to permit the application of
Proceeds to Restoration, then the Proceeds shall be so applied provided
that Landlord is reasonably satisfied that, upon the completion of the
Restoration, Tenant shall be able to satisfy its obligations hereunder in
respect of the affected Leased Property (assuming for these purposes a pro
rata Minimum Rent obligation.
(d) Manner of Reimbursement of Restoration Expenses. If Tenant is entitled
pursuant to Section 10.2(b) or (c) hereof to reimbursement of Restoration costs
from Proceeds, such Proceeds shall be disbursed on a monthly basis upon the
Depositary being furnished with (i) such architect's certificates, Lien waivers,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as the
Depositary may reasonably require and approve, and (ii) all plans and
specifications for such Restoration, such plans and specifications to be
approved by Landlord prior to commencement of any work (such approval not to be
unreasonably withheld or delayed). In addition, no payment made prior to the
Final Completion of the Restoration shall exceed ninety-five percent (95%) of
the value of the work performed from time to time; funds other than Proceeds
shall be disbursed prior to disbursement of such Proceeds; and at all times, the
undisbursed balance of such Proceeds remaining in the hands of the Depositary,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Landlord by or on behalf of Tenant for that purpose, shall be at
least sufficient in the reasonable judgment of Landlord to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Prior to any disbursement, Landlord shall have received evidence reasonably
satisfactory to it of the estimated cost of completion of the Restoration (such
estimate to be made by Tenant's architect or contractor and approved by Landlord
in its reasonable discretion), and Tenant shall have deposited with the
Depositary Eligible Collateral in an amount equal to the excess (if any) of such
estimated cost of completion over the net Proceeds. Any surplus which may remain
out of Proceeds received pursuant to a Casualty shall be paid to Tenant after
payment of such costs of Restoration. Any surplus which may remain out of
Proceeds received pursuant to a Condemnation after payment of such costs of
Restoration shall be paid over to and belong to Landlord.
10.3 Condemnation.
(a) Tenant shall promptly give Landlord written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting any Leased Property (a "Condemnation") and shall deliver to Landlord
copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a
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Condemnation, Tenant, regardless of whether Proceeds are available, shall
promptly proceed to restore, repair, replace or rebuild the same to the extent
practicable to be of at least equal value and of substantially the same
character as prior to such Condemnation, all to be effected in accordance with
the terms hereof applicable to Alterations.
(b) Landlord is hereby irrevocably appointed as Tenant's attorney-in-fact,
coupled with an interest, with exclusive power to collect, receive and retain
any Proceeds in respect of a Condemnation and to make any compromise or
settlement in connection with such Condemnation, subject to the provisions of
this Section, and such power shall include the power to substitute Landlord's
Lender in Landlord's discretion. Provided no Event of Default has occurred and
is continuing, (x) in the event of a Condemnation where the loss does not exceed
$1,000,000, Tenant may settle and compromise such Proceeds; provided that the
same is effected in a competent and timely manner, and (y) in the event a
Condemnation, where the loss exceeds $1,000,000, Tenant may settle and
compromise the Proceeds only with the consent of Landlord (and, if required
under the terms of Landlord's Loan Documents, Landlord's Lender), which consent
shall not be unreasonably withheld or delayed, and Landlord shall have the
opportunity to participate, at Tenant's cost, in any litigation and settlement
discussions in respect thereof. Tenant shall cause any Proceeds that are payable
to Tenant to be paid directly to a Depositary to be held and applied in
accordance with the terms hereof.
(c) The Rent shall be subject to adjustment in the manner provided for in
Section 4.2.
ARTICLE XI
ACCOUNTS AND RESERVES
11.1 Cash Management Procedures. Tenant hereby agrees to cooperate with
Landlord and to execute any and all instruments reasonably requested by Landlord
(including, if necessary, the execution of an amendment to this Lease), in the
establishment and maintenance of escrow and/or reserve accounts and cash
management procedures reasonably requested by any Landlord's Lender in
connection with Landlord's Loan Documents (the "Cash Management Procedures");
provided, however, that the Cash Management Procedures shall be no more onerous
than the "Cash Management Procedures" relating to that certain Master Lease
Agreement, dated as of April 22, 1998, between Americold Real Estate, L.P., as
landlord, and Americold Corporation, as tenant.
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ARTICLE XII
12.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) if Tenant shall fail to pay the Minimum Rent when due and
payable hereunder, or
(b) if Tenant shall fail to pay when due any amount (other than
Minimum Rent) when due and payable and such default shall continue for ten
(10) days after notice thereof to Tenant, or
(c) if Tenant shall fail to observe or perform any term, covenant or
condition of this Lease not specifically provided for in this Section 12.1
and such failure is not cured within a period of thirty (30) days after
receipt of notice from Landlord, unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
period of time shall be extended to such period of time as may be
necessary to cure such default with all due diligence, or
(d) if Tenant shall admit in writing its inability to pay its debts
generally as they become due; file a petition in bankruptcy or a petition
to take advantage of any insolvency act; make an assignment for the
benefit of its creditors; consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; or file a
petition or answer seeking reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any State thereof, or
(e) any petition shall be filed by or against Tenant under Federal
bankruptcy laws, or any other proceeding shall be instituted by or against
Tenant or such subsidiary seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian
or other similar official for Tenant, or for any substantial part of the
property of Tenant, and such proceeding is not dismissed within ninety
(90) days after institution thereof, or Tenant shall take any action to
authorize or effect any of the actions set forth above in this paragraph
(e), or
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(f) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding any
the same shall not be vacated or discharged within the later of ninety
(90) days after commencement thereof or thirty (30) days after receipt by
Tenant of notice thereof from Landlord, (unless Tenant shall be contesting
such lien or attachment in good faith in accordance with the terms of this
Lease), or
(g) if an event of default under any of the Other Leases shall have
occurred and be continuing,
then, and in any such event, Landlord may terminate this Lease by giving not
less than ten (10) days' notice of such termination and upon the expiration of
the time fixed in such notice, if any, and the failure of the applicable Event
of Default to be cured within such ten-day period, the Term shall terminate and
all rights of Tenant under this Lease shall cease. Landlord shall have all
rights at law and in equity available to Landlord as a result of Tenant's breach
of this Lease. Tenant shall, to the maximum extent permitted by law, pay as
Additional Charges all Litigation Costs as a result of any Event of Default
hereunder.
12.2 Certain Remedies. Landlord shall have the right to terminate this
Lease, and otherwise exercise remedies, at any time and from time to time, with
respect to one or more, or all, of the Leased Properties, and the termination of
this Lease or other exercise of remedies with respect to one or more Leased
Properties shall in no way constitute a waiver on the part of Landlord to
terminate this Lease on account of such Event of Default, or otherwise exercise
remedies, at any time and from time to time, in one or more other instances,
with respect to the balance of the Leased Properties.
12.3 Damages. Neither (a) the termination of this Lease pursuant to
Section 12.1 with respect to any or all of the Leased Property, (b) the
repossession of the applicable Leased Property or any portion thereof, (c) the
failure of Landlord, notwithstanding reasonable good faith efforts to relet the
applicable Leased Property or any portion thereof, (d) the reletting of all or
any portion thereof, nor (e) the failure of Landlord to collect or receive any
rentals due upon any such reletting, shall relieve Tenant of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event of any such termination, Tenant shall
forthwith pay to Landlord all Rent due and payable with respect to the Leased
Property to and including the date of such termination. Thereafter, Tenant,
until the end of what would have been the Term in the absence of such
termination, and whether or not the
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applicable Leased Property or any portion thereof shall have been re-let, shall
be liable to Landlord for, and shall pay to Landlord, as current damages, the
Rent and other charges which would be payable hereunder for the remainder of the
Term had such termination not occurred, less the net proceeds, if any, of any
reletting of the applicable Leased Property, after deducting all expenses in
connection with such re-letting, including all repossession costs, brokerage
commissions, legal expenses, attorneys' fees, advertising costs, expenses of
employees, alteration costs and expenses of preparation for such reletting.
Tenant shall pay such current damages to Landlord monthly on the days on which
the Minimum Rent would have been payable hereunder if this Lease had not been
terminated.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages and in lieu of
all such current damages beyond the date of such termination, at Landlord's
election, Tenant shall pay to Landlord either, at Landlord's election, (a) an
amount equal to the excess, if any, of the Rent and other charges which would be
payable hereunder from the date of such termination (assuming that, for the
purposes of this paragraph, annual payments by Tenant on account of Taxes and
Other Charges would be the same as payments required for the immediately
preceding twelve calendar months, or if less than twelve calendar months have
expired since the Commencement Date, the payments required for such lesser
period projected to an annual amount) for what would be the then unexpired term
of this Lease if the same remained in effect (with respect to the applicable
Leased Property), over the Fair Market Rental for the same period, or (b) an
amount equal to the lesser of (i) the Rent and other charges that would have
been payable for the balance of the Term had it not been terminated, or (ii) the
aggregate of the Minimum Rent, Additional Charges and other charges accrued in
the twelve (12) months ended next prior to such termination (without reduction
for any free rent or other concession or abatement). In the event this Lease is
so terminated prior the expiration of the first full year of the Term, the
liquidated damages which Landlord may elect to recover pursuant to this Section
shall be calculated as if such termination had occurred on the first anniversary
of the Commencement Date. Nothing contained herein shall, however, limit or
prejudice the right of Landlord to prove and obtain in proceedings for
bankruptcy or insolvency an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, the damages are to be proved, whether or not the amount be greater than,
equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet the applicable Leased
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Property or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which may, at Landlord's option, be equal to,
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant concessions or free rent to the extent that
Landlord considers advisable and necessary to relet the same, and (b) make such
alterations, repairs and decorations in the applicable Leased Property or any
portion thereof as Landlord, in its sole judgment, considers advisable and
necessary for the purpose of reletting the applicable Leased Property; and the
making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for the failure to relet the
applicable Leased Property, or, in the event that the applicable Leased Property
is relet, for failure to collect the rent under such reletting. To the fullest
extent permitted by law, Tenant hereby expressly waives any and all rights of
redemption granted under any present or future laws in the event of Tenant's
being evicted or dispossessed, or in the event of Landlord's obtaining
possession of the applicable Leased Property, by reason of the violation by
Tenant of any of the covenants and conditions of this Lease.
12.4 Waiver. If this Lease is terminated pursuant to Section 12.1, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XII, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt (provided nothing herein shall be construed to
limit Tenant's liability hereunder, which is intended to be fully recourse to
Tenant, to its interest in the Leased Property).
12.5 Application of Funds. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event of
Default (and such payment is made to Landlord rather than Tenant due to the
existence of an Event of Default) shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by the laws of
the State where the applicable Leased Property is located.
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ARTICLE XIII
13.1 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, without waiving or releasing
any obligation or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and at
the expense of Tenant, and may, to the extent permitted by law, enter upon the
applicable Leased Property or any portion thereof for such purpose and take all
such action thereon as, in Landlord's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Tenant. All reasonable
sums so paid by Landlord and all costs and expenses (including attorneys' fees
and expenses, in each a case, to the extent permitted by law) so incurred,
together with interest thereon (to the extent permitted by law) at the Overdue
Rate from the date on which such sums or expenses are paid or incurred by
Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article shall survive the
expiration or earlier termination of this Lease.
ARTICLE XIV
14.1 Holding Over. If Tenant shall for any reason remain in possession of
the applicable Leased Property after the expiration of the Term or earlier
termination of the Term, such possession shall be as a month-to-month tenant
during which time Tenant shall pay as rental each month, one and one-half times
the aggregate of (i) one-twelfth of the aggregate Minimum Rent payable with
respect to the last Lease Year of the Term; (ii) all Additional Charges accruing
during the month and (iii) all other sums, if any, payable by Tenant pursuant to
the provisions of this Lease with respect to the applicable Leased Property.
During such period of month-to-month tenancy, Tenant shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to month-to-month tenancies to continue its occupancy and use of the
applicable Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Lease.
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ARTICLE XV
SUBORDINATION
15.1 Subordination and Nondisturbance. This Lease and all rights of Tenant
hereunder are subject and subordinate to the Lien affecting the Leased
Properties created pursuant to Lender's Loan Documents, whether now or hereafter
existing, or the interest of any landlord under a lease senior in title to this
Lease, whether now or hereafter existing (all such Liens and interests,
collectively, the "Superior Interests"), and to all renewals, modifications,
consolidations, replacements and extensions of Superior Interests, provided that
the holder of such Superior Interest shall have executed and delivered to Tenant
a "non-disturbance" agreement in favor of Tenant substantially on the same terms
and conditions as are contained in the form attached hereto as Exhibit 15.1.
Subject to the foregoing proviso, this Section shall be self-operative and no
further instrument of subordination shall be required, but in confirmation of
such subordination, Tenant agrees to execute and deliver promptly any
commercially reasonable form of instrument (in recordable form, if requested)
that Landlord or the holder of any Superior Interest (each, a "Superior Party")
may request to evidence such subordination.
15.2 Attornment. If the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of any such Superior Interest, then Tenant shall, at
the option of such purchaser, assignee or any Superior Party, as the case may
be, (x) attorn to such party and perform for its benefit all the terms,
covenants and conditions of this Lease on Tenant's part to be performed with the
same force and effect as if such party were the Landlord originally named in
this Lease, or (y) enter into a new lease with such party, as Landlord, for the
remaining Term and otherwise on the same terms and conditions of this Lease
except that such successor Landlord shall not be (i) liable for any previous
act, omission or negligence of Landlord under this Lease; (ii) subject to any
counterclaim, defense or offset which theretofore shall have accrued to Tenant
against Landlord; (iii) bound by any previous modification or amendment of this
Lease or by any previous prepayment of more than one month's rent in advance of
its due date, unless such modification, amendment or prepayment shall have been
approved in writing by the Superior Party through or by reason of which such
successor Landlord shall have succeeded to the rights of Landlord under this
Lease; or (iv) liable for any security (if any) deposited pursuant to this Lease
unless such security has actually been delivered to such successor Landlord.
Nothing contained in this Section shall be construed to impair any right
otherwise exercisable by any such owner, holder or Tenant.
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15.3 Notice of Default to Landlord's Lender. In the event of any act or
omission by Landlord which would give Tenant the right, either immediately or
after the lapse of a period of time, to terminate this Lease, or to claim a
partial or total eviction, Tenant will not exercise any such right (A) until it
has given written notice of such act or omission to Landlord's Lender, and (B)
until a reasonable period of time (not less than thirty (30) days) for remedying
such act or omission shall have elapsed following giving of such notice and
following the time when Lender shall have become entitled under the Landlord's
Loan Documents to remedy the same, provided Lender, with reasonable diligence,
shall (i) have pursued such remedies as are available to it under Landlord's
Loan Documents so as to be able to remedy the act or omission, and (ii)
thereafter shall have commenced and continued to remedy such act or omission or
cause the same to be remedied. Tenant's agreement herein shall not apply to
those situations specifically set forth herein wherein Tenant has an express
option to cancel and terminate this Lease.
15.4 Modifications to Secure Financing. If any Superior Party or
prospective Superior Party shall request modifications of this Lease as a
condition to the provision, continuance or renewal of any such financing, Tenant
will not unreasonably withhold, delay or defer its consent thereto, provided
that (i) either such modifications do not materially increase the obligations of
Tenant hereunder or materially adversely affect Tenant's rights under this Lease
or (ii) if such modifications would materially increase the obligations of
Tenant hereunder or materially adversely affect Tenant's rights under this
Lease, then Landlord shall compensate Tenant for the same. Disputes as between
Landlord and Tenant regarding whether a proposed modification would materially
increase the obligations of Tenant hereunder or materially adversely affect
Tenant's rights under this Lease, and the compensation that would be payable to
Tenant as a result thereof shall be determined by arbitration in accordance with
the terms of Schedule 15.4 hereto.
15.5 Delivery of Notices to Landlord's Lender. Subsequent to the receipt
by Tenant of Notice from Landlord as to the identity and address of any Superior
Party (which Notice shall be accompanied by a copy of the instrument creating
such Superior Interest), no Notice from Tenant to Landlord shall be effective
unless and until a duplicate original of such Notice shall be given to such
Superior Party at the address set forth in the above described Notice. The
curing of any of Landlord's defaults by such Superior Party shall be treated as
performance by Landlord.
15.6 Right of Landlord's Lender to Enforce Lease. To the extent permitted
under the Landlord's Loan Documents, Landlord's Lender may exercise the
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rights of Landlord hereunder, including the right on the part of Landlord to
obtain insurance in the circumstances set forth in Section 10.1(e)(ii) hereof.
15.7 Exercise of Landlord's Discretion. In any instance hereunder in which
Landlord must be reasonable in making a request or granting or withholding an
approval or consent, Tenant acknowledges and agrees that Landlord may take into
account the reasonable objections of Landlord's Lender to the extent Landlord is
required to take such objections into account under Landlord's Loan Documents.
In any instance hereunder in which Landlord may make a request or grant or
withhold an approval in its discretion, Landlord may take into account the views
of Landlord's Lender to the extent Landlord is required to take such views into
account under Landlord's Loan Documents.
ARTICLE XVI
16.1 Indemnification. Notwithstanding the existence of any insurance
required to be provided hereunder, and without regard to the policy limits of
any such insurance, Tenant will protect, indemnify, save harmless and defend
Landlord and Landlord's Lender and their respective partners, shareholders,
officers, directors and employees (each, an "Indemnitee") from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and reasonable expenses (including Litigation Costs), to the maximum extent
permitted by law, imposed upon or incurred by or asserted against such
Indemnitee by reason of: (a) any accident, injury to or death of persons or loss
of or damage to property occurring on or about the Leased Property or adjoining
sidewalks, including any claims made by employees at the Leased Property, (b)
any use, misuse, non-use, condition, maintenance or repair by Tenant or anyone
claiming by, through or under Tenant, including agents, contractors, invitees or
visitors of the applicable Leased Property or Tenant's Personal Property, (c)
any Taxes or Other Charges, (d) any failure on the part of Tenant or anyone
claiming by, through or under Tenant to perform or comply with any of the terms
of this Lease, (e) any failure by Tenant to perform its obligations under any
Sublease or Warehouse Agreement and any claims made thereunder, (f) any contest
of any Legal Requirement or Insurance Requirement, regardless whether the same
is conducted in accordance with the terms hereof. Any amounts which become
payable by Tenant under this Section shall be paid within ten (10) days after
liability therefor on the part of Tenant is determined by litigation or
otherwise, and if not timely paid, shall bear interest (to the extent permitted
by law) at the Overdue Rate from the date of such determination to the date of
payment. Tenant, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or
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instituted against Indemnitee or may compromise or otherwise dispose of the same
as Tenant sees fit. Nothing herein shall be construed as indemnifying an
Indemnitee against its own grossly negligent acts or omissions or willful
misconduct. If at any time an Indemnitee shall have notice of a claim, such
Indemnitee shall give reasonably prompt written notice of such claim to Tenant;
provided that (i) such Indemnitee shall have no liability for a failure to give
notice of any claim of which Tenant has otherwise been notified or has knowledge
and (ii) the failure of such Indemnitee to give such a notice to Tenant shall
not limit the rights of such Indemnitee or the obligations of Tenant with
respect to such claim except to the extent that Tenant incurs actual expenses or
suffers actual monetary loss as a result of such failure. Tenant shall have the
right to control the defense or settlement of any Claim, provided that (A)
Tenant shall first confirm in writing to such Indemnitee that such claim is
within the scope of this indemnity and that Tenant shall pay any and all amounts
required to be paid in respect of such claim, (B) if the compromise or
settlement of any such claim shall not result in the complete release of such
Indemnitee from the claim so compromised or settled, the compromise or
settlement shall require the prior written approval of such Indemnitee and (C)
no such compromise or settlement shall include any admission of wrongdoing on
the part of such Indemnitee. An Indemnitee shall have the right to approve
counsel engaged to defend such claim and, at its election and sole cost and
expense, shall have the right, but not the obligation, to participate in the
defense of any claim. Tenant's liability under this Article with respect to
matters arising or accruing during the Term hereof shall survive any termination
of this Lease.
The parties hereto agree that this Article XVI shall not apply to those matters
specifically covered by the provisions of Article XXVI hereof.
ARTICLE XVII
17.1 No Waiver. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
ARTICLE XVIII
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18.1 Remedies Cumulative. Except as otherwise expressly provided herein,
to the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord or Tenant now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Landlord or Tenant or any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord or Tenant of any or all of such other rights, powers and remedies.
ARTICLE XIX
19.1 Acceptance of Surrender. No surrender to Landlord of this Lease or of
any Leased Property, or of any interest therein, shall be valid or effective
unless agreed to and accepted in writing by Landlord and Landlord's Lender (if
any) and no act by Landlord or any representative or agent of Landlord, other
than such a written acceptance by Landlord and Landlord's Lender (if any), shall
constitute an acceptance of any such surrender.
ARTICLE XX
20.1 No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same Person may
acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold
estate created thereby or any interest herein or in such leasehold estate and
(b) the fee estate in the applicable Leased Property.
ARTICLE XXI
21.1 Conveyance by Landlord. If Landlord or any successor owner of the
applicable Leased Property shall convey such Leased Property in accordance with
the terms hereof other than as security for a debt, and the grantee or
transferee of the Leased Property shall expressly assume all obligations of
Landlord hereunder arising or accruing from and after the date of such
conveyance or transfer, Landlord or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and obligations of
Landlord under this Lease arising or accruing from and after the date of such
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conveyance or other transfer as to the Leased Property and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
ARTICLE XXII
22.1 Quiet Enjoyment. So long as Tenant shall pay all Rent as the same
becomes due and no Event of Default shall have occurred and be continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for
the Term hereof, free of any claim or other action by Landlord or anyone
claiming by, through or under Landlord, but subject to all liens and
encumbrances of record as of the date hereof or otherwise permitted to be
created by Landlord hereunder, liens as to the obligations of Landlord that are
either not yet due or which are being contested in good faith and by proper
proceedings, and liens hereafter consented to by Tenant. No failure by Landlord
to comply with the foregoing covenant shall give Tenant any right to cancel or
terminate this Lease or abate, reduce or make a deduction from or offset against
the Rent or any other sum payable under this Lease, or to fail to perform any
other obligation of Tenant hereunder or thereunder. Notwithstanding the
foregoing, Tenant shall have the right, by separate and independent action to
pursue any claim it may have against Landlord as a result of a breach by
Landlord of the covenant of quiet enjoyment contained in this Section.
ARTICLE XXIII
23.1 Notices. All notices, demands, requests, consents, approvals and
other communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
AmeriCold Logistics, LLC
10 Glenlake Parkway
9th Floor
Atlanta, Georgia 30328
Attention: Chief Financial Officer
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(b) if to Landlord, to each of them:
c/o Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
Attention: Chief Financial Officer
(c) if required pursuant to Section 15.5 hereof, to Landlord's
Lender, in accordance with the terms of said Section.
or to such other address as either party may hereunder designate, and shall be
effective upon receipt.
ARTICLE XXIV
24.1 Appraisers. In the event that it becomes necessary to determine the
Fair Market Value or Fair Market Rental of any property for any purpose of this
Lease, and the parties cannot agree amongst themselves on such value within
twenty (20) days after the first request made by one of the parties to do so,
then either party may notify the other of a person selected to act as appraiser
on its behalf. Within fifteen (15) days after receipt of any such notice, the
other party shall by notice to the first party appoint a second person as
appraiser on its behalf. The appraisers thus appointed, each of whom must be a
member of The Appraisal Institute/American Institute of Real Estate Appraisers
(or any successor organization thereto), shall, within 45 days after the date of
the notice appointing the first appraiser, proceed to appraise the applicable
Leased Property to determine the Fair Market Value or Fair Market Rental thereof
as of the relevant date; provided that if one appraiser shall have been so
appointed, or if two appraisers shall have been so appointed but only one such
appraiser shall have made such determination within 50 days after the making of
the initial appointment, then the determination of such appraiser shall be final
and binding upon the parties. If two appraisers shall have been appointed and
shall have made their determinations within the respective requisite periods set
forth above and if the difference between the amounts so determined shall not
exceed ten percent (10%) of the lesser of such amounts, then the Fair Market
Value or Fair Market Rental shall be an amount equal to 50% of the sum of the
amounts so determined. If the difference between the amounts so determined shall
exceed ten percent (10%) of the lesser of such amounts, then such two appraisers
shall have 20 days to appoint a third appraiser, but if such appraisers fail to
do so, then either party may request the American Arbitration Association or any
successor organization thereto to
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appoint an appraiser within 20 days of such request, and both parties shall be
bound by any appointment so made within such 20 day period. If no such appraiser
shall have been appointed within such 20 days or within 90 days of the original
request for a determination of Fair Market Value or Fair Market Rental,
whichever is earlier, either Landlord or Tenant may apply to any court having
jurisdiction to have such appointment made by such court. Any appraiser
appointed by the original appraisers, by the American Arbitration Association or
by such court shall be instructed to determine the Fair Market Value or Fair
Market Rental within 30 days after appointment of such Appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determination of the other two appraisers shall be excluded, and 50% of the
sum of the remaining two determinations shall be final and binding upon Landlord
and Tenant as the Fair Market Value or Fair Market Rental for such interest.
This provision for determination by appraisal shall be specifically enforceable
to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties except as
otherwise provided by applicable law. Landlord and Tenant shall each pay the
fees and expenses of the appraiser appointed by it and their own legal fees, and
each shall pay one-half of the fees and expenses of the third appraiser and
one-half of all other cost and expenses incurred in connection with each
appraisal.
ARTICLE XXV
25.1 General REIT Provisions.
25.1.1 REIT Requirements. Tenant understands that Landlord or an
Affiliate of Landlord intends to elect to qualify as a real estate investment
trust ("REIT"). Accordingly, unless otherwise notified by Landlord, the
following requirements (the "REIT Requirements") must be satisfied:
(i) The average of the adjusted tax bases of Landlord's personal
property leased to Tenant under a lease at the beginning and end of a
calendar year cannot exceed 15% of the average of the aggregate adjusted
tax bases of all of Landlord's property that is leased to Tenant under
such lease at the beginning and end of such calendar year.
(ii) Tenant cannot sublet the property leased to it by Landlord, or
enter into any other arrangement, if such sublet or other arrangement
would cause all or a portion of the amounts paid by Tenant to Landlord
hereunder to fail to qualify as "rents from real property" within the
meaning of Section 856(d) of the Code.
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(iii) Tenant cannot sublease the property leased to it by Landlord
to, or enter into any similar arrangement with, any person in which
Landlord owns, directly or indirectly, a 10% or more interest, within the
meaning of Section 856(d)(2)(B) of the Code.
(iv) Landlord cannot own, directly or indirectly, a 10% or more
interest in Tenant, within the meaning of Section 856(d)(2)(B) of the
Code.
25.1.2 Satisfaction of REIT Requirements. Tenant agrees, and agrees
to use reasonable efforts to cause its Affiliates, to permit the REIT
Requirements to be satisfied. Tenant agrees, and agrees to use reasonable
efforts to cause its Affiliates, to cooperate in good faith with Landlord to
ensure that the REIT Requirements are satisfied, including providing Landlord
with information about the ownership of Tenant and its Affiliates to the extent
that such information is reasonably available. In addition, Tenant agrees, and
agrees to cause its Affiliates, to cooperate with Landlord in connection with
any additional requirements relating to Landlord's qualification as a REIT
arising from and after the date of this Lease. Immediately after becoming aware
that the REIT Requirements are not, or will not be, satisfied, Tenant shall
notify Landlord of such noncompliance.
ARTICLE XXVI
ENVIRONMENTAL INDEMNITY
26.1 Environmental Indemnity Provisions. Tenant hereby agrees to hold
harmless Landlord and Landlord's Lender, any successors to their respective
interests in this Lease, and the respective directors, officers, employees and
agents of any of the foregoing from and against any losses, claims, damages
(including consequential damages), penalties, fines, liabilities (including
strict liability), costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and attorneys' fees) incurred by Landlord or
any other indemnitee or assessed against the Leased Property by virtue of any
claim or lien by any governmental or quasi-governmental unit, body, or agency,
or any third party, for cleanup costs or other costs pursuant to any
Environmental Laws, but only to the extent that the same relate to the period
from and after the date hereof. Tenant's indemnity shall survive the termination
of this Lease, provided, however, Tenant shall have no indemnity obligation with
respect to (i) Hazardous Substances first introduced to the Leased Property
subsequent to the date that Tenant's occupancy of the Leased Property shall have
fully terminated or (ii) Hazardous Substances introduced to the Leased Property
by Landlord, its successors and assigns. Landlord hereby agrees to hold harmless
Tenant and any successors to its interest in this Lease, and the respective
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directors, officers, employees and agents of any of the foregoing from and
against any losses, claims, damages (including consequential damages),
penalties, fines, liabilities (including strict liability), costs (including
cleanup and recovery costs), and expenses (including expenses of litigation and
attorneys' fees) incurred by Tenant or any other indemnitee or assessed against
the Leased Property by virtue of any claim or lien by any governmental or
quasi-governmental unit, body, or agency, or any third party, for cleanup costs
or other costs pursuant to any Environmental Laws, but only to the extent that
the same relate to the period prior to the date hereof.
ARTICLE XXVII
MISCELLANEOUS
27.1 Survival of Claims. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination.
27.2 Severability. If any term or provision of this Lease or any
application thereof shall be invalid or unenforceable, the remainder of this
Lease and any other application of such term or provision shall not be affected
thereby.
27.3 Maximum Permissible Rate. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be
determined at the maximum permissible rate.
27.4 Headings. The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
27.5 Exculpation. Landlord's liability hereunder shall be limited solely
to its interest in the Leased Property, and no recourse under or in respect of
this Lease shall be had against any other assets of Landlord whatsoever.
Furthermore, except as otherwise expressly provided herein, in no event shall
Landlord (original or successor) ever be liable to Tenant for any indirect or
consequential damages suffered by Tenant from whatever cause.
27.6 Transfer of Licenses. Upon the expiration or earlier termination of
the Term, Tenant shall use its best efforts to transfer to Landlord or
Landlord's nominee or to cooperate with Landlord or Landlord's nominee in
connection with the processing by
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Landlord or Landlord's nominee of any applications for all licenses, operating
permits and other governmental authorization and all contracts, including
contracts with governmental or quasi-governmental entities which may be
necessary for the operation of the Leased Property; provided that the costs and
expenses of any such transfer or the processing of any such application shall be
paid by Landlord or Landlord's nominee.
27.7 Exhibition of Leased Property. Landlord and Landlord's agent shall
have the right to enter the applicable Leased Property at all reasonable times
for the purpose of exhibiting the Leased Property to others.
27.8 Entire Agreement. This Lease contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof.
27.9 Governing Law. This Lease shall be construed with respect to each
Leased Property under the substantive laws of the State of in which such Leased
Property is situated.
27.10 No Waiver. No waiver of any condition or covenant herein contained,
or of any breach of any such condition or covenant, shall be held or taken to be
a waiver of any subsequent breach of such covenant or condition, or to permit or
excuse its continuance or any future breach thereof or of any condition or
covenant herein construed as a waiver of such default, or of Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing default.
27.11 Successors and Assigns. This Lease shall be binding upon and shall
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
27.12 Modifications in Writing. This Lease may only be modified by a
writing signed by both Landlord and Tenant and, if otherwise required by the
terms hereof, Leasehold Mortgagee and/or Landlord's Lender.
27.13 No Waiver. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
27.14 Claims Against Landlord. In the event that a claim or adjudication
is made that Landlord or its agents have acted unreasonably or unreasonably
delayed (or refrained
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from), acting in any case where by law or under this Lease, Landlord or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Tenant agrees that neither Landlord nor its agents shall be liable for any
monetary damages, and Tenant's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment, except in any instance
in which it has been finally determined that Landlord's action, delay or
inaction has constituted gross negligence, fraud, willful misconduct or an
illegal act. The parties hereto agree that any action or proceeding to determine
whether Landlord has acted reasonably shall be determined by an action seeking
declaratory judgment.
ARTICLE XXVIII
28.1 Memorandum of Lease. Landlord and Tenant shall, promptly upon the
request of either enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the state in which the applicable
Leased Property is located, in which reference to this Lease, and all options
contained therein, shall be made. Tenant shall pay all costs and expenses of
recording such Memorandum of Lease.
ARTICLE XXIX
29.1 Landlord's Option to Purchase Tenant's Personal Property. Tenant
hereby grants Landlord the option to purchase all of the equipment and personal
property (tangible and intangible) that is employed by Tenant in connection with
the use and operation of each of the Properties, and the business conducted
thereat, including any interest of Tenant in the warehousing and customer
contracts (to the extent the same is assignable) and the interest of Tenant in
any equipment leases and the like. Such option shall be exercisable by Landlord
at any time prior to the date of expiration or earlier termination of this Lease
in respect of a Property and the conveyance in respect thereof shall be
consummated (and the payment of the purchase price therefor made) concurrently
with such expiration or earlier termination. The purchase price payable for
Tenant's Personalty shall be the Fair Market Value thereof, determined in
accordance with the terms of Article XXIV hereof (as adjusted to the extent
required to reflect that the subject of the appraisal is Tenant's Personalty
rather than a Leased Property). Tenant agrees to cooperate with Landlord in
effecting the smooth and orderly transfer of Tenant's Personalty in the event of
Landlord's exercise of the Purchase Option. Tenant's Personalty shall be
conveyed free and clear of all liens, encumbrances or rights of other parties,
except as may have been disclosed to the appraisers in the process of
establishing the Fair Market Value thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
duly executed as of March 11, 1999.
LANDLORD
VC OMAHA HOLDINGS, L.L.C.
By: /s/ Daniel F. McNamara
---------------------------------------
Name: Daniel F. McNamara
Title: President
CARMAR FREEZERS THOMASVILLE L.L.C.
By: VC Omaha Holdings, L.L.C., its sole
member
By: /s/ Daniel F. McNamara
--------------------------------
Name: Daniel F. McNamara
Title: President
TENANT
AMERICOLD LOGISTICS, LLC
By: /s/ Frederick B. Beilstein III
--------------------------------------
Name: Frederick B. Beilstein III
Title: Senior Vice President
-84-
<PAGE> 92
Exhibit A
[omitted: legal descriptions of parcels in East Dubuque, Illinois; West Point,
Mississippi; and Thomasville, Georgia]
-85-
<PAGE> 93
Exhibit 1.5(b)
List of Ground Leases and Expiration Dates
None
-86-
<PAGE> 94
Exhibit 2.1(a)
<TABLE>
<CAPTION>
Property Release Amount
- -------- --------------
<S> <C>
East Dubuque $29,905,418
West Point $26,080,764
Thomasville $23,289,309
-----------
$79,275,491
</TABLE>
-87-
<PAGE> 95
Exhibit 3.1A
<TABLE>
<CAPTION>
Pro-Rata
Reduction in
Fixed Rent &
Property % rent Breakpoint
- -------- -----------------
<S> <C>
East Dubuque 37.72%
West Point 32.90%
Thomasville 29.38%
------
100.00%
</TABLE>
-88-
<PAGE> 96
Exhibit 3.1(b)
CALCULATION OF PERCENTAGE RENT
Percentage Rent, with respect to each Lease, year shall becalculoated annually
as follows:
(a) for the period from Commencement Date through December 31, 2003, the
product of (i) 33.75% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint;
(b) for the period from January 1, 2004 through December 31, 2008, the
product of (i) 38.9% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint; and
(c) for the period from January 1, 2009 through February 28, 2014, the
product of (i) 42.2% times (ii) all Receipts for the applicable
Lease Year in excess of the Breakpoint.
As used herein, the "Breakpoint" with respect to any Lease Year shall be
$18,456,000. The Breakpoint shall be adjusted to account for the termination of
this Lease with respect to any one or more of the Leased Properties in
accordance with the terms of this Lease on a pro rata basis among each Leased
Property based on the percentages set forth next to each Leased Property in
Exhibit 3.1(a) attached to this Lease.
-89-
<PAGE> 97
Exhibit 8.2.8
CERTAIN SUPERIOR LEASES
None.
-90-
<PAGE> 98
Schedule 9.1(b)
<TABLE>
<CAPTION>
Landlord's Responsibility Minimum Tenant's Responsibility
- ------------------------- -------------------------------
<S> <C>
$200,000 per annum, which amount $415,000 per annum until 12/31/99,
increases by 5% every 5 years. increasing by 5% annually thereafter.
</TABLE>
-91-
<PAGE> 99
Exhibit 15.1
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of _________, ________ is made by and among
[____________] ("Landlord"), AmeriCold Logistics [II], LLC., a Delaware limited
liability company ("Tenant"), and [LANDLORD'S LENDER], a [___________] (together
with its successors and assigns "Lender") pursuant to that certain Loan
Agreement (the "Loan Agreement"), dated as of [_______________], by and between
Lender and Landlord.
W I T N E S S E T H
WHEREAS, under a certain master lease dated ________ __, 1999 (hereinafter
referred to as the "Lease"), Landlord did lease, let and demise the property
(hereinafter called the "Leased Property"), as described in the Lease to Tenant
for the period of time and upon the covenants, terms and conditions therein
stated; and
WHEREAS, the Lease has not been further amended or modified; and
WHEREAS, by making a mortgage loan, Lender became the owner of an
indebtedness and holder of a certain Note or Notes, secured by first priority
mortgages, deeds of trust and deeds to secure debt (collectively, the
"Mortgages"), which shall constitute liens upon the property described in said
Mortgages and as described in Exhibit A attached hereto (the "Mortgaged
Premises"), and is secured by an assignment of Landlord's interest in the Lease
as more particularly set forth in the Mortgage; and
WHEREAS, Landlord and Tenant acknowledge and agree to the aforesaid
assignment of Landlord's interest in the Lease; and
WHEREAS, Lender desires the Lease and all rights of the Tenant thereunder
to be subordinate to the Mortgage and all rights of Lender thereunder, and the
Tenant desires Lender's assurance not to disturb Tenant's rights of possession
of the Leased Property under the Lease in the event that Lender exercises its
remedies as a Lender under the Mortgages;
NOW THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
<PAGE> 100
Section 1.
The Lease, as the same may heretofore and hereafter be modified, amended
or extended, is and shall be subject and subordinate to the Mortgages on the
Mortgaged Premises, to each and every advance made or hereafter made under the
Loan Agreement, and to all renewals, modifications, consolidations, replacements
and extensions of the Mortgages.
Lender agrees that it shall make available to Tenant the insurance policy
proceeds and condemnation awards (or payments made in anticipation thereof or in
connection therewith) in accordance with the terms of Section 10.2(b) and
10.2(d) of the Lease.
Section 2.
So long as no default by Tenant has occurred and has continued to exist
for such period of time (after notice, if any, required by the Lease) as would
entitle Landlord to terminate the Lease (hereinafter called an "Event of
Default"), (A) Lender shall not, in any foreclosure action or proceeding which
may be instituted or taken by Lender under any Mortgage by reason of any default
thereunder, evict Tenant from the Leased Premises by the Lease, or terminate or
disturb Tenant's leasehold estate under the Lease, and (B) none of Tenant's
rights under the Lease shall be disturbed by reason of any default under any of
the Mortgages.
Section 3.
Tenant shall give Lender copies of all notices and other communications
given by Tenant to the Landlord under the Lease relating to defaults on the part
of the Landlord under the Lease.
Section 4.
In the event of any act or omission by Landlord which would give Tenant
the right, either immediately or after the lapse of a period of time, to
terminate the Lease, or to claim a partial or total eviction, Tenant will not
exercise any such right (A) until it has given written notice of such act or
omission to Lender by delivering such notice of such act or omission by
certified mail, return receipt requested, addressed to Lender at the address
specified under Section 7 hereof, and (B) until a reasonable period of time (not
less than thirty (30) days) for remedying such act or omission shall have
elapsed following giving of such notice and following the time when Lender shall
have become
<PAGE> 101
entitled under the Mortgages or any additional mortgage to remedy the same,
provided Lender, with reasonable diligence, shall (i) have pursued such remedies
as are available to it under the Mortgages so as to be able to remedy the act or
omission, and (ii) thereafter shall have commenced and continued to remedy such
act or omission or cause the same to be remedied.
Section 5.
Without limitation of any of the provisions of the Lease, in the event
that, by reason of any default on the part of the Landlord, Lender or its
assigns shall succeed to the interest of Landlord or any successor to Landlord,
then subject to the provisions of this Agreement the Lease shall nevertheless
continue in full force and effect and Tenant shall attorn to Lender or its
assigns and shall recognize Lender or its assigns as its landlord. Upon request
of Lender, Tenant shall execute and deliver to Lender or its assigns an
agreement of attornment. If Lender or its assigns shall succeed to the interest
of Landlord or any successor to Landlord, in no event shall Lender be obligated
to remedy and default, nor shall Lender or its assigns have any liability under
the Lease prior to the date Lender or its assigns shall succeed to the rights of
Landlord or any successor to Landlord under the Lease, nor any liability for
offsets or defenses which Tenant might have had against Landlord or any
successor to Landlord. Lender and its assigns shall have no personal liability
as successor to Landlord, and Tenant shall look only to the estate and property
of Lender or its assigns (as applicable) in the Mortgaged Premises or the
proceeds thereof for the satisfaction of Tenant's remedies for the collection of
a judgment (or other judicial process) requiring the payment of money in the
event of any default by Lender and its assigns as Landlord under the Lease. No
other property or assets of Lender or its assigns shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to the Lease, the relationship of Landlord and
Tenant thereunder or Tenant's use or occupancy of the Leased Property.
Section 6.
Tenant has not subordinated the Lease or any of its rights under the Lease
to any lien or mortgage other than the Mortgage prior to the date hereof, and it
will not subordinate the Lease or the rights of the Tenant thereunder to any
lien or mortgage other than the Mortgage without the prior written consent of
Lender, unless otherwise permitted under the Lease. If Tenant at any time
acquires the interest of the Landlord under the Lease, the Lease will remain in
full force and effect and the interests of the Tenant and the Landlord under the
Lease will not merge.
<PAGE> 102
Section 7.
All notices, demands, requests, consents, approvals and other
communications required or permitted to be given hereunder (collectively,
"Notices" or "notices") shall be in writing and delivered by hand or mailed (by
registered or certified mail, return receipt requested or reputable nationally
recognized overnight courier service and postage prepaid), addressed to the
respective parties, as follows:
(a) if to Tenant:
AmeriCold Logistics [II], LLC
10 Glenlake Parkway
9th Floor
Atlanta, Georgia 30328
Attention: Chief Executive Officer
(b) if to Lender:
_________________________
_________________________
_________________________
Attn: ___________________
or as to each party, to such other address as the party may designate by a
notice given in accordance with the requirements contained in this Section 7.
Section 8.
No prepayment of rent or additional rent due under the Lease of more than
one month in advance, and no amendment, modification, surrender or cancellation
of the Lease, shall be binding upon Lender, as holder of the Mortgages or as
Landlord under the Lease if it succeeds to that position, unless consented to in
writing by Lender. In addition, Lender as holder of the Mortgages or as Landlord
under the Lease if it succeeds to that position shall in no event have any
liability for the performance or completion of any work or to make improvements
to the Mortgaged Premises.
Section 9.
<PAGE> 103
If at any time Lender shall notify Tenant that an Event of Default has
occurred under the Mortgage and shall demand that any then unpaid rent or
additional rent and any rent or additional rent thereafter payable under the
Lease be paid directly to Lender, then Tenant shall thenceforth and until
notified by Lender that the matter in default has been paid or remedied pay such
rent or additional rent to Lender as the same becomes due under the Lease,
without the necessity for further notice and without obligation on the part of
Tenant to inquire whether or not default under the Mortgage occurred or has been
remedied. Any such payment made by the Tenant to Lender shall discharge in full
Tenant's obligation to make that payment to Landlord.
Section 10.
This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall apply to, bind and inure to the benefit of the parties hereto
and their respective successors and assigns. As used herein "Lender" shall
include any subsequent holder of the Mortgage. This Agreement shall supersede
and replace any agreement entered into prior to the date hereof by Tenant (or
any predecessor in interest of Tenant under the Lease) with any previous holder
of a mortgage covering the Mortgaged premises, which has been assigned to
Lender.
Section 11.
This Agreement shall be construed in accordance with the laws of the State
in which the Leased Property is situate.
[remainder of page intentionally left blank]
<PAGE> 104
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed, sealed and delivered in their respective names and in their behalf; and
if a corporation, by its officers duly authorized, as of the date first
hereinabove set forth.
Landlord:
[________________________]
By:_______________________
Tenant:
AMERICOLD LOGISTICS [II], LLC, a Delaware
limited liability company
By:
--------------------------------------
Name:
Title:
Lender:
[_________________________________]
By: [_____________________________]
By:___________________________
<PAGE> 105
STATE OF )
) SS.:
COUNTY OF )
On this day of , 1999, before me
personally came to me known, who being by me
duly sworn, did depose and say that he resides at ,
that he is the of , the trust described in and
which executed the foregoing as authorized signatory and on behalf of ;
that he knows the seal of said trust,that the seal affixed to said instrument is
such trust seal, that it was so affixed by order of the board of trustees of
said trust, and that he signed his name thereto by like order. In witness
whereof I hereunto set my hand and official seal.
____________________
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this day of , 1999, before
me personally came to me known, who by me being
duly sworn, did depose and say that he resides at ,
that he is the of ., the
of , the limited partnership described
in and which executed the foregoing instrument; that it was executed by
authority of the board of directors of said corporation and that he signed his
name thereto by like authority; and he acknowledged to me that said instrument
was executed by said corporation for and on behalf of said limited partnership
for the purposes therein mentioned.
<PAGE> 106
____________________
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On this day of , 1999, before me
personally came to me known, who being by me duly sworn,
did depose and say that he resides at , that he is the
of , the corporation described in and which
executed the foregoing instrument; that he knows the seal of said corporation,
that such corporate seal was affixed to the foregoing instrument; that it was so
affixed by order of the Board of Directors of said Corporation, and who
thereupon signed his name thereto by like order. In witness whereof I hereunto
set my hand and official seal.
____________________
Notary Public
(Notarial Seal)
<PAGE> 107
Schedule 15.4
Arbitration Procedures
Arbitration shall be held in the city of Atlanta, Georgia in accordance with the
rules of the American Arbitration Association then in effect. There shall be one
arbitrator appointed in accordance with those rules. As part of the award, the
arbitrator shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. The arbitration
shall commence within thirty (30) days after demand for arbitration is made by a
party hereto. The arbitrator shall render his/her award within thirty (30) days
after the completion of the arbitration and the arbitration shall be held on
consecutive Business Days. Failure by either party to submit to arbitration as
required under this Lease shall result in the arbitrator ruling in favor of the
other party is such other party has submitted to arbitration under this Lease.
Judgement may be entered on the arbitrator's award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction of the
Georgia courts for that purpose. The arbitrator may grant injunctive or other
equitable relief.
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
Americold Corporation:
We consent to the incorporation by reference in the registration statement (333-
77143) on Form S-8 of Vornado Operating Company of our report dated May 2, 1997,
with respect to consolidated balance sheets of Americold Corporation as of the
last day of February 1997 and 1996, and the related consolidated statements of
operations, common stockholders' deficit and cash flows for each of the years in
the three-year period ended the last day of February 1997, which report appears
in the Form 8-K/A of Vornado Operating Company dated May 26, 1999.
/s/ KPMG Peat Marwick LLP
Portland, Oregon
May 26, 1999
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Vornado Operating Company on Form S-8 of our reports dated April 23, 1998 and
March 15, 1998 (April 23, 1998 as to Note 4)(relating to the consolidated
financial statements of AmeriCold Corporation and Subsidiary) appearing in this
Current Report on Form 8-K/A of Vornado Operating Company.
/s/DELOITTE & TOUCHE LLP
Portland, Oregon
May 20, 1999
<PAGE> 2
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Vornado Operating Company on Form S-8 of our reports dated April 16, 1999
(relating to the combined financial statements of AmeriCold Corporation, URS
Logistics, Inc., VC Omaha Holdings, LLC and VC Missouri Holdings, LLC) and
March 15, 1998 (April 23, 1998 as to Note 4)(relating to the consolidated
financial statements of URS Logistics, Inc. and Subsidiary) appearing in this
Current Report on Form 8-K/A of Vornado Operating Company.
/s/ DELOITTE & TOUCHE LLP
Atlanta, Georgia
May 20, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports on the December 31, 1997 and 1996, financial statements
of American/Freezer Services, Inc. and Freezer Services-West Point, Inc.
(collectively "Freezer Services") included in this Form 8-K/A of Vornado
Operating Company (the "Company"), into the Company's Registration Statement on
Form S-8 as filed with the Securities and Exchange Commission on April 27,
1999. It should be noted the we have not audited any financial statements of
Freezer Services subsequent to December 31, 1997, or performed any audit
procedures subsequent to the dates of our reports.
/s/ Arthur Andersen LLP
Omaha, Nebraska
May 26, 1999
<PAGE> 1
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Vornado Operating Company
Saddle Brook, New Jersey
We consent to incorporation by reference in the Registration Statement on Form
S-8 (Registration No. 333-77143) of the Vornado Operating Company, filed with
the Securities and Exchange Commission on April 27, 1999, which incorporates by
reference Form 8-K dated March 12, 1999, as filed with the Securities and
Exchange Commission on March 31, 1999, as amended by Form 8-K/A dated and filed
with the Securities and Exchange Commission on May 26, 1999, of our report dated
February 13, 1998 on the combined balance sheet of THE CARMAR GROUP OF COMPANIES
as of December 31, 1997, and the related combined statements of income,
stockholders' and members' equity and cash flows for the year ended December 31,
1997 included in Form 8-K/A.
/s/ BAIRD, KURTZ & DOBSON
Joplin, Missouri
May 26, 1999
<PAGE> 1
Exhibit 99.1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
Americold Corporation:
We have audited the consolidated balance sheets of Americold
Corporation as of the last day of February 1996 and 1997, and the
related consolidated statements of operations, common stockholders'
deficit and cash flows for each of the years in the three-year
period ended the last day of February 1997. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Americold Corporation as of the last day of February
1996 and 1997, and the results of their operations and their cash
flows for each of the years in the three-year period ended the last
day of February 1997, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
Portland, Oregon
May 2, 1997
<PAGE> 2
AMERICOLD CORPORATION
Consolidated Balance Sheets
Last day of February 1996 and 1997
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
Assets 1996 1997
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,857 $ 13,702
Trade receivables, less allowance for doubtful accounts
of $218 and $396, respectively 25,461 27,560
Other receivables 3,512 3,138
Prepaid expenses 4,286 3,828
Tax refund receivable 3,336 2,636
Other current assets 845 891
--------- -------
Total current assets 58,297 51,755
Net property, plant and equipment 375,851 384,484
Cost in excess of net assets acquired, less accumulated
amortization of $22,138 and $24,644, respectively 77,255 74,749
Debt issuance costs, less accumulated amortization
of $3,987 and $5,168, respectively 6,627 11,041
Other noncurrent assets 8,962 9,005
-------- --------
Total assets $ 526,992 $ 531,034
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
<TABLE>
<CAPTION>
Liabilities, Preferred Stock and Common Stockholders' Deficit 1996 1997
------------------------------------------------------------- ---- ----
<S> <C> <C>
Current liabilities:
Accounts payable $ 11,363 $ 16,116
Accrued interest 19,056 18,466
Accrued expenses 11,604 13,660
Deferred revenue 5,707 5,555
Current maturities of long-term debt 2,732 5,229
Other current liabilities 4,630 5,259
--------- ---------
Total current liabilities 55,092 64,285
Long-term debt, less current maturities 461,667 465,834
Deferred income taxes 102,041 98,524
Other noncurrent liabilities 9,861 10,347
--------- ---------
Total liabilities 628,661 638,990
--------- ---------
Preferred stock, Series A, $100 par value. Authorized 1,000,000
shares; issued and outstanding 52,936 shares 5,771 5,753
--------- ---------
Common stockholders' deficit:
Common stock, $.01 par value. Authorized 10,000,000 shares; issued
and outstanding 4,931,194 and 4,995,556 shares, respectively 49 50
Additional paid-in capital 50,173 51,182
Retained deficit (157,345) (164,580)
Adjustment for minimum pension liability (317) (361)
--------- ---------
Total common stockholders' deficit (107,440) (113,709)
Commitments and contingencies --------- ---------
Total liabilities, preferred stock and common stockholders' deficit $ 526,992 $ 531,034
========= =========
</TABLE>
<PAGE> 4
AMERICOLD CORPORATION
Consolidated Statements of Operations
Years ended last day of February 1995, 1996 and 1997
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net sales $ 215,207 $ 279,788 $ 310,767
--------- --------- ---------
Operating expenses:
Cost of sales 138,132 194,936 228,762
Amortization of cost in excess of net assets acquired 2,535 2,773 2,506
Selling and administrative expenses 25,955 28,525 31,142
Employee stock ownership plan expense 750 750 500
--------- --------- ---------
Total operating expenses 167,372 226,984 262,910
--------- --------- ---------
Gross operating margin 47,835 52,804 47,857
--------- --------- ---------
Other income (expense):
Interest income 1,870 1,199 932
Interest expense (55,344) (56,610) (56,678)
Amortization of debt issuance costs (1,276) (964) (1,185)
Gain on insurance settlement 16,953 - -
Reorganization expenses - (7,344) (771)
Other, net 753 (591) 701
--------- --------- ---------
Total other expense (37,044) (64,310) (57,001)
--------- --------- ---------
Income (loss) before income taxes and extraordinary item 10,791 (11,506) (9,144)
Provision (benefit) for income taxes 5,227 (3,426) (2,604)
--------- --------- ---------
Income (loss) before extraordinary item 5,564 (8,080) (6,540)
Extraordinary item, net of income tax benefit of $1,158 - (1,794) -
--------- --------- ---------
Net income (loss) $ 5,564 $ (9,874) $ (6,540)
========= ========= =========
Income (loss) per share:
Income (loss) before extraordinary item $ 1.00 $ (1.80) $ (1.46)
Extraordinary item - (.37) -
--------- --------- ---------
Net income (loss) per common share $ 1.00 $ (2.17) $ (1.46)
========= ========= =========
Weighted average number of shares outstanding 4,864 4,867 4,952
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
AMERICOLD CORPORATION
Consolidated Statements of Common Stockholders' Deficit
Years ended last day of February 1995, 1996 and 1997
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
Adjustment
for
Additional minimum Total common
Common paid-in Retained pension stockholders'
stock capital deficit liability deficit
----- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Balance last day of February 1994 $ 49 $ 49,082 $(151,653) $ (55) $(102,577)
Purchase of common stock (3,065 shares) - (60) - - (60)
11.5% preferred stock dividend - - (190) - (190)
Undeclared cumulative preferred stock dividend - - (496) - (496)
Adjustment for minimum pension liability - - - 12 12
Net income - - 5,564 - 5,564
-------- -------- -------- -------- --------
Balance last day of February 1995 49 49,022 (146,775) (43) (97,747)
Issuance of common stock (26,685 shares) - 436 - - 436
13.5% preferred stock dividend - 715 (219) - 496
Undeclared cumulative preferred stock dividend - - (477) - (477)
Adjustment for minimum pension liability - - - (274) (274)
Net loss - - (9,874) - (9,874)
-------- -------- -------- -------- --------
Balance last day of February 1996 49 50,173 (157,345) (317) (107,440)
Issuance of common stock (64,362 shares) 1 1,009 - - 1,010
13.5% preferred stock dividend - - (237) - (237)
Undeclared cumulative preferred stock dividend - - (458) - (458)
Adjustment for minimum pension liability - - - (44) (44)
Net loss - - (6,540) - (6,540)
--------- -------- -------- -------- --------
Balance last day of February 1997 $ 50 $ 51,182 $(164,580) $ (361) $(113,709)
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
AMERICOLD CORPORATION
Consolidated Statements of Cash Flows
Years ended last day of February 1995, 1996 and 1997
(In Thousands)
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 5,564 $ (9,874) $ (6,540)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 20,140 19,682 20,697
Amortization of cost in excess of net assets acquired 2,535 2,773 2,506
Amortization of debt issuance costs 1,276 964 1,185
Amortization of original issue discount 1,369 430 -
Gain (loss) on sale of assets (286) (555) 25
Gain on insurance settlement (16,953) - -
Other amortization 302 570 570
Write-off of unamortized issuance costs - 962 -
Write-off of original issuance discount - 1,989 -
Write-off of long-term investment - 750 -
Change in assets and liabilities:
Receivables (6,952) (6,358) (1,725)
Prepaid expenses (1,268) 954 458
Tax refund receivable 1,012 (3,057) 700
Other current assets (67) (150) (46)
Accounts payable 1,291 4,622 4,753
Accrued interest 349 1,373 (590)
Accrued expenses 3,833 259 2,806
Deferred revenue 1,142 (207) (152)
Other current liabilities (1,032) 718 629
Deferred income taxes 1,540 (4,057) (3,517)
Other noncurrent liabilities (1,111) 772 (2,901)
-------- ------- --------
Net cash provided by operating activities 12,684 12,560 18,858
-------- ------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 7
AMERICOLD CORPORATION
Consolidated Statements of Cash Flows, Continued
(In Thousands)
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from investing activities:
Proceeds from sale of assets $ 1,105 $ 6,169 $ 1,658
Expenditures for property, plant and equipment (13,203) (34,183) (33,634)
Purchase of long-term investment (447) - -
Proceeds from insurance policies 26,343 - -
Expenditures for logistics software (1,650) (230) (56)
Other items, net 287 646 943
--------- -------- ---------
Net cash provided (used) by investing activities 12,435 (27,598) (31,089)
--------- -------- ---------
Cash flows from financing activities:
Principal payments under capital lease and other
debt obligations (2,087) (2,752) (2,425)
Proceeds from mortgage 13,475 - 15,222
Retirement of note and mortgage (9,044) - (11,376)
Proceeds from sale of senior subordinated notes - - 120,000
Retirement of senior subordinated debentures - - (115,000)
Retirement of mortgage bonds - (10,000) -
Release of escrow funds 2,714 20,083 4,820
Deposit of escrow funds - (4,768) -
Debt issuance costs (846) (269) (5,668)
Purchase of treasury stock (60) - -
Issuance of stock - 438 218
Preferred stock dividend - - (715)
--------- --------- ---------
Net cash provided by financing activities 4,152 2,732 5,076
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 29,271 (12,306) (7,155)
Cash and cash equivalents at beginning of year 3,892 33,163 20,857
--------- --------- ---------
Cash and cash equivalents at end of year $ 33,163 $ 20,857 $ 13,702
========= ========== =========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest, net of
amounts capitalized $ 53,626 $ 54,806 $ 57,268
Cash paid during the year for income taxes 2,675 2,531 58
Supplemental schedule of noncash investing and
financing activities:
Capital lease obligations incurred to lease new
equipment 1,120 844 243
Sale proceeds placed in escrow 1,483 450 5,334
Exchange of senior subordinated debentures - 115,000 -
Employee stock ownership plan contribution made
with common stock - - 750
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 8
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
Last day of February 1996 and 1997
(1) Summary of Significant Accounting Policies
------------------------------------------
Accounting policies and methods of their application that
significantly affect the determination of financial position,
cash flows and results of operations are as follows:
(a) Business Description
--------------------
Americold Corporation (the "Company") provides integrated
logistics services for the frozen food industry consisting of
warehousing and transportation management. These services are
provided through the Company's network of 49 refrigerated
warehouses and its refrigerated transportation management
unit. The Company has a wholly-owned warehousing subsidiary,
Americold Services Corporation.
In addition, the Company operates a limestone quarry. This
business is not significant to the Company as a whole and is
not required to be reported as a separate industry segment.
(b) Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of
Americold Corporation and its wholly-owned subsidiary. All
significant intercompany transactions, profits and balances
have been eliminated.
(c) Property, Plant and Equipment
-----------------------------
Property, plant and equipment are stated at cost.
Depreciation is generally provided on the straight-line method
over the estimated useful lives of the respective assets
ranging from 3 to 45 years for financial reporting purposes
and on accelerated methods for income tax purposes where
possible. Property held under capital leases (at capitalized
value) is amortized on the straight-line method over its
estimated useful life, limited generally by the lease period.
The amortization of the property held under capital leases is
included with depreciation expense. Estimated remaining
useful lives are reviewed periodically for reasonableness and
any necessary change is generally effected at the beginning of
the accounting period in which the revision is adopted.
Maintenance and repairs are expensed in the year incurred;
major renewals and betterments of equipment and refrigeration
facilities are capitalized and depreciated over the remaining
life of the asset.
(d) Cost in Excess of Net Assets Acquired
-------------------------------------
On December 24, 1986, all the outstanding capital stock of the
Company was acquired by a private group consisting of
affiliates of Kelso & Company, Inc., certain institutional
investors and certain key employees and members of the
Company's management. The acquisition of the Company was
accounted for as a purchase. An allocation of the purchase
price was made to the acquired assets and liabilities based on
their estimated fair market values at the date of acquisition.
The unallocated purchase price is the Company's estimate of
goodwill associated with the acquisition and is being
amortized using the straight-line method over a period of 40
years.
The Company assesses the recoverability of the goodwill by
determining whether the amortization of the goodwill balance
over its remaining useful life can be recovered through
projected undiscounted future net income. The amount of
goodwill impairment, if any, is measured based on projected
discounted future net income using a discount rate reflecting
the Company's current average cost of funds.
(e) Debt Issuance Costs
-------------------
Debt issuance costs incurred are amortized over the term of
the related debt.
(f) Income Taxes
------------
Income taxes are computed using the asset and liability
method. Under the asset and liability method, deferred income
tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of
assets and liabilities and are measured using the currently
enacted tax rates and laws.
(g) Management Estimates and Assumptions
------------------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
(h) Revenue Recognition
-------------------
The Company's revenues are primarily derived from services
provided to customers in both handling and storing frozen
products and from freight services. Handling and storage
revenue is based primarily upon the total weight of frozen
product received into and held in storage and is recognized as
earned, not as billed. Differences between revenue earned and
revenue billed are recorded as deferred revenue.
Approximately 50% of the handling revenue is deferred until
the customer's products are released. The freight services
revenues and direct costs are recognized upon delivery of
freight.
(i) Income (Loss) Per Share
-----------------------
Income (loss) per common share is computed by dividing net
income (loss) less preferred dividend requirements, by the
weighted average of common shares outstanding.
(j) Major Customers
---------------
Consolidated net sales to H. J. Heinz Company and subsidiaries
amounted to approximately $45.5 million, $108.1 million and
$149.9 million in the years ended the last day of February
1995, 1996 and 1997, respectively. No other customer
accounted for 10% or more of consolidated net sales.
(k) Cash and Cash Equivalents
-------------------------
All highly liquid investments with a maturity of three months
or less when purchased are considered to be cash equivalents.
There were cash equivalents of $15.4 million and $10.0 million
as of the last day of February 1996 and 1997, respectively.
(l) New Accounting Standards
------------------------
Effective March 1, 1996, the Company adopted Financial
Accounting Standard Board Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement generally requires assessment of recoverability
of an asset after events or circumstances that indicate an
impairment to the asset and its future cash flows. Any
impairment loss would be recognized as a one-time charge to
earnings affecting results of operations, but would not affect
the cash flow of the Company. There was no impairment loss to
report upon adoption.
Effective March 1, 1996, the Company adopted Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"). SFAS No. 123 requires that, except for
transactions with employees that are within the scope of
Accounting Principles Board Opinion No. 25 ("APB No. 25"), all
transactions in which goods or services are the consideration
received for the issuance of equity instruments are to be
accounted for based on the fair value of the consideration
received or the fair value of the equity instrument issued,
whichever is more reliably measurable. However, it also
allows an entity to continue to measure compensation costs for
those plans using the intrinsic value based method of
accounting prescribed by APB No. 25. Entities electing to
follow the accounting methods of APB No. 25 must make pro
forma disclosures of net income and, if presented, earnings
per share, as if the fair value method of accounting defined
in SFAS No. 123 had been applied.
Pro forma disclosures required for entities that elect to
continue to measure compensation cost using APB No. 25 must
include the effects of all awards granted in fiscal years that
begin after December 15, 1994. The Company has elected to
continue using APB No. 25 and make the necessary SFAS No. 123
pro forma disclosures.
The Company has not implemented the requirements of Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("SFAS No. 128"),
although it will be required to do so for fiscal years
beginning March 1, 1997 and thereafter.
This Statement establishes a different method of computing net
income per share than is currently required under the
provisions of Accounting Principles Board Opinion No. 15.
Under SFAS No. 128, the Company will be required to present
both basic net income per share and diluted net income per
share. The Company estimates that the adoption of SFAS No.
128 will not have a material impact on its income per share.
(2) Net Property, Plant and Equipment
---------------------------------
Net property, plant and equipment consists of the following
(in thousands):
Last day
of February
-----------
1996 1997
---- ----
Land $ 31,911 $ 35,038
Refrigerated facilities, buildings
and land improvements 450,402 467,496
Machinery and equipment 67,661 74,599
------- -------
549,974 577,133
Less accumulated depreciation 174,123 192,649
------- -------
$375,851 $384,484
======= =======
(3) Other Noncurrent Assets
-----------------------
Other noncurrent assets consist of the following (in
thousands):
Last day
of February
-----------
1996 1997
---- ----
Restricted funds held by trustee $ 5,037 $ 5,407
Real estate owned 300 300
Security deposits 261 261
Other 3,364 3,037
------- -------
$ 8,962 $ 9,005
======= =======
(4) Leases
------
Assets under capital leases are included in net property,
plant and equipment and consist of the following (in
thousands):
Last day
of February
-----------
1996 1997
---- ----
Refrigerated facilities,
buildings and land improvements $ 7,075 $ 7,075
Machinery and equipment 4,635 3,124
------- -------
11,710 10,199
Less accumulated depreciation 4,108 3,368
------- -------
$ 7,602 $ 6,831
======= =======
Future minimum lease payments under noncancelable leases for
years ended after the last day of February 1997 are as follows
(in thousands):
Year ending the last Capital Operating
day of February leases leases
-------------------- ------- ---------
1998 $ 4,013 $ 6,298
1999 782 5,348
2000 590 4,290
2001 509 3,211
2002 350 3,072
Thereafter 742 20,540
------- -------
Total minimum lease payments $ 6,986 $ 42,759
=======
Less amounts representing
interest 1,235
-------
Present value of net minimum
lease payments $ 5,751
=======
Included in expenses for the years ended the last day of
February 1995, 1996 and 1997 are approximately $9.5 million,
$7.7 million and $7.2 million, respectively, of rental expense
net of sublease rentals for operating leases.
The Company has arranged for up to $25.0 million in lease
financing of which approximately $17.7 million was used as of
the last day of February 1997.
In November 1996, the Company entered into a sale/leaseback
transaction of its Pasco, Washington facility. Of the
approximately $6.8 million of net proceeds, the Company
received approximately $1.5 million at closing and the
remaining $5.3 million was placed in escrow with the Trustee
under the indenture governing the Company's first mortgage
bonds. The Company has until November 1997 to substitute the
unencumbered property for the total amount of cash, or any
portion thereof, held in escrow. Any escrowed funds remaining
after the one year period will be used to repurchase
outstanding mortgage bonds. The deferred gain resulting from
the sale/leaseback transaction of approximately $2.7 million
is being amortized over the approximate ten year life of the
lease.
(5) Accrued Expenses
----------------
Accrued expenses consist of the following (in thousands):
Last day
of February
-----------
1996 1997
---- ----
Accrued payroll $ 3,565 $ 3,747
Accrued vacation pay 2,462 2,831
Accrued taxes 1,022 1,163
Accrued employee stock ownership
plan contribution 750 500
Other 3,805 5,419
------- --------
$ 11,604 $ 13,660
======== ========
(6) Other Current Liabilities
-------------------------
Other current liabilities consist of the following (in
thousands):
Last day
of February
-----------
1996 1997
---- ----
Workers' compensation $ 991 $ 693
Pension 1,100 2,110
Other 2,539 2,456
-------- -------
$ 4,630 $ 5,259
======== =======
(7) Long-term Debt
--------------
Long-term debt consists of the following (in thousands):
Last day
of February
-----------
1996 1997
---- ----
Capital lease obligations (9.3% and
9.1% weighted average interest
rate, respectively) $ 6,720 $ 5,751
Senior subordinated debentures - 15%
fixed, due May 1, 2007 115,000 -
Senior subordinated notes - 12.875%
fixed, due May 1, 2008. Interest
rate may increase by 1% effective
November 1, 1997 - 120,000
First mortgage bonds, Series A - 11.45%
fixed, due June 30, 2002, interest
payments only to January 1, 1999 with
principal amortization commencing
July 1, 1999 140,000 140,000
First mortgage bonds, Series B - 11.5%
fixed, due March 1, 2005, interest
payments only to September 1, 2003
with a mandatory sinking fund payment
of $88,125 on March 1, 2004 176,250 176,250
Mortgage notes payable - various
interest rates ranging from 8.6% to
13.6% requiring monthly principal and
interest payments with maturities
ranging from 2006 to 2017 26,429 29,062
------- -------
464,399 471,063
Less current maturities of long-term
debt 2,732 5,229
------- -------
$ 461,667 $ 465,834
======== =========
The Company has issued first mortgage bonds and the bonds are
secured by mortgages or deeds of trust on 31 of the Company's
facilities. The Company entered into an indenture in
connection with the issuance of the first mortgage bonds
which, like the Company's revolving credit agreement with the
Company's primary bank, requires the Company to meet certain
affirmative and restrictive covenants. Significant
restrictive items include, among others, limitations on
additional indebtedness, liens, dividends, capital
expenditures, asset dispositions, lease commitments and
investments. Also, certain "pro forma debt service" ratios
and senior debt to net worth ratios must be maintained. At
February 28, 1997, the Company was in compliance with all such
covenants.
The Company was notified in December 1996 that the
Metropolitan Life Insurance Company (the "Met") sold its
entire $140 million holdings of the Company's Series A, 11.45%
First Mortgage Bonds. As a result of such transaction, the
Second Amended and Restated Investment Agreement, dated May 5,
1995, between the Met and the Company, which included certain
financial covenants and other restrictive covenants, was
terminated.
On April 9, 1996, the Company sold $120.0 million aggregate
principal amount of the Company's 12.875% Notes. The interest
rate on the 12.875% Notes can be increased from 12.875% to
13.875% if the 12.875% Notes are not rated "B3 or higher" by
Moody's Investor Services, and "B- or higher" by Standard &
Poor's, by November 1, 1997. The 12.875% Notes have been
rated "B-" by Standard & Poor's since they were issued, and as
of February 28, 1997, "Caa" by Moody's Investor Services.
The available amount under the Company's revolving credit
agreement was $23.1 million as of the last day of February
1997, of which $8.7 million of letters of credit were
outstanding. No cash borrowings were outstanding at February
28, 1997.
As of the last day of February 1997, aggregate annual
maturities of long-term debt are as follows (in thousands):
Year ended the last
day of February
-------------------
1998 $ 5,229
1999 2,463
2000 32,502
2001 38,642
2002 38,282
Thereafter 353,945
-------
$ 471,063
========
(8) Employee Benefit Plans
----------------------
(a) Defined Benefit Pension Plans
-----------------------------
The Company has defined benefit pension plans which cover
substantially all employees, other than union employees
covered by union pension plans under collective bargaining
agreements. Benefits under these plans are based on years of
credited service and compensation during the years preceding
retirement or on years of credited service and established
monthly benefit levels.
Pension expense for all plans, including plans jointly
administered by industry and union representatives, totaled
$1.4 million, $1.7 million and $1.9 million for years ended
the last day of February 1995, 1996 and 1997, respectively.
Actuarial valuations for defined benefit plans are performed
as of the end of the plan year. The most recent actuarial
valuations are as of the last day of February 1997.
The funded status of the Company's defined benefit pension
plans and the accrued pension expense amounts recognized in
the Company's consolidated financial statements within other
noncurrent liabilities, as of the last day of February 1996
and 1997, are as follows (in thousands):
<TABLE>
<CAPTION>
Last day of Last day of
February 1996 February 1997
--------------------------- --------------------------
Plans with Plans with Plans with Plans with
assets in accumulated assets in accumulated
excess of benefits in excess of benefits in
accumulated excess of accumulated excess of
benefits assets benefits assets
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Accumulated benefit obligations:
Vested benefits $ 19,902 $ 7,382 $ 19,805 $ 7,740
Nonvested benefits 220 128 947 316
-------- -------- -------- --------
20,122 7,510 20,752 8,056
Effect of assumed future
compensation increases 3,808 - 4,379 -
-------- -------- -------- --------
Projected benefit obligations
for services rendered to date 23,930 7,510 25,131 8,056
Plan assets at fair value 20,644 6,005 22,227 6,659
-------- -------- -------- --------
Projected benefit obligations in excess
of plan assets 3,286 1,505 2,904 1,397
Unrecognized prior service cost (119) (108) (85) (101)
Unrecognized net gain (loss) from past
experience different from that assumed
and effects of changes in assumptions 1,323 (317) 1,277 (361)
-------- -------- -------- --------
Accrued pension liability $ 4,490 $ 1,080 $ 4,096 $ 935
======== ======== ========= =========
</TABLE>
Net periodic pension expense for the years ended the last day
of February 1995, 1996 and 1997 includes the following
components (in thousands):
Last day of February
1995 1996 1997
---- ---- ----
Service cost - benefits earned
during the period $ 1,107 $ 1,165 $ 1,186
Interest cost on projected
benefit obligation 2,121 2,293 2,431
Actual return on plan assets (2,554) (4,301) (2,826)
Net amortization and deferral (143) 1,541 109
-------- -------- --------
$ 531 $ 698 $ 900
======== ======== ========
Actuarial assumptions used for determining pension liabilities
were:
Last day of February
1995 1996 1997
---- ---- ----
Discount rate for interest
cost 8.5% 8.0% 8.0%
Rate of increase in future
compensation levels 4.0% 4.0% 4.0%
Expected long-term rate of
return on plan assets 10.5% 10.5% 10.5%
Plan assets are assigned to several investment management
companies and are invested in various equity and fixed fund
investments in accordance with the Company's investment
policy.
(b) Employee Stock Ownership Plan
-----------------------------
The Company established an employee stock ownership plan,
effective March 1, 1987, which is intended to provide
qualifying employees an equity interest in the Company, as
well as potential retirement benefits. The trust established
under the plan is designed to invest primarily in the
Company's stock. Contributions by the Company, in the form of
common or preferred stock of the Company, or cash, or a
combination thereof, may be made to the trustee on behalf of
eligible participants for each plan year as determined by the
Company's Board of Directors. Participating employees with
vested benefits, upon retirement or termination, have the
option of retaining the stock or selling it back to the
Company at its fair market value.
(c) Postretirement Benefits Other Than Pensions
-------------------------------------------
In addition to providing retirement benefits, the Company
provides certain health care and life insurance benefits for
retired employees. These benefits are provided to
substantially all employees other than certain union employees
who have elected not to participate.
The total of accumulated postretirement benefits obligation
(APBO), which is an unfunded obligation, is as follows:
Last day of February
1995 1996 1997
---- ---- ----
Retirees $ 2,314 $ 2,375 $ 2,618
Active employees 1,511 1,832 2,209
-------- -------- --------
$ 3,825 $ 4,207 $ 4,827
======== ======== ========
The components of net periodic postretirement expense for the
years ended the last day of February are as follows (in
thousands):
1995 1996 1997
---- ---- ----
Service cost benefits earned
in period $ 104 $ 114 $ 123
Interest cost on APBO 313 334 383
Amortization of unamortized
prior service cost (22) (22) (8)
------- ------- -------
$ 395 $ 426 $ 498
======= ======= =======
The discount rate used to determine the APBO and net periodic
expense as of February 28, 1995 was 9.0%, and as of February
29, 1996 and February 28, 1997 was 8.5%.
For fiscal 1997, an 11% increase in the medical cost trend
rate was assumed. This rate is projected to decrease
incrementally to 5.5% after nine years. A 1% increase in the
medical trend rate would increase the APBO by $0.2 million and
increase the net periodic expense by a negligible amount.
9. Common Stockholders' Deficit
---------------------------
The Company has reserved 300,000 shares of common stock for
issuance under a stock option plan established in 1987. Under
the plan, options are granted by the Compensation Committee of
the Board of Directors to purchase common stock at a price not
less than 85% of the fair market value on the date the option
is granted.
Stock options outstanding and transactions involving the stock
option plan are summarized for the years ended the last day of
February as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------------------- -------------------- -----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year 257,934 $16.06 253,795 $16.17 249,656 $15.45
Granted - - - - 160,000 12.30
Exercised - - - - (21,748) 10.00
Cancelled - - - - (160,000) 19.77
Forfeited (4,139) 10.00 (4,139) 10.00 (2,760) 10.00
-------- ----- -------- ----- -------- -----
Outstanding at end of year 253,795 $16.17 249,656 $16.26 225,148 $11.63
======= ===== ======= ===== ======= =====
Options exercisable at
year end 185,795 $14.57 213,656 $15.45 65,148 $10.00
======= ===== ======= ===== ======= =====
Weighted average grant date
fair value of options granted
during the year $ 0 $ 0 $ 2.67
===== ===== =====
</TABLE>
The Company has computed the value of all options granted
during fiscal 1997 using the minimum value method as
prescribed under SFAS No. 123 for pro forma disclosure
purposes. The following weighted average assumptions were
used for the grants made in fiscal 1997: risk free interest
rate at 6.875%; expected life of ten years; and dividend rate
of zero percent.
The total value of options granted during fiscal 1997 was
computed at $428,000. The options granted in fiscal 1997 have
a five-year vesting schedule and compensation will be
amortized on a pro forma basis over that period.
The options granted in fiscal 1997 had not vested as of the
last day of February 1997 and therefore there would be no
compensation cost in the current year under the pro forma
disclosure provisions of SFAS No. 123.
The effects of applying SFAS No. 123 in the pro forma
disclosure are not indicative of future amounts.
As of February 28, 1997, options for 225,148 shares were
outstanding with exercise prices between $10.00 and $12.30,
and a remaining weighted average contractual life of 6.7
years.
10. Preferred Stock
---------------
The Company has contributed shares of its Series A, variable
rate, cumulative preferred stock to the Americold Employee
Stock Ownership Plan (ESOP). The preferred stock is
redeemable by participants of the plan. As of the last day of
February 1996 and 1997, dividends not declared on the
Company's cumulative preferred stock total approximately
$477,000 and $458,000, respectively.
11. Income Taxes
------------
The provision (benefit) for income taxes consists of the
following (in thousands):
1995 1996 1997
---- ---- ----
Federal:
Current $ 2,867 $ - $ 250
Deferred 1,494 (2,858) (2,422)
-------- -------- --------
4,361 (2,858) (2,172)
-------- -------- --------
State:
Current 820 - 112
Deferred 46 (568) (544)
-------- -------- --------
$ 5,227 $ (3,426) $ (2,604)
======== ======== ========
Following is a reconciliation of the difference between income
taxes computed at the federal statutory rate and the provision
for income taxes (in thousands):
1995 1996 1997
---- ---- ----
Computed income tax expense
(benefit) at federal
statutory rate $ 3,777 $ (4,027) $ (3,200)
State and local income taxes,
net of federal income tax
benefits 563 (369) (280)
Amortization of cost in
excess of net assets
acquired 887 970 876
-------- -------- --------
$ 5,227 $ (3,426) $ (2,604)
======== ======== ========
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the related
amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities as of the last day
of February 1996 and 1997 are as follows (in thousands):
1996 1997
---- ----
Deferred tax liabilities:
Property, plant and equipment, due to
differences in depreciation and
prior accounting treatment $(110,574) $(109,099)
-------- ---------
Deferred tax assets:
Receivables, due to allowance for
doubtful accounts 86 155
Employee compensation and other
benefits 1,879 3,605
Capital leases, net 1,714 1,617
Postretirement benefits other than
pensions, due to accrual for
financial reporting purposes 1,650 1,794
Alternative minimum tax credit
carryforwards 2,865 3,192
Other, net 1,659 1,532
--------- ---------
Total deferred tax assets 9,853 11,895
--------- ---------
Net deferred tax liability
before valuation allowance (100,721) (97,204)
Deferred tax asset valuation allowance (1,320) (1,320)
--------- ---------
$(102,041) $ (98,524)
========= =========
The valuation allowance for deferred tax assets as of March 1,
1995 was $1.3 million. The valuation allowance is required to
reduce the amount of deferred tax assets to an amount which
will more likely than not be realized.
At February 28, 1997, the Company has an alternative minimum
tax credit carryforward of approximately $3.2 million
available to offset future regular taxes in excess of future
alternative minimum taxes.
12. Extraordinary Item
------------------
In conjunction with the exchange of the senior subordinated
debentures and the repurchase of the $10.0 million of first
mortgage bonds in fiscal 1996, as discussed in note 15,
unamortized original issue discount of approximately $2.0
million and unamortized issuance costs of approximately $1.0
million were written off, resulting in an extraordinary loss,
net of taxes, of approximately $1.8 million.
13. Disclosures About The Fair Value of Financial Instruments
---------------------------------------------------------
Cash, Trade Receivables, Other Receivables, Accounts Payable
and Accrued Expenses
------------------------------------------------------------
The carrying amount of these items approximates fair value
because of the short maturity of these instruments.
Long-Term Debt
--------------
The fair values of each of the Company's long-term debt
instruments are based on (a) the amount of future cash flows
associated with each instrument discounted using the Company's
current borrowing rate for similar debt instruments of
comparable maturity; (b) in the case of the first mortgage
bonds - Series B and senior subordinated notes, market price;
or (c) in the case of the first mortgage bonds - Series A, at
par, because there is not a market for such securities (in
thousands).
As of the last day
of February 1997
------------------
Estimated
fair
Carrying market
amount value
------ ------
Senior subordinated notes $120,000 $124,500
First mortgage bonds - Series A 140,000 140,000
First mortgage bonds - Series B 176,250 185,063
Mortgage notes payable 29,062 29,062
Limitations
-----------
Fair value estimates are made at a specific point in time,
based on relevant market information and information about the
financial instrument. These estimates are subjective in
nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the
estimates.
14. Gain on Insurance Settlement
----------------------------
Gain on insurance settlement of approximately $17.0 million
relates to the Company's settlement of its first party claims
with its insurance carriers for business interruption,
property damage and out-of-pocket expenses with respect to the
December 1991 fire at the Company's Kansas City, Kansas
warehouse facility. No previous income recognition was
determinable until the Company had settled all of the lawsuits
and claims related to the fire.
15. Plan of Reorganization Under Chapter 11
---------------------------------------
On May 9, 1995, the Company filed a prepackaged plan of
reorganization (the "Plan") under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court
for the District of Oregon (the "Court"). The principal
purpose of the Plan was to reduce the Company's short-term
cash requirements with respect to payments due on its
subordinated indebtedness and to adjust certain restrictive
financial covenants and certain other provisions contained in
the Amended and Restated Investment Agreement, dated March 2,
1993, between the Company and the Met. On June 19, 1995, the
Court approved the Company's Disclosure Statement dated April
14, 1995 and the Company's solicitation of votes to accept or
reject the Plan, and confirmed the Plan. On June 30, 1995,
the Plan became effective.
In connection with the Plan, the Company rejected certain
lease agreements relating to four warehouse facilities at
Watsonville, Oakland and San Francisco, California; and
Chicago, Illinois. In February 1996, the Company settled all
lease rejection issues with the lessor of three properties
located in Watsonville, Oakland and San Francisco, California.
Such settlement did not involve the payment of any damages by
the Company. In September 1996, the Company settled all lease
rejection issues with the lessor of the Chicago, Illinois
property. Such settlement, representing one year's rent
recovery by the lessor as provided by the Bankruptcy Code,
required a payment of approximately $0.4 million.
The Company has expensed the settlement payment and related
professional fees and all professional fees and similar
expenditures incurred related to the prepackaged bankruptcy as
"reorganization expenses."
<PAGE> 9
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
Americold Corporation:
We have audited the accompanying consolidated balance sheet of Americold
Corporation as of October 31, 1997, and the related consolidated statements of
operations and of cash flows for the eight months then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Americold Corporation at October
31, 1997, and the results of its operations and its cash flows for the eight
months then ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Portland, Oregon
April 23, 1998
-1-
<PAGE> 10
AMERICOLD CORPORATION
CONSOLIDATED BALANCE SHEET
OCTOBER 31, 1997
<TABLE>
<CAPTION>
October 31,
ASSETS 1997
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 10,517,000
Trade accounts receivable, less allowance for doubtful
accounts of $398,000 31,611,000
Other current assets 6,052,000
Refundable income taxes 2,670,000
Deferred tax assets 3,734,000
------------
Total current assets 54,584,000
------------
PROPERTY, PLANT, AND EQUIPMENT:
Land 34,910,000
Buildings and improvements 455,012,000
Machinery and equipment 72,483,000
Construction-in-progress 4,807,000
Other depreciable assets 2,571,000
------------
569,783,000
Less accumulated depreciation (202,366,000)
------------
Property, plant, and equipment, net 367,417,000
------------
CAPITALIZED LEASES:
Refrigerated warehouse facilities 7,075,000
Equipment 2,495,000
Less accumulated depreciation (3,338,000)
------------
Capitalized leases, net 6,232,000
------------
OTHER ASSETS:
Excess of costs over estimated fair value of net assets acquired, less
accumulated amortization of $26,315,000 73,078,000
Restricted funds held by trustee 5,426,000
Debt issuance costs, less accumulated amortization of
$2,971,000 9,254,000
Other 3,643,000
------------
Total other assets 91,401,000
------------
$519,634,000
============
</TABLE>
(Continued)
-2-
<PAGE> 11
AMERICOLD CORPORATION
CONSOLIDATED BALANCE SHEET
OCTOBER 31, 1997
<TABLE>
<CAPTION>
October 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997
<S> <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 33,424,000
Accrued interest 11,297,000
Due to Vornado Crescent Portland Partnership 127,445,000
Deferred revenue 6,415,000
Current portion of:
Long-term debt 1,792,000
Capitalized lease obligations 3,424,000
Other current liabilities 5,097,000
------------
Total current liabilities 188,894,000
LONG-TERM DEBT - Less current portion 342,422,000
CAPITALIZED LEASE OBLIGATIONS - Less current portion 1,759,000
DEFERRED TAX LIABILITIES 95,790,000
OTHER LIABILITIES 10,802,000
PREFERRED STOCK, Series A, $100 par value, authorized 1,000,000 shares; issued
and outstanding 46,798 4,680,000
STOCKHOLDERS' EQUITY:
Common stock; par value $.01 per share; 10,000,000 shares authorized; issued
and outstanding 5,037,823 51,000
Additional paid-in capital 51,869,000
Accumulated deficit (176,272,000)
Accumulated other comprehensive loss - adjustment for minimum
pension liability (361,000)
------------
Total stockholders' equity (124,713,000)
------------
$519,634,000
============
</TABLE>
See notes to consolidated financial statements. (Concluded)
-3-
<PAGE> 12
AMERICOLD CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
EIGHT MONTHS ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
October 31,
1997
<S> <C>
NET SALES $203,788,000
------------
OPERATING EXPENSES:
Cost of services 142,859,000
General and administrative 19,967,000
Depreciation and amortization 16,997,000
------------
Total operating expenses 179,823,000
------------
TOTAL OPERATING INCOME 23,965,000
------------
OTHER INCOME (EXPENSE):
Interest expense (36,999,000)
Interest income 642,000
Miscellaneous income 1,882,000
------------
Total other expense (34,475,000)
------------
NET LOSS BEFORE INCOME TAX BENEFIT
AND EXTRAORDINARY ITEM (10,510,000)
INCOME TAX BENEFIT 3,467,000
------------
LOSS BEFORE EXTRAORDINARY
ITEM (7,043,000)
EXTRAORDINARY ITEM, Net of income
tax benefit of $3,001,000 (4,649,000)
------------
NET LOSS $(11,692,000)
============
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 13
AMERICOLD CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
EIGHT MONTHS ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive
Loss-
Common Stock Additional Minimum
Paid-in Pension Accumulated
Shares Amount Capital Liability Deficit Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 28, 1997 4,995,556 $ 50,000 $ 51,182,000 $(361,000) $(164,580,000) $(113,709,000)
Stock options exercised 3,449 -- 34,000 -- -- 34,000
ESOP dividend 38,818 1,000 653,000 -- -- 654,000
COMPREHENSIVE LOSS:
Net loss -- -- -- -- (11,692,000) (11,692,000)
Adjustment for minimum pension liability -- -- -- -- -- --
--------- --------- ------------- --------- ------------- -------------
-- -- -- -- (11,692,000) (11,692,000)
--------- --------- ------------- --------- ------------- -------------
BALANCE, OCTOBER 31, 1997 5,037,823 $ 51,000 $ 51,869,000 $(361,000) $(176,272,000) $(124,713,000)
========= ========= ============= ========= ============= =============
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE> 14
AMERICOLD CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
EIGHT MONTHS ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
October 31,
1997
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (11,692,000)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 16,997,000
Gain on disposal of assets (874,000)
Partnership loss (262,000)
Deferred income taxes (6,469,000)
Deferred revenues 860,000
Changes in assets and liabilities:
Trade accounts receivable (4,051,000)
Other current assets 5,454,000
Accounts payable and accrued expenses 4,107,000
Other liabilities 294,000
Refundable income taxes (34,000)
Accrued interest (7,169,000)
Write-off of unamortized debt issuance costs 1,656,000
Write-off of long-term investment -
-------------
Net cash used in operating activities (1,183,000)
-------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (7,615,000)
Proceeds from disposals of property, plant,
and equipment 1,619,000
Investment in Partnership (250,000)
Other 139,000
-------------
Net cash used in investing activities (6,107,000)
=============
</TABLE>
(Continued)
-6-
<PAGE> 15
AMERICOLD CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
EIGHT MONTHS ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
October 31,
1997
<S> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and capital lease
obligations $ (1,666,000)
Due to Vornado Crescent Portland Partnership 127,445,000
Dividends paid (459,000)
Debt issuance costs (811,000)
Proceeds from borrowings 20,000,000
Retirement of long-term debt (140,000,000)
Repurchase of outstanding preferred stock (1,073,000)
Release of escrow funds 167,000
Interest on escrow funds (186,000)
ESOP dividend 654,000
Stock options exercised 34,000
------------
Net cash provided by financing activities 4,105,000
------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (3,185,000)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 13,702,000
------------
CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 10,517,000
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid during the year for:
Interest, net of amounts capitalized $ 44,168,000
Income taxes paid 34,000
</TABLE>
See notes to consolidated financial statements. (Concluded)
-7-
<PAGE> 16
AMERICOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EIGHT MONTHS ENDED OCTOBER 31, 1997
1. BASIS OF PRESENTATION AND SUBSEQUENT EVENT
On October 31, 1997, Americold Corporation (the "Company") was acquired by
an entity controlled by Vornado Realty Trust. As a result of concurrent
related transactions, the Company was acquired by Vornado/Crescent
Portland Partnership (the "Partnership"), a joint venture owned by Vornado
Realty Trust and Crescent Real Estate Equity Company. These financial
statements present the financial position and results of operations of the
Company on the historical cost basis for the eight-month period
immediately prior to the sale of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Americold Services Corporation. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The Company operates and manages public refrigerated
warehouses in the continental United States. The Company operates as one
reportable segment.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Depreciation and amortization are computed on the straight-line method
over the estimated remaining useful lives of the respective assets, which
are generally 30 years for buildings, 20 years for building improvements,
and 7 years for machinery and equipment. Depreciation and amortization
begin the month in which the asset is placed into service. For federal
income tax purposes, accelerated depreciation methods and shorter lives
are utilized.
Loan closing costs are capitalized and amortized over the term of the loan
to which they apply.
Lease agreements are classified as capital or operating in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 13, Accounting
for Leases, including subsequent amendments and interpretations.
Capitalized leases are recorded at the lower of the present value of
future lease payments or the fair market value of the property.
Capitalized leases are depreciated on a straight-line basis over the lease
terms for real estate and the estimated asset life or lease term for
equipment, whichever is shorter.
The Company charges construction costs with interest on borrowed funds
during the construction period of major facilities. This interest is
subsequently charged to operations through depreciation over the life of
capitalized property. Capitalized interest totaled $121,000 for the eight
months ended October 31, 1997.
-8-
<PAGE> 17
The Company defines "cash and cash equivalents" as all unrestricted cash
and highly liquid investments with an original maturity of three months or
less.
Revenues include storage and handling fees and management fees for
locations managed on behalf of third parties. Costs related to managed
facilities are included in operating expenses.
The Company charges customers for certain storage and handling in advance,
but defers the related revenue until it has been earned.
The Company records deferred income taxes for the difference in the bases
of assets and liabilities for tax and financial statement purposes at the
enacted rates in effect in the years that the differences are expected to
reverse.
The Company evaluates possible impairment of noncurrent assets and
recognition of impairment losses whenever circumstances indicate that the
carrying value of such assets may be less than their fair values.
2. INVESTMENT IN PARTNERSHIP
The Company is a partner with an unrelated third party (collectively the
"Partnership") for the purpose of operating a public refrigerated
warehouse in Park Rapids, Minnesota. The investment is accounted for using
the equity method.
The Company is entitled to 50% of the Partnership's earnings. Included in
revenues is $262,000 representing the Company's equity in the earnings of
the Partnership for the eight-month period ended October 31, 1997.
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
October 31,
1997
<S> <C>
First Mortgage bonds, Series B $176,250,000
Senior subordinated notes 120,000,000
Mortgage notes payable 27,964,000
Bridge loan 20,000,000
------------
344,214,000
Less current portion (1,792,000)
------------
$342,422,000
============
</TABLE>
-9-
<PAGE> 18
The Company had a credit agreement with Goldman Sachs Mortgage Company
which allows the Company to borrow up to $379,600,000. The credit
agreement is secured by the facilities of the Company. The Company had
borrowed $20,000,000 as of October 31, 1997 and subsequently the Company
borrowed an additional amount of $331,876,000, the proceeds of which were
used to pay the First Mortgage bonds, Series B, and the senior
subordinated notes. The interest rate under the agreement is based on the
monthly LIBOR rate which was 7.22% as of October 31, 1997. The agreement
was scheduled to mature on April 30, 1998.
On April 23, 1998, the Company borrowed $297,000,000 under a long-term
mortgage note. Proceeds of this borrowing were used primarily to repay the
bridge loan. The note is secured by mortgages on certain of the Company's
properties with an aggregate carrying value of approximately $510,000,000
and a property transferred to it from an affiliate with an aggregate
carrying value of approximately $11,000,000 at December 31, 1997. The debt
is repayable in equal monthly installments based on a 25-year amortization
schedule beginning in May 1998. At the Company's option, the loan may be
repaid at any time on or after April 11, 2008 without penalty. This loan
bears interest at approximately 7% until April 2008, at which time the
interest rate will be adjusted to approximately 9%.
The Company has classified as a current liability the amount of its new
mortgage debt that is payable during 1998. The Company has classified the
remaining balance of its debt outstanding at October 31, 1997 as a
long-term liability based on its demonstrated ability to refinance that
debt.
Under the terms of the Company's April 1998 borrowings, the Company's cash
receipts and certain disbursements will be controlled by the servicer of
the mortgage loan. Accordingly, the Company expects that certain of its
cash balances will be classified as restricted cash during the time that
the debt remains outstanding.
The mortgage notes payable have interest rates ranging from 8.6% to 13.6%
and require monthly principal and interest payments with maturities
ranging from 2006 to 2017. The aggregate mortgage note payments as of
December 31, 1997 are $1,824,000 in 1998, $2,011,000 in 1999, $2,177,000
in 2000, $2,028,000 in 2001, $2,103,000 in 2002, and $17,536,000
thereafter.
In October 1997, the Partnership advanced cash to the Company which was
used to call and repay the First Mortgage bonds, Series A. In connection
with this early termination, the Company wrote off unamortized original
issue discounts of $5,994,000 and unamortized issuance costs of $1,656,000
resulting in an extraordinary loss, net of taxes, of $4,649,000.
4. COMMITMENTS AND CONTINGENCIES
The Company has both capital and operating lease agreements for
refrigerated warehouse facilities and equipment. The Company pays taxes,
insurance, and maintenance costs on substantially all of the leased
property. Lease terms generally range from 5 to 20 years with renewal or
purchase options.
-10-
<PAGE> 19
As of December 31, 1997, future minimum lease payments under these leases
are as follows:
<TABLE>
<CAPTION>
Refrigerated Warehouse
Facilities and Equipment Headquarters
Facility Total
Capitalized Operating Operating Operating
Year Ended December 31, Leases Leases Lease Leases
<S> <C> <C> <C> <C>
1998 $ 3,554,000 $ 5,517,000 $ 281,000 $ 5,798,000
1999 614,000 4,397,000 281,000 4,678,000
2000 515,000 3,083,000 281,000 3,364,000
2001 392,000 2,836,000 281,000 3,117,000
2002 169,000 2,808,000 210,000 3,018,000
Thereafter 611,000 13,118,000 - 13,118,000
------------ ----------- ----------- -----------
Total minimum obligations 5,855,000 $31,759,000 $ 1,334,000 $33,093,000
=========== =========== ===========
Less interest portion 815,000
------------
Present value of net
minimum payments 5,040,000
Less current portion 3,424,000
------------
Capital lease obligations,
long-term portion $ 1,616,000
============
</TABLE>
Rental expense for all operating leases was $5.2 million, $7.2 million, and
$7.7 million for the eight-month period ended October 31, 1997.
In the normal course of business, the Company is party to various legal
claims, actions, and complaints. Although it is not possible to predict
with certainty whether or not the Company will ultimately be successful in
any of these legal matters or, if not, what the impact might be, the
Company believes that disposition of these matters will not have a material
adverse effect on the Company's financial position, results of operations,
or cash flows.
-11-
<PAGE> 20
5. INCOME TAXES
Deferred income taxes consist of the tax effects of temporary differences
and carryforwards as follows:
<TABLE>
<CAPTION>
October 31,
1997
<S> <C>
Deferred tax liabilities:
Property, plant, and equipment, due to differences
in depreciation $(107,756,000)
-------------
Deferred tax assets:
Employee compensation and other benefits 8,472,000
Capital leases, net 1,544,000
Alternative minimum tax credit carryforwards 3,519,000
Net operating loss ("NOL") 6,346,000
Other, net 1,304,000
-------------
21,185,000
Deferred tax asset valuation allowance (5,485,000)
-------------
Deferred tax assets, net 15,700,000
-------------
Net deferred tax liability $ (92,056,000)
=============
</TABLE>
The valuation allowance of $5,485,000 is required to reduce the amount of
deferred tax assets to an amount which will more likely than not be
realized.
The net deferred tax liability is classified in the balance sheet as
follows:
<TABLE>
<CAPTION>
October 31,
1997
<S> <C>
Deferred tax liabilities $(95,790,000)
Deferred tax assets 3,734,000
------------
$(92,056,000)
============
</TABLE>
-12-
<PAGE> 21
The income tax benefit from continuing operations consists of the
following:
<TABLE>
<CAPTION>
October 31,
1997
<S> <C>
Federal:
Current $ -
Deferred (3,093,000)
------------
(3,093,000)
------------
State:
Current -
Deferred (374,000)
------------
(374,000)
------------
Income tax benefit $ (3,467,000)
============
</TABLE>
A reconciliation of the difference between the federal statutory rate and
the effective tax rate from continuing operations is as follows:
<TABLE>
<CAPTION>
October 31,
1997
<S> <C>
Income tax refund based on federal
statutory rate $(3,678,000)
State taxes, net of federal tax benefit (423,000)
Other 634,000
-----------
Income tax benefit $(3,467,000)
===========
</TABLE>
At October 31, 1997, the Company has alternative minimum tax credit
carryforwards of $3,519,000. In addition, the Company has available NOL
carryforwards of $16,177,000 to offset future taxable income. These NOL
carryforwards expire through 2013.
6. SIGNIFICANT CUSTOMERS
Revenues from one customer represented 46% of total revenue for the
eight-month period ended October 31, 1997. A significant portion of the
Company's customers operates in the processed foods industry.
7. EMPLOYEE BENEFIT PLANS
-13-
<PAGE> 22
Defined Benefit Pension Plans -- The Company has defined benefit pension plans
that cover substantially all employees, other than union employees covered by
union pension plans under collective bargaining agreements. Benefits under the
Company's plans are based on years of credited service and compensation during
the years preceding retirement, or on years of credited service and established
mortality benefit levels.
Postretirement Benefits Other Than Pensions -- In addition to providing
retirement benefits, the Company provides certain health care and life insurance
benefits for retired employees. These benefits are provided to substantially all
employees other than certain union employees who have elected not to
participate.
Available actuarial information regarding the defined benefit pension plans and
postretirement benefits other than pensions as of December 31, 1997 and for the
ten months ended December 31, 1997 is as follows:
<TABLE>
<CAPTION>
Pension Benefits
---------------------------
AC National Other
AC Retirement Service Postretirement
Income Plan Related Plan Benefits
<S> <C> <C> <C>
Change in benefit obligation
Benefit obligation at March 1, 1997 $25,131,000 $8,056,000 $ 4,743,000
Service cost 620,000 372,000 121,000
Interest cost 1,620,000 509,000 333,000
Actuarial gain 1,479,000 367,000 1,556,000
Benefits paid (1,344,000) (405,000) (83,000)
----------- ---------- -----------
Benefit obligation at December 31, 1997 $27,506,000 $8,899,000 $ 6,670,000
=========== ========== ===========
Change in plan assets
Fair value of plan assets at
March 1, 1997 $22,227,000 $6,659,000 $ --
Actual return on plan assets 2,748,000 858,000 --
Employer contributions 319,000 1,791,000 83,000
Benefits paid (1,345,000) (405,000) (83,000)
----------- ---------- -----------
Fair value of plan assets of
December 31, 1997 $23,949,000 $8,903,000 $ --
=========== ========== ===========
Funded status $(3,557,000) $ 4,000 $(6,670,000)
Unrecognized net actuarial (gain) loss (622,000) 378,000 1,406,000
Unrecognized prior service cost 57,000 176,000 (49,000)
----------- ---------- -----------
(Accrued) prepaid benefit cost $(4,122,000) $ 558,000 $(5,313,000)
=========== ========== ===========
Weighted-average assumptions as of
December 31, 1997:
Discount rate 7.50% 7.50% 8.00%
Expected return 10.50% 10.50% N/A
Rate of compensation increase 4.00% 4.00% N/A
</TABLE>
For measurement purposes, a 10.25% for pre-65 participants and 8.50% for post-65
participants annual rate of increase in the per capita cost of covered health
care benefits was assumed for 1997. Starting in 1998, the rate is assumed to
decrease 0.75% for pre-65 participants and 0.50% for post-65 participants for
each year until 2004 to 5.50% and remain at that level thereafter.
<TABLE>
<CAPTION>
Pension Benefits
---------------------------
AC National Other
AC Retirement Service Postretirement
Income Plan Related Plan Benefits
<S> <C> <C> <C>
Components of net periodic benefit cost:
Service cost $ 620,000 $ 372,000 $121,000
Interest cost 1,620,000 509,000 333,000
Expected return on plan assets (1,860,000) (598,000) --
Recognized net actuarial (gain) loss (63,000) 6,000 11,000
Amortization of prior service cost 28,000 10,000 (7,000)
----------- --------- --------
$ 345,000 $ 299,000 $458,000
=========== ========= ========
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage point increase in assumed
health care cost trend rates would increase the postretirement benefit
obligation by $184,000 and increase the periodic expense by a negligible amount.
The effect of a one-percentage point decrease in assumed health care cost trend
rates was not available as of December 31, 1997.
-14-
<PAGE> 23
8. SUBSEQUENT EVENTS
Subsequent to October 31, 1997, the Company or an affiliate entered into
an asset purchase agreement with a third party consisting of several
companies (the "Sellers") who also operate and manage public refrigerated
warehouses. The agreement states Americold Corporation will purchase all
of the Sellers' rights, title, and interest in the assets, properties, and
rights that are owned, leased, or licensed by any of the Sellers and are
used in connection with the conduct of business. Total consideration to be
paid including the assumption of liabilities is approximately
$134,000,000.
* * * * * *
-15-
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
Americold Corporation:
We have audited the accompanying consolidated balance sheet of Americold
Corporation and Subsidiary as of December 31, 1997, and the related consolidated
statements of income, stockholder equity, and cash flows for the two months
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Americold Corporation and
Subsidiary at December 31, 1997, and the results of its operations and its cash
flows for the two months ended December 31, 1997 in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Portland, Oregon
March 25, 1998
(April 23, 1998 as to Note 4)
-1-
<PAGE> 25
AMERICOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash investments $ 12,488,000
Trade accounts receivable, less allowance for doubtful accounts of $401,000 28,023,000
Other current assets 5,220,000
Refundable income taxes 2,639,000
Deferred income taxes 4,136,000
------------
Total current assets 52,506,000
------------
PROPERTY, PLANT, AND EQUIPMENT:
Land 57,214,000
Buildings and improvements 592,903,000
Machinery and equipment 78,713,000
Construction-in-progress 3,177,000
Other depreciable assets 2,435,000
------------
734,442,000
Less accumulated depreciation (2,925,000)
------------
Property, plant, and equipment, net 731,517,000
------------
CAPITALIZED LEASES:
Refrigerated warehouse facilities 4,637,000
Equipment 1,625,000
------------
6,262,000
Less accumulated depreciation (30,000)
------------
Capitalized leases, net 6,232,000
------------
OTHER ASSETS:
Excess of costs over estimated fair value of net assets acquired 142,628,000
Restricted funds held by trustee 5,472,000
Other 4,003,000
------------
Total other assets 152,103,000
------------
$942,358,000
============
</TABLE>
(Continued)
-2-
<PAGE> 26
AMERICOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDER EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 45,985,000
Accrued interest 9,652,000
Due to Vornado Crescent Portland Partnership 849,000
Current portion of:
Long-term debt 4,818,000
Capitalized lease obligations 3,367,000
------------
Total current liabilities 64,671,000
LONG-TERM DEBT - Less current portion 406,636,000
CAPITALIZED LEASE OBLIGATIONS - Less current portion 1,673,000
DEFERRED INCOME TAXES 239,178,000
OTHER LIABILITIES 9,059,000
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDER EQUITY:
Common stock; par value $.10 per share; 1,000 shares
authorized; 1,000 shares issued and outstanding -
Additional paid-in capital 220,891,000
Retained earnings 250,000
------------
Total stockholder equity 221,141,000
------------
$942,358,000
============
</TABLE>
See notes to consolidated financial statements. (Concluded)
-3-
<PAGE> 27
AMERICOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
TWO MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
NET SALES $52,128,000
OPERATING EXPENSES:
Cost of services 34,835,000
General and administrative 6,009,000
Depreciation and amortization 3,964,000
-----------
Total operating expenses 44,808,000
-----------
TOTAL OPERATING INCOME 7,320,000
-----------
OTHER INCOME (EXPENSE):
Interest expense (6,998,000)
Interest income 82,000
Miscellaneous income 274,000
-----------
Total other expense (6,642,000)
-----------
NET INCOME BEFORE INCOME TAXES 678,000
INCOME TAX EXPENSE (279,000)
-----------
NET INCOME $ 399,000
===========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 28
AMERICOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDER EQUITY
TWO MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 1, 1997 1,000 $ - $ 220,891,000 $ - $ 220,891,000
Dividends declared - - - (149,000) (149,000)
Minimum pension liability - - - - -
Net income - - - 399,000 399,000
----- ------ ------------- --------- -------------
BALANCE, DECEMBER 31, 1997 1,000 $ - $ 220,891,000 $ 250,000 $ 221,141,000
===== ====== ============= ========= =============
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE> 29
AMERICOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
TWO MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 399,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 3,964,000
Loss on disposal of assets 10,000
Partnership earnings (16,000)
Deferred income taxes 279,000
Changes in assets and liabilities:
Trade accounts receivable 3,588,000
Other current assets 831,000
Accounts payable and accrued expenses (4,487,000)
Due to Vornado Crescent Partnership 1,206,000
Other liabilities (2,104,000)
Refundable income taxes 31,000
-----------
Net cash provided by operating activities 3,701,000
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (1,454,000)
Partnership distributions 300,000
Payments received on notes receivable 250,000
Increase in other long-term assets 61,000
-----------
Net cash used in investing activities (843,000)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (285,000)
Principal payments under capital lease obligations (143,000)
Dividends paid (149,000)
Debt issuance costs (310,000)
-----------
Net cash used in financing activities (887,000)
-----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,971,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,517,000
-----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $12,488,000
===========
SUPPLEMENTAL DISCLOSURE - Interest paid $ 8,644,000
</TABLE>
See notes to consolidated financial statements.
-6-
<PAGE> 30
AMERICOLD CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR TWO MONTHS ENDED DECEMBER 31, 1997
1. ACQUISITION OF THE COMPANY
On October 31, 1997, Americold Corporation (the "Company") was acquired by
an entity controlled by Vornado Realty Trust for approximately
$220,891,000 plus the assumption of outstanding debt and other
liabilities. As a result of concurrent related transactions, the Company
was acquired by Vornado/Crescent Atlanta Partnership, a joint venture
owned by Vornado Realty Trust and Crescent Real Estate Equities Company.
The joint venture applied the purchase method of accounting to the
acquisition and "pushed down" its basis in the acquired assets and
liabilities to the Company. Preliminary values assigned to assets and
liabilities of the Company on November 1, 1997 were as follows:
<TABLE>
<S> <C>
Cash and cash equivalents $ 10,517,000
Property, plant, and equipment and capitalized leases 739,285,000
Excess of costs over estimated fair value of net assets acquired 143,224,000
Other assets 55,690,000
Current liabilities (65,968,000)
Long-term debt and capitalized leases (417,011,000)
Deferred income taxes and other liabilities (244,846,000)
------------
$220,891,000
============
</TABLE>
Purchase price in excess of the estimated fair value of assets acquired
and liabilities assumed is being amortized over a 40-year period. The
accumulated amortization was $596,000 at December 31, 1997. The assignment
of fair values to assets acquired and liabilities assumed is preliminary
and subject to revision. In particular, management has not yet finalized
plans related to locations to be closed, if any.
Results of operations of the Company are presented for the period from
acquisition to December 31, 1997, the end of the Company's fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Americold Services Corporation. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The Company operates and manages public refrigerated
warehouses in the continental United States. The Company operates as one
reportable segment.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
-7-
<PAGE> 31
Depreciation and amortization are computed on the straight-line method
over the estimated remaining useful lives of the respective assets, which
are generally 30 years for buildings, 20 years for building improvements,
and 7 years for machinery and equipment. Depreciation and amortization
begin the month in which the asset is placed into service. For federal
income tax purposes, accelerated depreciation methods and shorter lives
are utilized.
Loan closing costs are capitalized and amortized on the straight-line
method over the term of the loan to which they apply.
Lease agreements are classified as capital or operating in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 13, Accounting
for Leases, including subsequent amendments and interpretations.
Capitalized leases are recorded at the lower of the present value of
future lease payments or the fair market value of the property.
Capitalized leases are depreciated on a straight-line basis over the lease
terms for real estate and the estimated asset life or lease term for
equipment, whichever is shorter.
The Company charges construction costs with interest on borrowed funds
during the construction period of major facilities. This interest is
subsequently charged to operations through depreciation over the life of
capitalized property. No interest was capitalized during the two months
ended December 31, 1997.
The Company defines "cash and cash investments" as all unrestricted cash
and highly liquid investments with an original maturity of three months or
less.
Revenues include storage and handling fees and management fees for
locations managed on behalf of third parties. Costs related to managed
facilities are included in operating expenses.
The Company charges customers for certain storage and handling in advance,
but defers the related revenue until it has been earned. Unearned revenue
of $5,760,000 is included in accounts payable and accrued expenses.
The Company records deferred income taxes for the difference in the bases
of assets and liabilities for tax and financial statement purposes at the
enacted rates in effect in the years that the differences are expected to
reverse.
The Company evaluates possible impairment of noncurrent assets and
recognition of impairment losses whenever circumstances indicate that the
carrying value of such assets may be less than their fair values.
3. INVESTMENT IN PARTNERSHIP
The Company is a partner with an unrelated third party (collectively the
"Partnership") for the purpose of operating a public refrigerated
warehouse in Park Rapids, Minnesota. The investment is accounted for using
the equity method.
The Company is entitled to 50% of the Partnership's earnings. Included in
revenues is $16,000 representing the Company's equity in the earnings of
the Partnership.
-8-
<PAGE> 32
4. LONG-TERM DEBT
<TABLE>
<S> <C>
First Mortgage bonds, Series B $185,619,000
Senior subordinated notes 153,156,000
Bridge loan 45,000,000
Mortgage notes payable 27,679,000
------------
411,454,000
Less current portion (4,818,000)
------------
$406,636,000
============
</TABLE>
The Company had a credit agreement with Goldman Sachs Mortgage Company
which allows the Company to borrow up to $379,600,000. The Company had
borrowed $45,000,000 under the credit agreement as of December 31, 1997.
Subsequent to year end, the Company borrowed an additional amount of
$306,876,000, the proceeds of which were used to pay the First Mortgage
bonds, Series B and the senior subordinated notes. The interest rate under
the agreement is based on LIBOR and was 7.22% as of December 31, 1997. The
agreement was scheduled to mature on April 30, 1998.
The mortgage notes payable at $27,679,000 have interest rates ranging from
8.6% to 13.6% and require monthly principal and interest payments with
maturities ranging from 2006 to 2017.
On April 23, 1998, the Company borrowed $297,000,000 under a long-term
mortgage note. The note is secured by mortgages on certain of the
Company's properties with an aggregate carrying value of approximately
$510,000,000 and a property transferred to it from an affiliate with an
aggregate carrying value of approximately $11 million at December 31,
1997. The debt is repayable in equal monthly installments based on a
25-year amortization schedule beginning in May 1998. At the Company's
option, the loan may be repaid at any time on or after April 11, 2008.
This loan bears interest at approximately 7% until April 2008, at which
time the interest rate will be adjusted to approximately 9%.
The Company has classified as a current liability the amount of its new
mortgage debt that is payable during 1998. The Company has classified the
remaining balance of its debt outstanding at December 31, 1997 as a
long-term liability based on its demonstrated ability to refinance that
debt.
Under the terms of the Company's April 1998 borrowings, the Company's cash
receipts and certain disbursements will be controlled by the servicer of
the mortgage loan. Accordingly, the Company expects that certain of its
cash balances will be classified as restricted cash during the time that
the debt remains outstanding.
The aggregate maturities of long-term debt including the long-term
mortgage note for each of the next five years and thereafter are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING
December 31,
<S> <C>
1998 $ 4,818,000
1999 6,771,000
2000 7,281,000
2001 7,501,000
2002 7,972,000
Thereafter 290,336,000
------------
Total $324,679,000
============
</TABLE>
-9-
<PAGE> 33
5. COMMITMENTS AND CONTINGENCIES
The Company has both capital and operating lease agreements for
refrigerated warehouse facilities and equipment. The Company pays taxes,
insurance, and maintenance costs on substantially all of the leased
property. Lease terms generally range from 5 to 20 years with renewal or
purchase options.
As of December 31, 1997, future minimum lease payments under these leases
are as follows:
<TABLE>
<CAPTION>
REFRIGERATED WAREHOUSE
FACILITIES AND EQUIPMENT HEADQUARTERS
FACILITY TOTAL
CAPITALIZED OPERATING OPERATING OPERATING
LEASES LEASES LEASE LEASES
<S> <C> <C> <C> <C>
1998 $ 3,554,000 $ 5,517,000 $ 281,000 $ 5,798,000
1999 614,000 4,397,000 281,000 4,678,000
2000 515,000 3,083,000 281,000 3,364,000
2001 392,000 2,836,000 281,000 3,117,000
2002 169,000 2,808,000 210,000 3,018,000
Thereafter 611,000 13,118,000 - 13,118,000
----------- ----------- ----------- -----------
Total minimum obligations 5,855,000 $31,759,000 $ 1,334,000 $33,093,000
=========== =========== ===========
Less interest portion 815,000
-----------
Present value of net
minimum payments 5,040,000
Less current portion 3,367,000
-----------
Capital lease obligations,
long-term portion $ 1,673,000
===========
</TABLE>
Rental expense for all operating leases was $1,263,000 for the two-month
period ended December 31, 1997.
In the normal course of business, the Company is party to various legal
claims, actions, and complaints. Although it is not possible to predict
with certainty whether or not the Company will ultimately be successful in
any of these legal matters or, if not, what the impact might be, the
Company believes that disposition of these matters will not have a
material adverse effect on the Company's financial position, results of
operations, or cash flows.
-10-
<PAGE> 34
6. INCOME TAXES
Deferred income taxes at December 31, 1997 consist of the tax effects of
temporary differences and carryforwards as follows:
<TABLE>
<S> <C>
Deferred tax liabilities:
Property, plant, and equipment, due to differences in depreciation $(249,015,000)
-------------
Deferred tax assets:
Employee compensation and other benefits 7,608,000
Capital leases, net 1,522,000
Alternative minimum tax credit carryforwards 3,582,000
Net operating loss ("NOL") 6,746,000
-------------
19,458,000
Deferred tax asset valuation allowance (5,485,000)
-------------
Deferred tax assets, net 13,973,000
-------------
Net deferred tax liability $(235,042,000)
=============
</TABLE>
The valuation allowance of $5,485,000 is required to reduce the amount of
deferred tax assets to an amount which will more likely than not be
realized.
The net deferred tax liability is classified in the balance sheet as
follows:
<TABLE>
<S> <C>
Deferred income taxes $(239,178,000)
Deferred tax assets 4,136,000
-------------
$(235,042,000)
=============
</TABLE>
The provision for income taxes consists of the following for the two-month
period ended December 31, 1997:
<TABLE>
<S> <C>
Federal:
Current $ -
Deferred 249,000
State:
Current -
Deferred 30,000
----------
Income tax expense $ 279,000
==========
</TABLE>
A reconciliation of the difference between the federal statutory rate and
the effective tax rate in the two-month period ended December 31, 1997 is
as follows:
<TABLE>
<S> <C>
Income taxes based federal statutory rate $ 237,000
State taxes, net of federal tax benefit 30,000
Other 12,000
---------
Income tax expense $ 279,000
=========
</TABLE>
-11-
<PAGE> 35
At December 31, 1997, the Company has alternative minimum tax credit
carryforwards of $3,582,000. In addition, the Company has available NOL
carryforwards of $17,199,000 to offset future taxable income. These NOL
carryforwards expire through 2013.
7. SIGNIFICANT CUSTOMERS
Revenues from two customers represented 36% and 12% of total revenue,
respectively. A significant portion of the Company's customers operates in
the processed foods industry.
8. EMPLOYEE BENEFIT PLANS
Defined Benefit Pension Plans - The Company has defined benefit pension
plans that cover substantially all employees, other than union employees
covered by union pension plans under collective bargaining agreements.
Benefits under the Company's plans are based on years of credited service
and compensation during the years preceding retirement, or on years of
credited service and established monthly benefit levels.
Postretirement Benefits Other Than Pensions - In addition to providing
retirement benefits, the Company provides certain health care and life
insurance benefits for retired employees. These benefits are provided to
substantially all employees other than certain union employees who have
elected not to participate.
Available actuarial information regarding the defined benefit pension
plans and postretirement benefits other than pensions as of December 31,
1997 and for the ten months ended December 31, 1997 is as follows:
<TABLE>
<CAPTION>
Pension Benefits
--------------------------------------
AC National Other
AC Retirement Service Postretirement
Income Plan Related Plan Benefits
<S> <C> <C> <C>
Change in benefit obligations
Benefit obligation at March 1, 1997 $25,131,000 $8,056,000 $4,743,000
Service cost 620,000 372,000 121,000
Interest cost 1,620,000 509,000 333,000
Actuarial gain 1,479,000 367,000 1,556,000
Benefits paid (1,344,000) (405,000) (83,000)
----------- ---------- -----------
Benefit obligation at December 31, 1997 $27,506,000 $8,899,000 $ 6,670,000
=========== ========== ===========
Change in plan assets
Fair value of plan assets at
March 1, 1997 $22,227,000 $6,659,000 $ --
Actual return on plan assets 2,748,000 858,000 --
Employer contributions 319,000 1,791,000 83,000
Benefits paid (1,345,000) (405,000) (83,000)
----------- ---------- -----------
Fair value of plan assets at
December 31, 1997 $23,949,000 $8,903,000 $ --
=========== ========== ===========
Funded status $(3,557,000) $ 4,000 $(6,670,000)
Unrecognized net actuarial (gain) loss (622,000) 378,000 1,406,000
Unrecognized prior service cost 57,000 176,000 (49,000)
----------- ---------- -----------
(Accrued)/prepaid benefit cost $(4,122,000) $ 558,000 $(5,313,000)
=========== ========== ===========
Weighted-average assumption as of
December 31, 1997:
Discount rate 7.50% 7.50% 8.00%
Expected return 10.50% 10.50% N/A
Rate of compensation increase 4.00% 4.00% N/A
</TABLE>
For measurement purposes, a 10.25% for pre-65 participants and 6.50% for post-65
participants annual rate of increase in the per capita cost of covered health
care benefits was assumed for 1997. Starting in 1998, the rate is assumed to
decrease 0.75% for pre-65 participants and 0.50% for post-65 participants for
each year until 2004 to 5.50% and remain at that level thereafter.
<TABLE>
<CAPTION>
Pension Benefits
--------------------------------------
AC National Other
AC Retirement Service Postretirement
Income Plan Related Plan Benefits
<S> <C> <C> <C>
Components of net periodic benefit cost:
Service cost $ 620,000 $ 372,000 $121,000
Interest cost 1,620,000 509,000 333,000
Expected return on plan assets (1,860,000) (598,000) --
Recognized net actuarial (gain) loss (63,000) 6,000 11,000
Amortization of prior service cost 28,000 10,000 (7,000)
----------- --------- --------
$ 345,000 $ 299,000 $458,000
=========== ========= ========
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage point increase in assumed
health care cost trend rates would increase the postretirement benefit
obligation by $184,000 and increase the periodic expense by a negligible amount.
The effect of a one-percentage point decrease in assumed health care cost trend
rates was not available as of December 31, 1997.
-12-
<PAGE> 36
9. SUBSEQUENT EVENT
Subsequent to year end, the Company or an affiliate entered into an asset
purchase agreement with a third party consisting of several companies (the
"Sellers") who also operate and manage public refrigerated warehouses. The
agreement states Americold Corporation will purchase all of the Sellers'
rights, title, and interest in the assets, properties, and rights that are
owned, leased, or licensed by any of the Sellers and are used in
connection with the conduct of business. Total consideration to be paid
including the assumption of liabilities is approximately $134,000,000.
* * * * * *
-13-
<PAGE> 37
INDEPENDENT AUDITORS' REPORT
AmeriCold Corporation, URS Logistics, Inc.,
VC Omaha Holdings, LLC, and VC Missouri Holdings, LLC:
We have audited the accompanying combined balance sheet of AmeriCold
Corporation, URS Logistics, Inc., VC Omaha Holdings, LLC, and VC Missouri
Holdings, LLC ("AmeriCold Logistics" or the "Companies") as of December 31,
1998, and the related combined statements of operations, stock-holders' equity,
and cash flows for the year then ended. These Companies are under common
ownership and common management. These financial statements are the
responsibility of the Companies' management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the combined financial position of AmeriCold Corporation, URS
Logistics, Inc., VC Omaha Holdings, LLC, and VC Missouri Holdings, LLC at
December 31, 1998, and the combined results of their operations and their
combined cash flows for the year then ended in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the combined financial statements, on March 1, 1999,
AmeriCold Corporation elected to be treated as a real estate investment trust
for tax purposes.
/s/ DELOITTE & TOUCHE LLP
Atlanta, Georgia
April 16, 1999
<PAGE> 38
AMERICOLD LOGISTICS
COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(Thousands)
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 18,182
Trade accounts receivable, less allowance for doubtful
accounts of $1,042 73,316
Other receivables 3,664
Deferred income taxes 5,825
Other current assets 16,155
-----------
Total current assets 117,142
PROPERTY, PLANT, AND EQUIPMENT:
Land 62,377
Buildings and improvements 1,089,305
Machinery and equipment 155,266
Construction-in-progress 25,934
-----------
1,332,882
Less accumulated depreciation (71,077)
-----------
Property, plant, and equipment, net 1,261,805
CAPITALIZED LEASES:
Refrigerated warehouse facilities 52,979
Equipment 6,954
-----------
59,933
Less accumulated depreciation (4,237)
-----------
Capitalized leases, net 55,696
-----------
OTHER ASSETS:
Excess of cost over net assets acquired 298,625
Restricted cash 23,853
Loan closing costs 5,573
Other 8,559
-----------
Total other assets 336,610
-----------
$ 1,771,253
===========
</TABLE>
See notes to combined financial statements. (Continued)
-2-
<PAGE> 39
AMERICOLD LOGISTICS
COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,211
Accrued expenses 57,901
Unearned revenue 6,090
Current portion of:
Long-term debt 27,283
Capitalized lease obligations 3,093
Other current liabilities 7,644
-----------
Total current liabilities 116,222
LONG-TERM DEBT - Less current portion 577,120
DEFERRED INCOME TAXES 277,883
CAPITALIZED LEASE OBLIGATIONS - Less current portion 47,511
OTHER LIABILITIES 12,653
-----------
Total liabilities 1,031,389
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock --
Paid-in capital 724,420
Retained earnings 16,914
-----------
741,334
Accumulated comprehensive loss - minimum pension charge (1,470)
-----------
Stockholders' equity 739,864
-----------
$ 1,771,253
===========
</TABLE>
See notes to combined financial statements. (Concluded)
-3-
<PAGE> 40
AMERICOLD LOGISTICS
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
REVENUES $ 569,751
OPERATING EXPENSES:
Cost of services 419,288
Depreciation and amortization 57,658
General and administrative 23,253
---------
Total operating expenses 500,199
---------
OPERATING INCOME 69,552
OTHER INCOME (EXPENSE):
Interest expense (45,700)
Other income 2,374
---------
INCOME BEFORE INCOME TAXES 26,226
INCOME TAX EXPENSE 9,238
---------
NET INCOME $ 16,988
=========
</TABLE>
See notes to combined financial statements.
-4-
<PAGE> 41
AMERICOLD LOGISTICS
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
(Thousands Except Share Data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------
COMMON STOCK ACCUMULATED
-------------------- RETAINED EARNINGS/ COMPREHENSIVE
NUMBER PAR PAID-IN (ACCUMULATED LOSS - MINIMUM
OF SHARES VALUE CAPITAL DEFICIT) PENSION CHARGE
--------- --------- --------- ------------------ --------------
BALANCE - December 31, 1997
<S> <C> <C> <C> <C> <C>
AmeriCold Corporation (1) 1,000 $ -- $ 220,891 $ 250 $
URS Logistics, Inc. (2) 1,000 -- 183,433 (324)
-------- --------- --------- --------- ---------
2,000 -- 404,324 (74)
Acquisition of VC Omaha Holdings, LLC 84,289
Acquisition of VC Missouri Holdings, LLC 147,135
Capital contributions 88,672
COMPREHENSIVE INCOME:
Net income 16,988
Adjustment for minimum pension liability, net of taxes
of $980 (1,470)
-------- --------- --------- --------- ---------
16,988 (1,470)
BALANCE - December 31, 1998 2,000 $ -- $ 724,420 $ 16,914 $ (1,470)
======== ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TOTAL
--------
BALANCE - December 31, 1997
<S> <C>
AmeriCold Corporation (1) $221,141
URS Logistics, Inc. (2) 183,109
--------
404,250
Acquisition of VC Omaha Holdings, LLC 84,289
Acquisition of VC Missouri Holdings, LLC 147,135
Capital contributions 88,672
COMPREHENSIVE INCOME:
Net income 16,988
Adjustment for minimum pension liability, net of taxes
of $980 (1,470)
--------
15,518
BALANCE - December 31, 1998 $739,864
========
</TABLE>
(1) Common Stock: Par value $.10 per share; 1,000 shares authorized,
issued, and outstanding.
(2) Common Stock: Par value $.10 per share; 1,000 shares authorized,
issued, and outstanding.
See notes to combined financial statements.
-5-
<PAGE> 42
AMERICOLD LOGISTICS
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
(Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES:
Net income $ 16,988
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 57,658
Deferred income taxes 7,933
Changes in assets and liabilities, net of acquisitions:
Trade accounts receivable (19,315)
Other current assets (10,924)
Accounts payable and accrued expenses (400)
Other liabilities 457
---------
Net cash provided by operating activities 52,397
INVESTING ACTIVITIES:
Additions to property, plant, and equipment (48,152)
Increase in other assets (13,619)
---------
Net cash used in investing activities (61,771)
FINANCING ACTIVITIES:
Proceeds from borrowings 711,467
Payments on long-term debt (769,727)
Cash equity contributions 78,624
Principal payments under capital lease obligations (5,291)
Loan closing costs (5,088)
---------
Net cash provided by financing activities 9,985
---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 611
CASH AND CASH EQUIVALENTS:
Beginning of period 17,571
---------
End of period $ 18,182
=========
SUPPLEMENTAL DISCLOSURES:
Interest paid, net of amount capitalized $ 51,628
---------
Income taxes paid $ --
---------
SUPPLEMENTAL INFORMATION ABOUT NONCASH FINANCING
ACTIVITIES:
Capital lease obligations of $6,673 were incurred during the year ended
December 31, 1998 when the Company entered into new leases for equipment
</TABLE>
See notes to combined financial statements.
-6-
<PAGE> 43
AMERICOLD LOGISTICS
NOTES TO COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION AND SUBSEQUENT EVENT
Principles of Combination - The combined financial statements include the
accounts of AmeriCold Corporation and subsidiaries consolidated ("AC");
URS Logistics, Inc. and subsidiaries consolidated ("URS"), VC Omaha
Holdings, LLC and subsidiaries consolidated ("VCO"); and VC Missouri
Holdings, LLC and subsidiaries consolidated ("VCM") (collectively,
"AmeriCold Logistics" or the "Companies"). The Companies are owned by
Vornado Realty Trust, Vornado Operating Company, Crescent Real Estate
Equities Company, and Crescent Operating, Inc. All significant
intercompany accounts and transactions have been eliminated. The Companies
operate and manage public refrigerated warehouses in the continental
United States.
Subsequent Event - Legal Restructuring - During March 1999, each of the
Companies sold substantially all of their nonreal estate assets to a
partnership and two limited liability corporations ultimately owned by
Vornado Operating Company and Crescent Operating, Inc. Each of the
acquiring entities simultaneously entered into a lease agreement with the
Companies to lease certain real estate assets retained by the Companies
for terms of 15 years. These leases provide for payment of minimum rent,
percentage rent, and certain other expenses related to the leased real
estate assets. The Companies' intend to elect to be treated as real estate
investment trusts (REITs) beginning no later than January 1, 2000. One of
the Companies, AmeriCold Corporation, made its election to be treated as a
REIT on March 1, 1999. As a result of this change in its tax status, AC
reversed its deferred tax assets and liabilities on March 1, 1999. The net
deferred tax liability of $170,361 that was initially recorded in
connection with the allocation of purchase price to AC assets acquired and
liabilities assumed was reversed against related excess of cost over net
assets acquired. The remaining net deferred tax liability of $7,354
related to AC's deferred income tax provision since acquisition and
therefore was recorded as an income tax benefit in the period REIT status
was elected. URS anticipates electing REIT status and reversing its net
deferred tax liabilities on January 1, 2000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Cash and Cash Equivalent - AmeriCold Logistics defines "equivalents" as
all unrestricted cash and highly liquid investments with a maturity at the
time of acquisition of three months or less.
Property, Plant, and Equipment - Depreciation and amortization are
computed on the straight-line method over the estimated remaining useful
lives of the respective assets. Depreciation and amortization begin the
month in which the asset is placed into service. For federal income tax
purposes, accelerated depreciation methods are utilized.
-7-
<PAGE> 44
AmeriCold Logistics charges construction costs with interest on borrowed
funds during the construction period of major facilities. This interest is
subsequently charged to operations through depreciation over the life of
capitalized property. Approximately $1,632 of interest was capitalized
during the year ended December 31, 1998.
Capital Leases - Lease agreements are classified as capital or operating
in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 13, Accounting for Leases, including subsequent amendments and
interpretations. Capitalized leases are recorded at the lower of the
present value of future lease payments or the fair market value of the
property. Capitalized leases are depreciated on a straight-line basis over
the lease terms for real estate and the estimated asset life or lease term
for equipment, whichever is shorter.
Excess of Cost Over Net Assets Acquired - The excess of cost over net
assets acquired is amortized over 40 years using the straight-line method
of amortization.
Impairment of Long-Lived Assets - AmeriCold Logistics evaluates possible
impairment of long-lived assets and recognition of impairment losses
whenever circumstances indicate that the fair values of such assets may be
less than their carrying values.
Loan Closing Costs - Loan closing costs are capitalized and amortized on
the straight-line method over the term of the loan to which they apply.
Revenue Recognition - Revenues include storage and handling fees and
management fees for locations managed on behalf of third parties. Costs
related to managed facilities are included in operating expenses.
AmeriCold Logistics charges customers for certain storage and handling in
advance but defers the related revenue until it has been earned.
Income Taxes - AC and URS record deferred income taxes for the difference
in the bases of assets and liabilities for tax and financial statement
purposes at the enacted rates in effect in the years that the differences
are expected to reverse. No provision for income taxes is recorded for VCO
and VCM, because they are limited liability corporations which are not
required to pay federal or state income taxes.
Fair Value of Financial Instruments - The carrying values of cash and cash
equivalents, accounts receivable, accounts payable, and accrued
liabilities approximate fair values due to the short-term maturities of
the instruments. The carrying value of long-term debt also approximates
fair value because interest rates applicable to the Companies' long-term
debt approximate market interest rates.
3. ACQUISITIONS
On October 31, 1997, AC and URS were acquired by an entity controlled by
Vornado Realty Trust for approximately $220,891 and $183,433,
respectively, plus the assumption of outstanding debt and other
liabilities. As a result of concurrent related transactions, AC and URS
were acquired by Vornado/ Crescent Atlanta Partnership and
Vornado/Crescent Portland Partnership, joint ventures owned by Vornado
Realty Trust and Crescent Real Estate Equities Company. The joint ventures
applied the purchase method of accounting to the acquisition and "pushed
down" their basis in the acquired assets and liabilities to AC and URS.
-8-
<PAGE> 45
During 1998, AC and URS finalized their valuations of assets acquired and
liabilities assumed in the October 1997 purchase transactions. The Company
reduced the values of property acquired by an aggregate of approximately
$155,000 based on appraised values. AC also finalized its plan to close an
underground warehouse facility and terminate certain employees.
Accordingly, the Company established a liability of approximately $17,200
as an adjustment to the original purchase price allocation, primarily for
engineering, backfilling, and site remediation costs associated with the
facility closure. AC charged expenditures of approximately $536 against
this reserve during 1998.
On June 1, 1998, AC, together with its parent companies, acquired a group
of commonly owned warehouses known as Freezer Services for approximately
$84,000, plus the assumption of certain outstanding debt and other
liabilities. On July 1, 1998, entities controlled by Vornado Realty L.P.
acquired a group of commonly owned warehouses known as the Carmar Group
for approximately $147,000, plus the assumption of certain outstanding
debt and other liabilities. Concurrently with the acquisitions, all assets
and liabilities of the acquired businesses were contributed to one or the
other of two newly created entities, VCO and VCM. The acquiring entities
applied the purchase method of accounting to these acquisitions and
"pushed down" their bases in the acquired assets and liabilities to VCO
and VCM. Values assigned to assets and liabilities of the Companies were
as follows:
(Thousands)
<TABLE>
<CAPTION>
AC URS VCO VCM TOTAL
<S> <C> <C> <C> <C> <C>
Cash and equivalents $ 10,517 $ 10,184 $ -- $ -- $ 20,701
Property, plant, and
equipment 616,548 404,007 115,822 157,217 1,293,594
Excess cost 216,967 81,719 8,760 -- 307,446
Other assets 56,925 33,112 9,860 9,863 109,760
Current liabilities (70,835) (36,367) (3,767) (4,696) (115,665)
Long-term debt and
capital leases (427,764) (211,013) (46,386) (15,249) (700,412)
Deferred taxes (170,361) (93,764) -- -- (264,125)
Other liabilities (11,106) (4,445) -- -- (15,551)
--------- --------- --------- --------- -----------
$ 220,891 $ 183,433 $ 84,289 $ 147,135 $ 635,748
========= ========= ========= ========= ===========
</TABLE>
The assignment of fair values to assets acquired and liabilities assumed
for VCO and VCM is preliminary and subject to revision based on final
determination of the fair values of properties acquired.
Results of operations of AC and URS are presented for the entire year
ended December 31, 1998. Results of operations of VCO and VCM are
presented from their respective acquisition dates to December 31, 1998.
-9-
<PAGE> 46
4. ACCRUED EXPENSES
Detail of accrued expense as of December 31, 1998 is as follows:
<TABLE>
<S> <C>
(Thousands)
Accrued facility closure and severance costs $16,644
Accrued payroll and related expense 14,557
Accrued property taxes 3,855
Accrued interest 2,452
Other accrued expenses 20,393
-------
$57,901
=======
</TABLE>
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
AC URS VCO TOTAL
(Thousands)
<S> <C> <C> <C> <C>
Mortgage notes $296,052 $252,193 $ 48,057 $596,302
Other 101 8,000 -- 8,101
-------- -------- -------- --------
296,153 260,193 48,057 604,403
Less current portion 4,962 12,182 10,139 27,283
-------- -------- -------- --------
$291,191 $248,011 $ 37,918 $577,120
======== ======== ======== ========
</TABLE>
On April 23, 1998, AC borrowed $297,000 and URS borrowed $253,000 under
long-term mortgage notes. Proceeds of these borrowings were used primarily
to repay in full bridge financing that had been obtained in January 1998.
The debt is repayable in equal monthly installments based on a 25-year
amortization schedule beginning in May 1998. At the Companies' option, the
loans may be repaid at any time on or after April 11, 2008. These loans
bear interest at 6.9% until April 2008, at which time the interest rate
will be adjusted to approximately 9%. The AC and URS notes are secured by
mortgages on certain of their respective properties with aggregate
carrying values of approximately $521,000 and $423,000.
Under the terms of the Companies' April 1998 borrowings, the Companies'
cash receipts and certain of its disbursements will be controlled by the
servicer of the mortgage loan. Accordingly, the Companies have classified
certain of their cash balances as restricted.
The effective interest rates on the VCO mortgage notes are approximately
7%, and the notes are secured by certain property, plant, and equipment of
VCO.
The URS other debt of $8,000 is a loan due to Vornado Realty LP. The note
bears interest at 8.37% and is due on demand.
-10-
<PAGE> 47
Aggregate maturities of the Companies' long-term debt for each of the next
five years and thereafter are as follows:
<TABLE>
<CAPTION>
(Thousands)
YEAR ENDED
DECEMBER 31, AC URS VCO TOTAL
<S> <C> <C> <C> <C>
1999 $ 4,962 $ 12,182 $ 10,139 $ 27,283
2000 5,195 4,424 2,522 12,141
2001 5,616 4,782 2,690 13,088
2002 6,008 5,117 2,873 13,998
2003 6,429 5,475 13,410 25,314
Thereafter 267,943 228,213 16,423 512,579
-------- -------- -------- --------
$296,153 $260,193 $ 48,057 $604,403
======== ======== ======== ========
</TABLE>
6. LEASE COMMITMENTS
The Companies also have both capital and operating lease agreements for
equipment and other facilities. The Companies pay taxes, insurance, and
maintenance costs on substantially all of the leased property. Lease terms
generally range from 5 to 20 years with renewal or purchase options.
As of December 31, 1998, future minimum lease payments under capital
leases are as follows:
<TABLE>
<CAPTION>
(Thousands)
YEAR ENDED
DECEMBER 31, AC URS TOTAL
<S> <C> <C> <C>
1999 $ 4,656 $ 3,813 $ 8,469
2000 4,557 3,685 8,242
2001 4,082 3,783 7,865
2002 3,739 2,790 6,529
2003 3,535 2,484 6,019
Thereafter 35,009 23,973 58,982
-------- -------- --------
Total minimum obligations 55,578 40,528 96,106
Less interest portion (28,846) (16,656) (45,502)
-------- -------- --------
Present value of net
minimum payments 26,732 23,872 50,604
Less current portion (1,363) (1,730) (3,093)
-------- -------- --------
$ 25,369 $ 22,142 $ 47,511
======== ======== ========
</TABLE>
-11-
<PAGE> 48
As of December 31, 1998, future minimum lease payments under operating
leases are as follows:
<TABLE>
<CAPTION>
(Thousands)
YEAR ENDED
DECEMBER 31, AC URS TOTAL
<S> <C> <C> <C>
1999 $ 4,667 $ 8,665 $13,332
2000 3,363 8,460 11,823
2001 3,116 8,155 11,271
2002 3,019 7,058 10,077
2003 2,703 6,572 9,275
Thereafter 10,417 29,969 40,386
------- ------- -------
$27,285 $68,879 $96,164
======= ======= =======
</TABLE>
Rental expense for all operating leases was $15,031 for the year ended
December 31, 1998.
-12-
<PAGE> 49
7. INCOME TAXES
Deferred income taxes at December 31, 1998 consist of the tax effects of
temporary differences in the basis of assets and liabilities for financial
reporting and tax purposes as follows:
<TABLE>
<CAPTION>
(Thousands)
CURRENT AC URS TOTAL
<S> <C> <C> <C>
Deferred tax assets:
Employee compensation and other benefits $ 2,102 $ 2,321 $ 4,423
Deferred revenue -- 884 884
Allowance for doubtful accounts 151 236 387
Other -- 450 450
--------- --------- ---------
2,253 3,891 6,144
Deferred tax liabilities:
Other (206) (113) (319)
--------- --------- ---------
Net current deferred tax asset $ 2,047 $ 3,778 $ 5,825
========= ========= =========
Noncurrent
Deferred tax liabilities:
Property, plant, and equipment due to
differences in depreciation $(197,986) $(109,306) $(307,292)
Deferred tax assets:
Net operating loss ("NOL") carryforwards 14,912 6,606 21,518
Alternative minimum tax credit carryforwards 3,890 1,939 5,829
Employee compensation and accrued liabilities 4,538 2,640 7,178
Capital leases 369 -- 369
--------- --------- ---------
23,709 11,185 34,894
Deferred tax asset valuation allowance (5,485) -- (5,485)
--------- --------- ---------
Net noncurrent deferred tax liability $(179,762) $ (98,121) $(277,883)
========= ========= =========
</TABLE>
-13-
<PAGE> 50
Tax expense for the year ended December 31, 1998 consists of the
following:
<TABLE>
(Thousands)
AC URS TOTAL
<S> <C> <C> <C>
Federal:
Current $ 2,807 $ (34) $ 2,773
Deferred 4,132 474 4,606
------- ------- -------
6,939 440 7,379
State:
Current (1,468) -- (1,468)
Deferred 3,222 105 3,327
------- ------- -------
1,754 105 1,859
------- ------- -------
Income tax expense $ 8,693 $ 545 $ 9,238
======= ======= =======
</TABLE>
Reconciliation of the differences between tax expense computed at the
federal statutory rate and tax expense as recorded for the year ended
December 31, 1998 is as follows:
<TABLE>
<CAPTION>
(Thousands)
AC URS TOTAL
<S> <C> <C> <C>
Income taxes based on federal statutory rate $5,946 $(278) $5,668
State taxes, net of federal tax benefit 1,158 69 1,227
Nondeductible goodwill 1,537 607 2,144
Other 52 147 199
------ ----- ------
Net income tax expense $8,693 $ 545 $9,238
====== ===== ======
</TABLE>
At December 31, 1998, AC and URS have alternative minimum tax credit
carryforwards of $3,890 and $1,939, respectively, which expire through the
year 2019. In addition, AC and URS have available NOL carryforwards of
$43,860 and $15,661, respectively, to offset future taxable income. The
NOL carryforwards expire through the year 2018.
8. EMPLOYEE BENEFIT PLANS
Defined Benefit Pension Plans - AC has defined benefit pension plans that
cover substantially all employees, other than union employees covered by
union pension plans under collective bargaining agreements. Benefits under
AC's plans are based on years of credited service and compensation during
the years preceding retirement, or on years of credited service and
established monthly benefit levels.
Postretirement Benefits Other Than Pensions - In addition to providing
retirement benefits, AC provides certain health care and life insurance
benefits for retired employees. These benefits are provided to
substantially all employees other than certain union employees who have
elected not to participate.
-14-
<PAGE> 51
Actuarial information regarding the defined benefit pension plans and
postretirement benefits other than pensions as of December 31, 1998 is as
follows:
<TABLE>
<CAPTION>
PENSION BENEFITS
-----------------------------
AC NATIONAL OTHER
AC RETIREMENT SERVICE POSTRETIREMENT
INCOME PLAN RELATED PLAN BENEFITS
(THOUSANDS EXCEPT
RATE DATA)
<S> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 27,506 $ 8,899 $ 6,670
Service cost 933 524 178
Interest cost 2,099 710 440
Actuarial (gain) loss 4,316 2,128 (40)
Benefits paid (1,802) (608) (98)
-------- -------- -------
Benefit obligation at end of year $ 33,052 $ 11,653 $ 7,150
======== ======== =======
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 23,949 $ 8,903 $ --
Actual return on plan assets 2,309 979 --
Employer contributions 1,237 784 98
Benefits paid (1,802) (608) (98)
-------- -------- -------
Fair value of plan assets at end of year $ 25,693 $ 10,058 $ --
======== ======== =======
Funded status $ (7,359) $ (1,595) $ (7,150)
Unrecognized actuarial loss 3,598 2,450 1,653
Unrecognized prior service cost 23 63 (41)
-------- -------- -------
(Accrued) prepaid benefit cost $ (3,738) $ 918 $ (5,538)
======== ======== ========
Amounts recognized in the combined balance sheet consist of:
Accrued benefit liability $(3,738) $ (1,595) $(5,538)
Intangible asset -- 63
Accumulated other comprehensive loss -- 2,450
------- -------- -------
Net amount recognized $(3,738) $ 918 $(5,538)
======= ======== =======
Weighted-average assumptions as of December 31, 1998:
Discount rate 6.75% 6.75% 6.75%
Expected return 9.50% 9.50% N/A
Rate of compensation increase 4.00% 4.00% N/A
</TABLE>
For measurement purposes, a 10.25% for pre-65 participants and 8.50% for
post-85 participants annual rate of increase in the per capita cost of
covered health care benefits was assumed for 1998. Starting in 1999, the
rate is assumed to decrease 0.75% for pre-65 participants and 0.50% for
post-65 participants for each year until 2004 to 5.50% and remain at that
level thereafter.
-15-
<PAGE> 52
<TABLE>
<CAPTION>
PENSION BENEFITS
-----------------------------
AC NATIONAL OTHER
AC RETIREMENT SERVICE POSTRETIREMENT
INCOME PLAN RELATED PLAN BENEFITS
<S> <C> <C> <C>
COMPONENTS OF NET PERIODIC
BENEFIT COST:
Service cost $ 933 $ 524 $ 178
Interest cost 2,099 710 440
Expected return on plan assets (2,213) (846) --
Recognized net actuarial loss -- 24 63
Amortization of prior service cost 34 12 (8)
------- ----- -----
$ 853 $ 424 $ 873
======= ===== =====
</TABLE>
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the AC National Service Related Plan, whose
accumulated benefit obligations exceeded plan assets were $11,653,
$11,653, and $10,058, respectively.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage point change
in assumed health care cost-trend rates would have the following effects:
<TABLE>
<CAPTION>
ONE-PERCENTAGE ONE-PERCENTAGE
POINT INCREASE POINT DECREASE
-------------- --------------
<S> <C> <C>
Effect on total of service and interest cost components $ 29 $ (28)
Effect on postretirement benefit obligation $419 $(385)
</TABLE>
Profit Sharing - URS, VCO, and VCM have defined contribution employee
benefit plans which cover all eligible employees. The plans also allow
contributions by plan participants in accordance with Section 401(k) of
the Internal Revenue Code. Profit sharing expense for the year ended
December 31, 1998 was $2,573.
VEBA - VCO and VCM sponsor health benefit plans for their employees. These
plans constitute a voluntary employee benefits association under Section
501(c)(9) of the Internal Revenue Code and were established within the
guidelines of the Employee Retirement Income Security Act of 1974. VCO and
VCM contributions to the plans are determined on the specific cost of each
employee covered by the plans. Health benefit costs incurred under these
plans and charged to expense for the year ended December 31, 1998 was
$1,579.
Deferred Compensation - URS has deferred compensation and supplemental
retirement plan agreements with certain of its executives. The agreements
provide for certain benefits at retirement or disability, and also provide
for survivor benefits in the event of death of the employee. URS charges
expense for the accretion of the liability each year.
URS is presently funding the plan through a life insurance program which
protects it against losses due to acceleration of benefits arising from
disability or death and provides for the funds expected to be needed for
the normal benefits.
The net expense for all deferred compensation and supplemental retirement
plans was approximately $160.
-16-
<PAGE> 53
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
URS Logistics, Inc.:
We have audited the accompanying consolidated balance sheets of URS Logistics,
Inc. (the "Company") and subsidiary as of October 31, 1997 and December 31,
1996 and the related consolidated statements of operations, stockholders'
equity, and cash flows for the ten months ended October 31, 1997 and the year
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company and subsidiary as of
October 31, 1997 and December 31, 1996 and the results of their operations and
their cash flows for the ten months ended October 31, 1997 and the year ended
December 31, 1996 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
March 25, 1998
(April 23, 1998 as to Note 4)
<PAGE> 54
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1997 AND DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
CURRENT ASSETS:
Cash and cash investments $ 6,206,000 $ 904,000
Trade accounts receivable, less allowance for doubtful
accounts of $100,000 at October 31, 1997 and December
31, 1996 18,646,000 17,345,000
Other current assets 2,374,000 2,072,000
Refundable income taxes 2,508,000 1,015,000
Deferred income taxes 2,637,000 2,303,000
------------ ------------
Total current assets 32,371,000 23,639,000
OTHER ASSETS:
Loan closing costs 5,417,000 4,334,000
Investment in partnership 2,557,000 2,838,000
Other 5,475,000 872,000
------------ ------------
Total other assets 13,449,000 8,044,000
PROPERTY, PLANT, AND EQUIPMENT:
Land 15,713,000 15,617,000
Buildings and improvements 236,756,000 228,610,000
Machinery and equipment 76,839,000 70,036,000
Construction-in-progress 4,649,000 1,772,000
------------ ------------
333,957,000 316,035,000
Less accumulated depreciation 98,269,000 86,474,000
------------ ------------
Property, plant, and equipment, net 235,688,000 229,561,000
CAPITALIZED LEASES:
Refrigerated warehouse facilities 15,828,000 15,828,000
Equipment 7,498,000 5,321,000
------------ ------------
23,326,000 21,149,000
Less accumulated depreciation 4,523,000 3,401,000
------------ ------------
Capitalized leases, net 18,803,000 17,748,000
------------ ------------
$300,311,000 $278,992,000
============ ============
(continued)
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE> 55
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1997 AND DECEMBER 31, 1996
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
<S> <C> <C>
CURRENT LIABILITIES:
Accrued payroll and related expenses $ 7,496,000 $ 7,338,000
Accrued interest expense 5,561,000 --
Unearned revenue 2,088,000 2,088,000
Deferred transaction costs 3,453,000 --
Accrued property taxes 1,544,000 1,100,000
Accounts payable and accrued expenses 2,854,000 4,372,000
Accrued liability for compensation expense 12,115,000 --
Current portion of:
Long-term debt 5,339,000 5,523,000
Capitalized lease obligations 912,000 869,000
----------- ------------
Total current liabilities 41,362,000 21,290,000
LONG-TERM DEBT - Less current portion 158,577,000 147,660,000
CAPITALIZED LEASE OBLIGATIONS -
Less current portion 17,762,000 16,499,000
DEFERRED INCOME TAXES 46,955,000 50,761,000
OTHER LIABILITIES 1,736,000 1,892,000
STOCKHOLDERS' EQUITY:
Common stock; par value $.10 per share;
100,000 shares authorized; 48,687 shares
issued and outstanding at October 31, 1997
and December 31, 1996 5,000 5,000
Additional paid-in capital 44,766,000 44,766,000
Accumulated deficit (10,360,000) (3,296,000)
----------- ------------
34,411,000 41,475,000
Less:
Due from stockholders 145,000 288,000
Treasury stock - 240 shares and 192 shares
at October 31, 1997 and December 31, 1996,
at cost 347,000 297,000
----------- ------------
Stockholders' equity, net 33,919,000 40,890,000
----------- ------------
$300,311,000 $278,992,000
=========== ============
</TABLE>
See notes to consolidated financial statements. (Concluded)
-3-
<PAGE> 56
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
TEN MONTHS ENDED OCTOBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
REVENUES ................................. $131,793,000 $144,229,000
OPERATING EXPENSES:
Cost of services ........................ 90,660,000 94,931,000
General and administrative .............. 11,149,000 12,259,000
Depreciation and amortization ........... 13,472,000 14,574,000
Compensation expense .................... 12,115,000 --
------------ ------------
Total operating expenses ............... 127,396,000 121,764,000
------------ ------------
4,397,000 22,465,000
INTEREST EXPENSE ......................... (15,840,000) (18,037,000)
INTEREST INCOME .......................... 241,000 263,000
------------ ------------
Net interest expense ................... (15,599,000) (17,774,000)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES ........ (11,202,000) 4,691,000
INCOME TAX BENEFIT (EXPENSE) ............. 4,138,000 (1,827,000)
------------ ------------
NET INCOME (LOSS) ........................ $ (7,064,000) $ 2,864,000
============ ============
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 57
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Treasury Stock
---------------- ----------------------
Number Par Additional Accumulated Due From Number
of Shares Value Paid-In Deficit Stockholders of Shares Cost
Capital
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31, 1995..... 48,687 $5,000 $44,766,000 $ (6,160,000) $ (361,000) 96 $ (101,000)
Purchase of treasury shares... 96 (196,000)
Payments received on
stockholder notes............ 73,000
Net income.................... 2,864,000
------ ------ ----------- ------------ ---------- --- ----------
BALANCE - December 31, 1996 48,687 5,000 44,766,000 (3,296,000) (288,000) 192 (297,000)
Purchase of treasury shares... 48 (50,000)
Payments received on
stockholder notes............ 143,000
Net loss...................... (7,064,000)
------ ------ ----------- ------------ ---------- --- ----------
BALANCE - October 31, 1997...... 48,687 $5,000 $44,766,000 $(10,360,000) $ (145,000) 240 $ (347,000)
====== ====== =========== ============ ========== === ==========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE> 58
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEN MONTHS ENDED OCTOBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (7,064,000) $ 2,864,000
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 13,472,000 14,574,000
Loss (gain) on disposal of assets 4,000 (7,000)
Partnership earnings (697,000) (687,000)
Changes in assets and liabilities:
Trade accounts receivable (1,301,000) (2,954,000)
Other current assets (302,000) (297,000)
Accounts payable and accrued expenses 20,213,000 1,308,000
Deferred income taxes (5,633,000) (1,498,000)
Other liabilities (156,000) (76,000)
------------ ------------
Net cash provided by operating activities 18,536,000 13,227,000
INVESTING ACTIVITIES:
Additions to property, plant, and equipment (20,210,000) (13,994,000)
Proceeds from disposals of property, plant
and equipment 87,000 9,000
Contribution to partnership (630,000)
Partnership distributions 978,000 537,000
Payments received on notes receivable 30,000 42,000
Increase in other long-term assets (4,633,000) (40,000)
------------ ------------
Net cash used in investing activities (23,748,000) (13,996,000)
FINANCING ACTIVITIES:
Proceeds from borrowings 47,000,000 11,483,000
Payments on long-term debt 36,268,000 (10,939,000)
Principal payments under capital lease obligations 1,306,000 (470,000)
Purchase of treasury stock (50,000) (196,000)
Payments received on notes receivable from
shareholders 143,000 73,000
Loan closing costs (1,617,000) --
------------ ------------
Net cash provided by (used in) financing
activities 10,514,000 (49,000)
------------ ------------
NET CHANGE IN CASH AND CASH INVESTMENTS 5,302,000 (818,000)
CASH AND CASH INVESTMENTS:
Beginning of period 904,000 1,722,000
------------ ------------
End of period $ 6,206,000 $ 904,000
------------ ------------
SUPPLEMENTAL DISCLOSURES:
Interest paid, net of amount capitalized $ 11,128,000 $ 18,045,000
============ ============
Income taxes paid $ 1,493,000 $ 3,324,000
============ ============
SUPPLEMENTAL INFORMATION ABOUT NONCASH
FINANCING INVESTING AND FINANCING ACTIVITIES:
Capital lease obligations of $2,180,000
were incurred during the ten months ended
October 31, 1997 when the Company entered
into new leases for equipment.
See notes to consolidated financial statements.
</TABLE>
-6-
<PAGE> 59
URS LOGISTICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 1997 AND DECEMBER 31, 1996 FOR THE TEN MONTHS ENDED
OCTOBER 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
1. BASIS OF PRESENTATION AND SUBSEQUENT EVENT
On October 31, 1997, all of the common stock of URS Logistics, Inc.'s (the
"Company") was acquired by an entity controlled by Vornado Realty Trust. As
a result of concurrent related transactions, the Company was acquired by
Vornado/Crescent Atlanta Partnership, a joint venture owned by Vornado
Realty Trust and Crescent Real Estate Equities Company. These financial
statements present the financial position and results of operations of the
Company on the historical cost basis for the ten-month period immediately
prior to the sale of the Company and for the year ended December 31, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, United Refrigerated Services of Texarkana,
Inc. All significant intercompany accounts and transactions have been
eliminated in consolidation. The Company operates and manages public
refrigerated warehouses in the continental United States.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Depreciation and amortization are computed on the straight-line method over
the estimated remaining useful lives of the respective assets, which are
generally 50 years for buildings, 20 years for building improvements, and
5-12 years for machinery and equipment. Depreciation and amortization begin
the month in which the asset is placed into service. For federal income tax
purposes, accelerated depreciation methods and shorter lives are utilized.
Loan closing costs are capitalized and amortized on the straight-line
method over the term of the loan to which they apply.
Lease agreements are classified as capital or operating in accordance with
Statement of Financial Accounting Standards ("SFAS") 13, "Accounting for
Leases," including subsequent amendments and interpretations. Capitalized
leases are recorded at the lower of the present value of future lease
payments or the fair market value of the property. Capitalized leases are
depreciated on a straight-line basis over the lease terms for real estate
and the estimated asset life or lease term for equipment, whichever is
shorter.
-7-
<PAGE> 60
The Company charges construction costs with interest on borrowed funds
during the construction period of major facilities. This interest is
subsequently charged to operations through depreciation over the life of
capitalized property. Approximately $190,000 of interest was capitalized
during the year ended December 31, 1996.
The Company defines "cash and cash investments" as all unrestricted cash
and highly liquid investments with an original maturity of three months or
less.
Revenues include storage and handling fees and management fees for
locations managed on behalf of third parties. Costs related to managed
facilities are included in operating expenses.
The Company charges customers for certain storage and handling in advance,
but defers the related revenue until it has been earned.
The Company records deferred income taxes for the difference in the bases
of assets and liabilities for tax and financial statement purposes and the
enacted rates in effect in the years that the differences are expected to
reverse.
The Company evaluates possible impairment of noncurrent assets and
recognition of impairment losses whenever circumstances indicate that the
carrying value of such assets may be less than their fair values.
Certain reclassifications of prior year balances have been made to conform
with current year financial statement presentation.
3. INVESTMENT IN PARTNERSHIP
The Company's wholly owned subsidiary is a partner with an unrelated third
party (collectively the "Partnership") for the purpose of operating a
public refrigerated warehouse in Texarkana, Arkansas. The investment is
accounted for using the equity method.
The Company is entitled to 50% of the Partnership's earnings. Included in
revenues in the ten months ended October 31, 1997 and the year ended
December 31, 1996 are $697,000 and $687,000, respectively, representing the
Company's equity in the earnings of the Partnership.
The partnership owns land and building and is responsible for the related
mortgage debt. The Company has guaranteed approximately $3,506,000 that
represents 50% of the mortgage debt.
-8-
<PAGE> 61
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Term Loan......................... $ 39,900,000
Term Note A....................... 9,016,000 $ 11,700,000
Term Note B....................... 42,000,000 42,000,000
Term Note C....................... 73,000,000 73,000,000
Line of credit borrowings......... 26,483,000
------------ ------------
163,916,000 153,183,000
Less current portion.............. 5,339,000 5,523,000
------------ ------------
$158,577,000 $147,660,000
============ ============
</TABLE>
Subsequent to October 31, 1997, the Company made a scheduled repayment against
Term Note A of $2,839,000. In December 1997, the Company repaid in full the
term loan in the amount of $39,900,000. In January 1998, as contemplated in
connection with the acquisition of the Company, the Company repaid the entire
balance of Term Notes A, B, and C. Such January repayments aggregated
approximately $149,603,000, including prepayment penalties of $28,425,000.
Financing for these repayments was provided by a bridge loan with interest at
formula rates based on LIBOR and that matures on April 30, 1998.
The Company entered into interest rate swap agreements to reduce the impact of
changes in interest rates on its line of credit borrowings. At October 31,
1997, the Company had outstanding two interest rate swap agreements with
commercial banks, having a total notional principal amount of $16 million.
These agreements effectively convert the Company's floating reference interest
rate (based on three-month LIBOR) on $16 million of its revolving line of
credit borrowings to a fixed reference rate of 5.42%. The interest rate swap
agreements mature in December 1997. Although the Company is exposed to credit
loss in the event of nonperformance by the other parties to the interest rate
swap agreements, the Company does not anticipate nonperformance by the
counterparties. The interest rate swap agreements resulted in an immaterial
amount of net interest income for the ten months ended October 31, 1997.
The weighted average interest rate on the debt outstanding at October 31, 1997
and December 31, 1996 was 10.9% and 11.0%, respectively. All long-term debt is
collateralized by substantially all owned property, plant, and equipment.
On April 23, 1998, the Company borrowed $253,000,000 under a long-term mortgage
note. Proceeds of this borrowing were used primarily to repay in full the
bridge financing obtained in January 1998. The debt is repayable in equal
monthly installments based on a 25-year amortization schedule beginning in May
1998. At the Company's option, the loan may be repaid at any time on or after
April 11, 2008. This loan bears interest at 7% until April 2008, at which time
the interest rate will be adjusted to 9%.
The Company has classified as a current liability the amount of its new mortgage
debt that is payable during 1998. The Company has classified the remaining
balance of its debt outstanding at December 31, 1998 as a long-term liability
based on its demonstrated ability to refinance that debt.
-9-
<PAGE> 62
Under the terms of the Company's April 1998 borrowings, the Company's cash
receipts and certain of its disbursements will be controlled by the servicer of
the mortgage loan. Accordingly, the Company expects that certain of its cash
balances will be classified as restricted cash during the time that the debt
remains outstanding.
Aggregate maturities of the Company's $253,000,000 long-term debt for each of
the next five years and thereafter as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
<S> <C>
1998......................................... $2,574,000
1999......................................... 4,090,000
2000......................................... 4,383,000
2001......................................... 4,697,000
2002......................................... 5,034,000
Thereafter................................... 232,222,000
------------
$253,000,000
============
</TABLE>
5. LEASE COMMITMENTS
Prior to October 31, 1997, the Company leased two refrigerated warehouse
facilities from entities owned by an individual who was a significant
shareholder. These leases are classified as capital leases. The lease terms
expire on April 1, 2013. Fixed rental payments under these leases aggregate
$1,650,000 annually. The Company also leased under an operating lease one
refrigerated warehouse facility from an entity owned by a significant
shareholder. The lease term expires on December 30, 2010 and may be extended
for two five-year periods at the option of the Company. The future minimum
lease payments under this lease are set at $1,120,000 annually. The leases
continue in effect after the sale of the Company.
The Company also has both capital and operating lease agreements for equipment
and other facilities. The Company pays taxes, insurance, and maintenance costs
on substantially all of the leased property. Lease terms generally range from 5
to 20 years with renewal or purchase options.
-10-
<PAGE> 63
As of October 31, 1997, future minimum lease payments under these leases are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Refrigerated Warehouse Headquarters
Facilities and Equipment Facility Total
----------------------------
Capitalized Operating Operating Operating
Leases Leases Lease Lease
Nov. - Dec. 1997 $ 493,000 $ 1,214,000 $ 78,000 $ 1,292,000
1998 2,960,000 7,463,000 478,000 7,941,000
1999 2,960,000 6,930,000 492,000 7,422,000
2000 2,820,000 6,565,000 434,000 6,999,000
2001 2,925,000 6,237,000 445,000 6,682,000
2002 1,937,000 5,115,000 457,000 5,572,000
Thereafter 16,800,000 30,812,000 30,812,000
------------ ------------ ----------- -----------
Total minimum obligations 30,895,000 $ 64,336,000 $2,384,000 $66,721,000
============ =========== ============
Less interest portion 12,221,000
Present value of net
minimum payments 18,674,000
Less current portion 912,000
-----------
$17,762,000
============
</TABLE>
Rental expense for all operating leases was $7,732,000 for the ten months
ended October 31, 1997 and $9,092,000 for the year ended December 31, 1996.
6. TAXES ON INCOME
Deferred income taxes at October 31, 1997 and December 31, 1996 consist of
the tax effects of temporary differences in the basis of assets and
liabilities for financial reporting and tax purposes as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
Current assets - accrued expenses $ 2,637,000 $ 2,303,000
----------- -----------
Noncurrent liabilities:
Depreciation $51,938,000 $52,848,000
Net operating loss and minimum tax credit carryforwards (4,883,000) (1,813,000)
Other (100,000) (274,000)
------------ ------------
$46,955,000 $50,761,000
=========== ===========
</TABLE>
-11-
<PAGE> 64
Tax benefit (expense) for the ten months ended October 31, 1997 and the year
ended December 31, 1996 consists of the following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Current expense:
Federal $ -- $(1,707,000)
State -- (793,000)
---------- -----------
(2,500,000)
Deferred benefit 4,138,000 673,000
---------- -----------
Net benefit (expense) $4,138,000 $(1,827,000)
========== ===========
</TABLE>
Reconciliations between the amounts determined by applying the federal
statutory rates in the ten months ended October 31, 1997 and the year ended
December 31, 1996 to income (loss) before income taxes and income tax
expense (benefit) are as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Income tax benefit (expense)
at federal statutory rate (34.0)% 35.0%
State tax, net of federal benefit (4.1)% 6.7%
Nondeductible expenses 1.1% 2.7%
Increase in tax credit carryforwards (6.2)%
Other 0.1% 0.7%
----- ----
Net benefit (expense) (36.9)% 38.9%
===== ====
</TABLE>
In 1996, the Company amended certain of its previously filed tax returns.
The amended filings resulted in an increase in certain tax credit
carryforward amounts, which have been included as a reduction of 1996 tax
expense.
The Company has net operating loss and alternative minimum tax credit
carryforwards for tax purposes of approximately $7,200,000 and $1,700,000,
respectively, at October 31, 1997, which have been recognized for financial
reporting purposes.
7. SIGNIFICANT CUSTOMERS
In the ten months ended October 31, 1997, revenues from two customers
represented 10% each of total revenue. A significant portion of the
Company's customers operate in the processed foods industry.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
Based on amounts repaid by the Company subsequent to October 31, 1997, the
fair value of long-term debt was approximately $192,342,000. Based on the
contractual interest rates and maturity dates of the Company's interest rate
swaps, the fair value of such swaps at October 31, 1997 was not significant.
9. EMPLOYEE BENEFIT PLANS
Profit Sharing - The Company has a defined contribution employee benefit
plan which covers all eligible employees. The Company's profit sharing
expense was $1,454,000 for the ten months ended
-12-
<PAGE> 65
October 31, 1997 and $1,536,000 for the year ended December 31, 1996. The
plan was also allows contributions by plan participants in accordance with
Section 401(k) of the Internal Revenue Code.
Deferred Compensation - The Company has deferred compensation and
supplemental retirement plan agreements with certain of its executives. The
agreements provide for certain benefits at retirement or disability, and
also provide for survivor benefits in the event of death of the employee.
The Company charges expense for the accretion of the liability each year.
The Company is presently funding the plan through a life insurance program
which protects it against losses due to acceleration of benefits arising
from disability or death and provides for the funds expected to be needed
for the normal benefits.
The net expense for all deferred compensation and supplemental retirement
plans was approximately $124,546 for the ten months ended October 31, 1997
and $207,000 for the year ended December 31, 1996.
10. COMPENSATION EXPENSE
The Company had outstanding warrants that allowed the holders to purchase up
to 5,785 shares of the Company's common stock. Warrants for 4,250 shares
(including warrants for 3,000 shares held by employees) became exercisable
and were exercised when the change in control of the Company occurred. The
remaining 1,535 warrants expired. The Company recorded $6,720,000 of
compensation expense in connection with the exercise of these warrants.
In connection with the sale of the Company, the Company recorded $5,395,000
in management compensation expense.
-13-
<PAGE> 66
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
URS Logistics, Inc.:
We have audited the accompanying consolidated balance sheet of URS Logistics,
Inc. (the "Company") and subsidiary as of December 31, 1997 and the related
consolidated statements of operations, stockholder's equity, and cash flows for
the two months ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company and subsidiary as of
December 31, 1997 and the results of their operations and their cash flows for
the two months ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
March 25, 1998
(April 23, 1998 as to Note 4)
<PAGE> 67
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and cash investments $ 5,083,000
Trade accounts receivable, less allowance for doubtful
accounts of $100,000 20,275,000
Other current assets 1,670,000
Refundable income taxes 3,121,000
Deferred income taxes 2,637,000
------------
Total current assets 32,786,000
PROPERTY, PLANT, AND EQUIPMENT:
Land 20,910,000
Buildings and improvements 288,553,000
Machinery and equipment 108,730,000
Construction-in-progress 1,254,000
------------
419,447,000
Less accumulated depreciation 2,015,000
------------
Property, plant, and equipment, net 417,432,000
CAPITALIZED LEASES:
Refrigerated warehouse facilities 13,075,000
Equipment 5,728,000
------------
18,803,000
Less accumulated depreciation 258,000
------------
Capitalized leases, net 18,545,000
OTHER ASSETS:
Excess of cost over estimated fair value of net
assets acquired, net of accumulated amortization
of $295,000 68,943,000
Loan closing costs, net of accumulated amortization
of $150,000 452,000
Investment in partnership 2,706,000
Other 3,318,000
------------
Total other assets 75,419,000
------------
$544,182,000
------------
(continued)
</TABLE>
-2-
<PAGE> 68
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C>
CURRENT LIABILITIES:
Accrued payroll and insurance $ 9,439,000
Deferred revenue 2,134,000
Accrued property taxes 1,032,000
Accounts payable and accrued expenses 3,257,000
Current portion of:
Long-term debt 2,574,000
Capitalized lease obligations 1,365,000
------------
Total current liabilities 19,801,000
LONG-TERM DEBT 200,429,000
CAPITALIZED LEASE OBLIGATIONS -
Less current portion 17,093,000
DEFERRED INCOME TAXES 122,002,000
OTHER LIABILITIES 1,748,000
STOCKHOLDER'S EQUITY:
Common stock; par value $.10 per share;
1,000 shares authorized, issued, and
outstanding --
Additional paid-in capital 183,433,000
Accumulated deficit (324,000)
------------
Stockholder's equity 183,109,000
------------
$544,182,000
============
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 69
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
TWO MONTHS ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
REVENUES ......................................................... $26,571,000
OPERATING EXPENSES:
Cost of services ................................................ 17,960,000
General and administrative ...................................... 2,832,000
Depreciation and amortization ................................... 2,718,000
-----------
Total operating expenses ....................................... 23,510,000
-----------
Operating income ............................................... 3,061,000
INTEREST EXPENSE, net of interest income of $89,000 .............. 3,337,000
-----------
NET LOSS BEFORE INCOME TAXES ..................................... (276,000)
INCOME TAX EXPENSE ............................................... (48,000)
-----------
NET LOSS ......................................................... $ (324,000)
===========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 70
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Common Stock
---------------------
Number Par Additional Accumulated
of Shares Value Paid-In Deficit
Capital
<S> <C> <C> <C> <C>
BALANCE - October 31, 1997.......... 1,000 $ - $183,433,000
Net loss.......................... $ (324,000)
====== === ============ ==========
Balance - December 31, 1997......... 1,000 $ - $183,433,000 $ (324,000)
====== === ============ ==========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE> 71
URS LOGISTICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
TWO MONTHS ENDED DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES:
Net loss $ (324,000)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 2,718,000
Partnership earnings (149,000)
Changes in assets and liabilities:
Trade accounts receivable (1,629,000)
Other current assets 808,000
Accounts payable and accrued expenses (15,289,000)
Other liabilities 11,000
Refundable income taxes (613,000)
-----------
Net cash used in operating activities (14,467,000)
INVESTING ACTIVITIES:
Additions to property, plant, and equipment (1,604,000)
Decrease in other long-term assets 522,000
-----------
Net cash used in investing activities (1,082,000)
FINANCING ACTIVITIES:
Proceeds from borrowings 53,400,000
Payments on long-term debt (42,739,000)
Principal payments under capital lease obligations (214,000)
-----------
Net cash provided by financing activities 10,447,000
-----------
NET CHANGE IN CASH AND CASH INVESTMENTS (5,102,000)
CASH AND CASH INVESTMENTS:
Beginning of period 10,185,000
-----------
End of period $ 5,083,000
===========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 8,203,000
===========
Income taxes paid $ 661,000
===========
</TABLE>
See notes to consolidated financial statements.
-6-
<PAGE> 72
URS LOGISTICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR TWO MONTHS ENDED DECEMBER 31, 1997
- -------------------------------------------------------------------------------
1. ACQUISITION OF THE COMPANY
On October 31, 1997, all of the common stock of URS Logistics, Inc. (the
"Company"), was acquired by an entity controlled by Vornado Realty Trust for
approximately $183,433,000 plus assumption of outstanding debt and capitalized
lease obligations of approximately $209,649,000. As a result of concurrent
related transactions, the Company was acquired by Vornado/Crescent Atlanta
Partnership, a joint venture owned by Vornado Realty Trust and Crescent Real
Estate Equities Company. The joint venture applied the purchase method of
accounting to the acquisition and "pushed down" its basis in the acquired
assets and liabilities to the Company. Preliminary values assigned to assets
and liabilities of the Company on November 1, 1997 were as follows:
<TABLE>
<S> <C>
Current assets $ 33,817,000
Property, plant, and equipment 417,843,000
Capitalized leases 18,803,000
Excess of cost over fair value of net assets acquired 69,238,000
Other assets 7,759,000
Current liabilities, including approximately
$412,000 related to severance and relocation (33,276,000)
Long-term debt (192,342,000)
Capitalized lease obligations (17,307,000)
Deferred income taxes (119,365,000)
Other liabilities (1,737,000)
--------------
$183,433,000
==============
</TABLE>
Purchase price in excess of the fair value of assets acquired and liabilities
assumed is being amortized over a 40-year period. The assignment of fair values
to assets acquired and liabilities assumed is preliminary and subject to
revision. In particular, management has not yet finalized plans related to
locations to be closed.
Results of operations of the Company are presented for the period from
acquisition to December 31, 1997, the end of the Company's fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, United Refrigerated Services of Texarkana, Inc. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The Company operates and manages public refrigerated warehouses
in the continental United States.
- 7 -
<PAGE> 73
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Depreciation and amortization are computed on the straight-line method over
the estimated remaining useful lives of the respective assets, which are
generally 30 to 50 years for buildings, 20 years for building improvements,
and 5-12 years for machinery and equipment. Depreciation and amortization
begin the month in which the asset is placed into service. For federal income
tax purposes, accelerated depreciation methods and shorter lives are
utilized.
Loan closing costs are capitalized and amortized on the straight-line method
over the term of the loan to which they apply.
Lease agreements are classified as capital or operating in accordance with
Statement of Financial Accounting Standards ("SFAS")13, "Accounting for
Leases," including subsequent amendments and interpretations. Capitalized
leases are recorded at the lower of the present value of future lease
payments or the fair market value of the property. Capitalized leases are
depreciated on a straight-line basis over the lease terms for real estate and
the estimated asset life or lease term for equipment, whichever is shorter.
The Company charges construction costs with interest on borrowed funds during
the construction period of major facilities. This interest is subsequently
charged to operations through depreciation over the life of capitalized
property. No interest was capitalized during the two months ended December
31, 1997.
The Company defines "cash and cash investments" as all unrestricted cash and
highly liquid investments with an original maturity of three months or less.
Revenues include storage and handling fees and management fees for locations
managed on behalf of third parties. Costs related to managed facilities are
included in operating expenses.
The Company charges customers for certain storage and handling in advance,
but defers the related revenue until it has been earned.
The Company records deferred income taxes for the difference in the bases of
assets and liabilities for tax and financial statement purposes and the
enacted rates in effect in the years that the differences are expected to
reverse.
The Company evaluates possible impairment of noncurrent assets and
recognition of impairment losses whenever circumstances indicate that the
carrying value of such assets may be less than their fair values.
3. INVESTMENT IN PARTNERSHIP
The Company's wholly owned subsidiary is a partner with an unrelated third
party (collectively the "Partnership") for the purpose of operating a public
refrigerated warehouse in Texarkana, Arkansas. The investment is accounted
for using the equity method.
The Company is entitled to 50% of the Partnership's earnings. Included in
revenues is $149,000 representing the Company's equity in the earnings of the
Partnership.
-8-
<PAGE> 74
The partnership owns land and building and is responsible for the related
mortgage debt. The Company has guaranteed approximately $3,458,000 that
represents 50% of the mortgage debt.
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
1997
<S> <C>
Term Note A $ 6,178,000
Term Note B 42,000,000
Term Note C 73,000,000
Prepayment penalties due 28,425,000
Bridge Loan 53,400,000
-------------
203,003,000
Less current portion 2,574,000
-------------
$ 200,429,000
==============
</TABLE>
Subsequent to October 31, 1997, the Company made a scheduled repayment against
Term Note A of $2,839,000. In December 1997, the Company repaid in full a term
loan in the amount of $39,900,000. In January 1998, as contemplated in
connection with the acquisition of the Company, the Company repaid the entire
balance of Term Notes A, B, and C. Such January repayments aggregated
approximately $149,603,000, including prepayment penalties of $28,425,000.
Financing for these repayments was provided by a bridge loan with interest at
formula rates based on LIBOR.
The weighted average interest rate on the debt outstanding at December 31,
1997 was 11.45%. All long-term debt is collateralized by substantially all
owned property, plant, and equipment. In addition, the Company's parent pledged
all of the outstanding stock of the Company as security for the bridge
financing.
On April 23, 1998, the Company borrowed $253,000,000 under a long-term mortgage
note. Proceeds of this borrowing were used primarily to repay in full the
bridge loan. The note is secured by mortgages on certain of the Company's
properties with an aggregate carrying value of approximately $372,000,000
and certain properties transferred to it from an affiliate with an aggregate
carrying value of approximately $51,000,000 at December 31, 1997. The debt is
repayable in equal monthly installments based on a 25-year amortization
schedule beginning in May 1998. At the Company's option, the loan may be repaid
at any time on or after April 11, 2008. This loan bears interest at
approximately 7% until April 2008, at which time the interest rate will be
adjusted to approximately 9%.
The Company has classified as a current liability the amount of its new
mortgage debt that is payable during 1998. The Company has classified the
remaining balance of its debt outstanding at December 31, 1998 as a long-term
liability based on its demonstrated ability to refinance that debt.
Under the terms of the Company's April 1998 borrowings, the Company's cash
receipts and certain disbursements will be controlled by the servicer of the
mortgage loan. Accordingly, the Company expects that certain of its cash
balances will be classified as restricted cash during the time that the debt
remains outstanding.
-9-
<PAGE> 75
Aggregate maturities of the Company's $253,000,000 long-term debt for each of
the next five years and thereafter as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
<S> <C>
1998 $ 2,574,000
1999 4,090,000
2000 4,383,000
2001 4,697,000
2002 5,034,000
Thereafter 232,222,000
------------
$253,000,000
============
</TABLE>
5. LEASE COMMITMENTS
The Company has both capital and operating lease agreements for refrigerated
warehouse facilities and equipment. The Company pays taxes, insurance, and
maintenance costs on substantially all of the leased property. Lease terms
generally range from 5 to 20 years with renewal or purchase options.
As of December 31, 1997, future minimum lease payments under these leases are as
follows:
<TABLE>
<CAPTION>
REFRIGERATED WAREHOUSE HEADQUARTERS
FACILITIES AND EQUIPMENT FACILITY TOTAL
--------------------------- OPERATING OPERATING
CAPITALIZED OPERATING LEASE LEASES
LEASES LEASES
<S> <C> <C> <C> <C>
1998 $ 2,960,000 $ 7,592,000 $ 479,000 $ 8,071,000
1999 2,960,000 7,059,000 492,000 7,551,000
2000 2,820,000 6,693,000 434,000 7,127,000
2001 2,925,000 6,365,000 445,000 6,810,000
2002 1,937,000 5,244,000 456,000 5,700,000
Thereafter 16,798,000 31,069,000 -- 31,069,000
----------- ----------- ---------- -----------
Total minimum obligations 30,400,000 $64,022,000 $2,306,000 $66,328,000
=========== ========== ===========
Less interest portion 11,942,000
-----------
Present value of net
minimum payments 18,458,000
Less current portion 1,365,000
-----------
$17,093,000
===========
</TABLE>
Rental expense for all operating leases for the two months ended December 31,
1997 was $1,554,000.
6. TAXES ON INCOME
Deferred income taxes at December 31, 1997 consist of the tax effects of
temporary differences in the basis of assets and liabilities for financial
reporting and tax purposes as follows:
-10-
<PAGE> 76
6. TAXES ON INCOME
Deferred income taxes at December 31, 1997 consist of the tax effects of
temporary differences in the basis of assets and liabilities for financial
reporting and tax purposes as follows:
<TABLE>
<S> <C>
Current assets -- accrued expenses........................... $ 2,637,000
============
Noncurrent liabilities:
Depreciation............................................... $123,213,000
Other...................................................... (1,211,000)
------------
$122,002,000
============
</TABLE>
Tax expense for the two months ended December 31, 1997 consists of the
following:
<TABLE>
<S> <C>
Current Expense:
Federal.................................................... $38,000
State...................................................... 10,000
-------
$48,000
Deferred benefit............................................. --
-------
Net expense.............................................. $48,000
=======
</TABLE>
A reconciliation between income tax expense and the amount determined
by applying the federal statutory rate to loss before income taxes is as
follows:
<TABLE>
<S> <C>
Income tax benefit at federal statutory rate ............. $(94,000)
State tax, net of federal benefit......................... 10,000
Nondeductible amortization of excess cost................. 112,000
Nondeductible expenses.................................... 19,000
Other..................................................... 1,000
--------
$ 48,000
========
</TABLE>
As of December 31, 1997, the Company has net operating loss and
alternative minimum tax credit carryforwards for tax purposes of approximately
$7,200,000 and $1,700,000, respectively.
7. SIGNIFICANT CUSTOMERS
Revenues from two customers each represented approximately 10% of total
revenue. A significant portion of the Company's customers operate in the
processed foods industry.
8. EMPLOYEE BENEFIT PLANS
Profit Sharing -- The Company has a defined contribution employee benefit
plan which covers all eligible employees. The plan was also allows
contributions by plan participants in accordance with Section 401(k) of the
Internal Revenue Code. The Company's profit sharing expense for the two months
ended December 31, 1997 was $217,000.
-11-
<PAGE> 77
Deferred Compensation -- The Company has deferred compensation and
supplemental retirement plan agreements with certain of its executives. The
agreements provide for certain benefits at retirement or disability, and also
provide for survivor benefits in the event of death of the employee. The
Company charges expense for the accretion of the liability each year.
The Company is presently funding the plan through a life insurance program
which protects it against losses due to acceleration of benefits arising from
disability or death and provides for the funds expected to be needed for the
normal benefits.
The net expense for all deferred compensation and supplemental retirement
plans was approximately $27,000.
-12-
<PAGE> 78
[ARTHUR ANDERSEN LLP LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholder and Board of Directors of
Freezer Services - West Point, Inc.:
We have audited the accompanying balance sheets of Freezer Services - West
Point, Inc. (a Nebraska corporation) as of December 31, 1997 and 1996, and the
related statements of operations, changes in stockholder's equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Freezer Services - West Point,
Inc. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Omaha, Nebraska,
February 6, 1998 (except
with respect to the matter
discussed in Note 7, as
to which the date is
February 25, 1998)
<PAGE> 79
FREEZER SERVICES - WEST POINT, INC.
BALANCE SHEETS -- DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
------ ----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,292,891 $ 1,584,177
Accounts receivable --
Trade 665,962 925,602
Other 4,773 213,840
Prepaid expenses 33,485 51,958
----------- -----------
Total current assets 2,997,111 2,775,577
PROPERTY, PLANT AND EQUIPMENT, net of
accumulated depreciation 14,464,197 15,689,834
DEBT ISSUE COSTS, net of accumulated
amortization of $71,952 and $45,788 in
1997 and 1996, respectively 187,515 213,679
----------- -----------
Total assets $17,648,823 $18,679,090
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 769,769 $ 717,386
Accounts payable 218,795 290,507
Accrued expenses 135,975 131,473
Deferred revenues 118,425 131,513
----------- -----------
Total current liabilities 1,242,964 1,270,879
DUE TO STOCKHOLDER 1,200,000 1,200,000
LONG-TERM DEBT, net of current maturities 12,947,466 13,721,803
----------- -----------
Total liabilities 15,390,430 16,192,682
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock --
Class A voting, $1 par value,
5,000 shares authorized,
100 shares issued 100 100
Class B nonvoting, $1 par value,
5,000 shares authorized,
0 shares issued -- --
Additional paid-in capital 3,799,900 3,799,900
Retained deficit (1,541,607) (1,313,592)
----------- -----------
Total stockholder's equity 2,258,393 2,486,408
----------- -----------
Total liabilities and
stockholder's equity $17,648,823 $18,679,090
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE> 80
FREEZER SERVICES - WEST POINT, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<S> <C> <C>
1997 1996
------ -------
OPERATING REVENUES:
Handling $ 5,934,824 $ 5,770,814
Storage 957,277 1,240,518
Other 552,487 621,299
------------ ------------
Total operating revenues 7,444,588 7,632,631
PLANT OPERATING EXPENSES 5,076,199 4,933,080
------------ ------------
Gross profit 2,368,389 2,699,551
GENERAL AND ADMINISTRATIVE EXPENSES 1,457,256 1,494,216
------------ ------------
Operating income 911,133 1,205,335
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (1,148,170) (1,205,457)
Other 9,022 (28,046)
------------ --------------
Total other expense (1,139,148) (1,233,503)
------------ --------------
NET LOSS $ (228,015) $ (28,168)
============= ==============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 81
FREEZER SERVICES - WEST POINT, INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Deficit Total
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 $100 $3,799,900 $(1,285,424) $2,514,576
Net loss -- -- (28,168) (28,168)
----- ----------- ------------ ------------
BALANCE, December 31, 1996 100 3,799,900 (1,313,592) 2,486,408
Net loss -- -- (228,015) (228,015)
----- ----------- ------------ ------------
BALANCE, December 31, 1997 $100 $3,799,900 $(1,541,607) $2,258,393
===== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 82
FREEZER SERVICES--WEST POINT, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (228,015) $ (28,168)
Adjustments to reconcile net loss to net cash
from operating activities--
Depreciation and amortization 1,312,741 1,312,620
Changes in assets and liabilities--
Trade accounts receivable 259,640 (260,202)
Other accounts receivable 209,067 336,160
Prepaid expenses 18,473 (23,765)
Trade accounts payable (71,712) (358,368)
Accrued expenses 4,502 40,189
Deferred revenues (13,088) 80,426
----------- ----------
Net cash from operating activities 1,491,608 1,098,892
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net (60,939) (149,965)
----------- ----------
Net cash from investing activities (60,939) (149,965)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 1,200,000 1,200,000
Payments on long-term debt (1,921,955) (556,480)
Change in due to affiliate -- (46,036)
----------- ----------
Net cash from financing activities (721,955) (597,484)
----------- ----------
NET INCREASE IN CASH 708,714 1,546,411
CASH AND CASH EQUIVALENTS, beginning of period 1,584,177 37,766
----------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 2,292,891 $1,584,177
=========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $1,134,355 $1,108,352
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 83
FREEZER SERVICES - WEST POINT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business
Freezer Services - West Point, Inc. (the Company), a Nebraska corporation, was
formed March 23, 1994, to operate a processing facility in West Point,
Mississippi. Construction of the facility was completed and the Company
commenced operations in August 1995. The Company's revenues are generated
primarily by providing refrigerated and frozen food processing and product
storage services, as well as providing other services related to the
distribution, packaging, loading and unloading, handling and transportation of
those products.
Approximately 95 percent and 98 percent of the Company's revenues were
generated from one customer in 1997 and 1996, respectively.
Revenue Recognition
Storage and handling revenues are recognized ratably over the period such goods
are in storage. Revenues for other services are recognized at the time services
are performed.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and the Company's portion of funds
pooled with affiliated entities. The pooled funds consist of cash and
short-term investments with original maturities of three months or less. The
short-term investments are carried at cost, which approximates market value.
The pool is maintained for investment purposes and the Company's portion is
available for immediate withdrawal. The Company's portion of the pooled funds
was $1,770,294 and $1,404,221 at December 31, 1997 and 1996, respectively.
<PAGE> 84
-2-
Depreciation
The cost of property, plant and equipment is depreciated over the estimated
useful lives of the related assets. Depreciation is determined on a
straight-line basis.
The useful lives of property, plant and equipment for purposes of determining
depreciation are:
<TABLE>
<S> <C>
Processing facility 20 years
Machinery and transportation equipment 5-7 years
Office furniture and equipment 5-7 years
</TABLE>
Income Taxes
The Company has elected S corporation status under Section 1362 of the Internal
Revenue Code. Accordingly, income taxes are attributable to the stockholder of
the Company, and no provision for income taxes has been recorded in the
accompanying financial statements.
Fair Value of Financial Instruments
The Company assumes that the carrying amount of short-term financial
instruments approximates their fair value. For these purposes, short-term is
defined as any item that matures, reprices or represents a cash transaction
between willing parties within six months or less of the measurement date.
Fair values of long-term debt are based on market prices of similar instruments
and/or valuation techniques using market assumptions. Although management uses
its best judgment in estimating the fair value of these financial instruments,
there are inherent limitations in any estimation technique. Therefore, the fair
value estimates presented herein are not necessarily indicative of the amounts
which the Company could realize in a current transaction.
2. PROPERTY, PLANT AND EQUIPMENT:
The following is a summary of property, plant and equipment at December 31:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Land $ 68,500 $ 68,500
Processing facility 14,218,166 14,189,052
Machinery and transportation equipment 1,596,653 1,578,065
Office furniture and equipment 1,666,130 1,652,893
----------- -----------
17,549,449 17,488,510
Less - Accumulated depreciation (3,085,252) (1,798,676)
----------- -----------
$14,464,197 $15,689,834
=========== ===========
</TABLE>
<PAGE> 85
-3-
3. CONTRACT REVENUE:
During the year ended December 31, 1994, the Company and a food processing
company entered into an agreement for the construction and operation of the
warehouse facility. Under the terms of the agreement, the food processor pays
the Company a fixed handling, storage and freezing rate. Additional special
services may be performed at a rate determined at the time the services are
performed.
The agreement also calls for the Company to be reimbursed for certain start-up
costs incurred immediately prior to the opening and during the first six months
of operations of the facility. The Company incurred total start-up costs of
$799,398. Of this amount, $196,795 has been classified as accounts receivable-
other on the accompanying balance sheet at December 31, 1996. The balance was
repaid during 1997.
The term of the agreement runs through August 2005 followed by two five-year
renewal options. The food processing company has the option to purchase the
facility at any time after August 2000. The option price is determined under
terms of the agreement.
4. RELATED-PARTY TRANSACTIONS:
The company obtains management, accounting and administrative services from an
affiliated entity. The accompanying financial statements include expenses of
approximately $561,457 and $364,250 for these services for the years ended
December 31, 1997 and 1996, respectively.
During the year ended December 31, 1995, a stockholder of the Company advanced
$1,200,000 to the Company. Interest on the advance was at 7.75 percent per
annum. The advance was paid during 1997.
During the year ended December 31, 1997, a stockholder of the Company
advanced $1,200,000 to the Company. The advance matures July 31, 1999, and bears
interest at 6.0 percent per annum.
<PAGE> 86
-4-
5. LONG-TERM DEBT:
Long-term debt at December 31, 1997 and 1996, consisted of the following:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Note payable, interest at 8.1 percent.
Principal and interest due in
monthly installments beginning August
1995 through June 2005, with the final
principal and interest payment of
$6,800,648 due June 2005 with an option
to extend for 5 years. The note is
secured by certain property and
equipment of the Company. The
stockholder's guarantee is limited
to the top $3,500,000 which has been
reduced to $2,220,202 as of December 31,
1997........................................... $12,706,244 $13,272,985
Note payable, interest at 4.25 percent.
Principal and interest due in equal
monthly installments of $16,541 beginning
October 1996 through September 2003.
The note is collateralized by a
$1,200,000 irrevocable letter of credit....... 1,010,991 1,166,204
----------- -----------
13,717,235 14,439,189
Less -- Current maturities....................... 769,769 717,386
----------- -----------
$12,947,466 $13,721,803
=========== ===========
</TABLE>
Scheduled maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
1998............................................. $ 769,769
1999............................................. 828,028
2000............................................. 890,905
2001............................................. 958,777
2002............................................. 1,032,049
2003 and thereafter.............................. 9,237,707
-----------
$13,717,235
===========
</TABLE>
<PAGE> 87
-5-
The notes payable contain certain financial and other restrictive covenants
including maintenance of minimum current ratio, working capital, net tangible
assets, fixed charge coverage ratio and net worth levels. The Company was in
compliance with all such covenants at December 31, 1997.
At December 31, 1997, the estimated fair value of long-term debt approximated
its carrying value.
6. EMPLOYEE BENEFIT PLANS:
The Company, together with other affiliated entities, sponsors a health benefit
plan for its employees. The plan constitutes a voluntary employee benefits
association under Section 501(c)(9) of the Internal Revenue Code and was
established within the guidelines of the Employee Retirement Income Security Act
of 1974. The Company's contributions to the plan are determined on the specific
cost of each employee covered by the plan. The Company's health benefit costs
charged to expense during the years ended December 31, 1997 and 1996, were
$214,728 and $214,668, respectively.
The Company, together with other affiliated entities, sponsors a 401(k)
retirement plan for all eligible employees. Participants may contribute up to 17
percent of their eligible wages. The Company matched 25 percent and 50 percent
of the first 6 percent contributed by the employees in 1997 and 1996,
respectively. The Company's 401(k) contributions charged to expense during the
years ended December 31, 1997 and 1996, were $8,280 and $16,522, respectively.
7. SUBSEQUENT EVENT:
Subsequent to December 31, 1997, the Company executed a letter of intent to sell
substantially all of the assets and liabilities of the Company to an independent
third party at a negotiated price. The management of the Company expects to
execute an asset purchase agreement in March 1998.
<PAGE> 88
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
American/Freezer Services, Inc.:
We have audited the accompanying balance sheets of American/Freezer Services,
Inc. (a Nebraska corporation) as of December 31, 1997 and 1996, and the related
statements of income, changes in stockholders' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and exhibits based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American/Freezer Services, Inc.
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
Omaha, Nebraska, February 6, 1998 (except
with respect to the matter discussed in Note
10, as to which the date is February 25,
1998)
<PAGE> 89
AMERICAN/FREEZER SERVICES, INC.
BALANCE SHEETS--DECEMBER 31
<TABLE>
<CAPTION>
ASSETS 1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,525,510 $ 8,735,281
Accounts receivable-
Trade 2,042,203 1,666,238
Other 111,165 231,473
Assets held for sale, net - 3,435,696
Prepaid expenses 495,825 494,303
Advances to affiliates 4,823,330 518,597
Bond sinking fund - 220,193
----------- -----------
Total current assets 10,998,033 15,301,781
PROPERTY, PLANT AND EQUIPMENT, net of
accumulated depreciation 26,339,388 27,016,511
INVESTMENT IN LAND, at cost 478,495 478,495
OTHER ASSETS:
Bond reserve fund 152,716 354,787
Bond issue costs, net of accumulated amortization of $185,168
and $416,750 in 1997 and 1996, respectively 278,454 338,368
Organization costs 525 3,674
----------- -----------
Total assets $38,247,611 $43,493,616
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities due to stockholders $ 443,104 $ -
Current maturities of long-term debt 2,382,758 2,641,488
Deferred revenues 390,837 313,335
Accounts payable and accrued expenses 1,898,355 4,010,530
----------- -----------
Total current liabilities 5,115,054 6,965,353
RENTAL SECURITY DEPOSIT 38,694 2,940
DUE TO STOCKHOLDERS 5,521,882 1,030,000
LONG-TERM DEBT, net of current maturities:
Real estate mortgage 13,143,566 19,136,564
----------- -----------
Total liabilities 23,819,196 27,134,857
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock-
Class A voting, $10 par value,
2,000 shares authorized, 499.2 shares issued
and outstanding 4,992 4,992
Class B nonvoting, $10 par value, 2,000 shares
authorized, 457.6 and 46.4 shares issued
at December 31, 1997 and 1996, respectively 4,576 464
Additional paid-in capital 8,672,647 809,496
Retained earnings 5,746,200 15,543,807
----------- -----------
Total stockholders' equity 14,428,415 16,358,759
----------- -----------
Total liabilities and stockholders' equity $38,247,611 $43,493,616
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE> 90
AMERICAN/FREEZER SERVICES, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATING REVENUES:
Handling $ 17,041,235 $ 17,831,356
Storage 6,818,170 7,889,665
Freezing 3,713,913 4,413,354
Lease 3,050,029 3,703,322
Other 224,758 99,192
------------ ------------
Total operating revenues 30,848,105 33,936,889
PLANT OPERATING EXPENSES 16,819,877 19,235,150
------------ ------------
Gross profit 14,028,228 14,701,739
GENERAL AND ADMINISTRATIVE EXPENSES 5,784,780 7,221,835
------------ ------------
Operating income 8,243,448 7,479,904
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (1,426,758) (1,937,742)
Interest income 325,720 560,725
Miscellaneous income, net 7,057,910 69,443
------------ ------------
Total other income (expense) 5,956,872 (1,307,574)
------------ ------------
NET INCOME $ 14,200,320 $ 6,172,330
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 91
AMERICAN/FREEZER SERVICES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Class A Class B Additional
----------------- ----------------- Paid-in Retained
Shares Value Shares Value Capital Earnings Total
------ ------- ------ -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 499.2 $ 4,992 46.4 $ 464 $ 809,496 $ 16,174,902 $ 16,989,854
Net income - - - - - 6,172,330 6,172,330
Distributions to stockholders - - - - - (6,803,425) (6,803,425)
----- ------ ------ -------- ----------- ------------ ------------
BALANCE, December 31, 1996 499.2 4,992 46.4 464 809,496 15,543,807 16,358,759
Net income - - - - - 14,200,320 14,200,320
200% Stock dividend - - 1091.2 10,912 20,867,018 (20,877,930) -
Purchase of and retirement of
Treasury stock - - (680.0) (6,800) (13,003,867) - (13,010,667)
Distributions to stockholders - - - - - (3,119,997) (3,119,997)
----- ------- ------ -------- ------------ ------------ ------------
BALANCE, December 31, 1997 499.2 $ 4,992 457.6 $ 4,576 $ 8,672,647 $ 5,746,200 $ 14,428,415
===== ======= ====== ======== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 92
AMERICAN/FREEZER SERVICES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,200,320 $ 6,172,330
Adjustments to reconcile net income to net cash
from operating activities-
Depreciation 2,483,490 3,734,708
Amortization 63,063 393,063
Gain on sale of assets (7,114,304) -
Changes in assets and liabilities-
Trade accounts receivable, net (375,965) 229,551
Other accounts receivable 120,308 (177,196)
Prepaid expenses (1,522) (125,569)
Accounts payable (1,698,124) 1,568,451
Accrued expenses (414,051) 504,206
Deferred revenues 77,502 (1,438,165)
Rental security deposit 35,754 (25,122)
------------ ------------
Net cash from operating activities 7,376,471 10,836,257
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net (1,806,367) (815,886)
Proceeds from sale of assets 10,550,000 -
------------ ------------
Net cash provided by (from) investing activities 8,743,633 (815,886)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (6,286,742) (2,600,586)
Stockholder cash distributions (3,119,997) (6,803,425)
Payments received on advances to affiliates 49,400 3,066,499
Net changes on revolving credit agreement - (1,000,000)
Deposits into bond sinking fund (810,689) (968,410)
Payments from bond sinking fund 1,232,953 922,170
Advances to affiliates (4,354,133) (518,597)
Changes in cash surrender value of life insurance - 91,754
Advances received from stockholders - 310,000
Payments made on advances from stockholders (1,030,000) (250,000)
Proceeds from issuance of long-term debt 6,000,000 -
Purchase of treasury stock (13,010,667) -
------------ ------------
Net cash from financing activities (21,329,875) (7,750,595)
------------ ------------
NET INCREASE (DECREASE) IN CASH (5,209,771) 2,269,776
CASH AND CASH EQUIVALENTS, beginning of year 8,735,281 6,465,505
------------ ------------
CASH AND CASH EQUIVALENTS, end of year $ 3,525,510 $ 8,735,281
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 1,396,472 $ 1,955,800
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
In November 1997, the Board of Directors approved a 200 percent stock
dividend of Class B nonvoting stock for each share of Class A voting stock
and each share of Class B nonvoting stock.
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 93
AMERICAN/FREEZER SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business
American/Freezer Services, Inc. (the Company), a Nebraska corporation, operates
or manages processing facilities in Fremont, Nebraska; Sioux Falls, South
Dakota; Phoenix, Arizona; East Dubuque, Illinois; Amarillo, Texas; Garden City,
Kansas; and Wilmington, California. The Company's revenues are generated
primarily by providing refrigerated and frozen food processing and product
storage services, as well as providing other services related to the
distribution, packaging, loading and unloading, handling and transportation of
those products.
Approximately 49 percent and 35 percent of the Company's revenues were generated
from three customers in 1997 and 1996, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Storage and handling revenues are recognized ratably over the period such goods
are in storage. Revenues for other services are recognized at the time services
are performed.
The Company recognizes lease revenue on a straight-line basis over the term of
the lease. Cash received in excess of revenue recognized is classified as
deferred revenues in the accompanying balance sheets.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and the Company's portion of funds
pooled with affiliated entities. The pooled funds consist of cash and short-term
investments with original maturities of three months or less. The short-term
investments are carried at cost, which approximates
<PAGE> 94
- 2 -
market value. The pool is maintained for investment purposes and the Company's
portion is available for immediate withdrawal. The Company's portion of the
pooled funds was $1,909,937 and $6,640,357 at December 31, 1997 and 1996,
respectively.
Depreciation
The cost of property, plant and equipment is depreciated over the estimated
useful lives of the related assets. Depreciation is determined on a
straight-line basis.
The useful lives of property, plant and equipment for purposes of determining
depreciation are:
<TABLE>
<S> <C>
Processing facilities 15-20 years
Machinery and transportation equipment 5-7 years
Office furniture and equipment 5-7 years
</TABLE>
Amortization
Bond issue costs are amortized on a straight-line basis over the term of the
related debt. The organization costs are amortized over five years.
Income Taxes
The Company has elected S corporation status under Section 1362 of the Internal
Revenue Code. Accordingly, income taxes are attributable to the stockholders of
the Company, and no provision for income taxes has been recorded in the
accompanying financial statements.
Fair Value of Financial Instruments
The Company assumes that the carrying amount of short-term financial instruments
approximates their fair value. For these purposes, short-term is defined as any
item that matures, reprices or represents a cash transaction between willing
parties within six months or less of the measurement date.
Fair values of long-term debt are based on market prices of similar instruments
and/or valuation techniques using market assumptions. Although management uses
its best judgment in estimating the fair value of these financial instruments,
there are inherent limitations in any estimation technique. Therefore, the fair
value estimates presented herein are not necessarily indicative of the amounts
which the Company could realize in a current transaction.
Reclassification of 1996 Amounts
Certain reclassifications have been made to the December 31, 1996, financial
statements to conform with the December 31, 1997, presentation.
<PAGE> 95
- 3 -
2. PROPERTY, PLANT AND EQUIPMENT:
The following is a summary of property, plant and equipment at December 31:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Land $ 1,432,941 $ 1,432,941
Processing facilities and improvements 46,007,062 44,602,259
Machinery and transportation equipment 4,718,337 4,505,537
Office furniture and equipment 1,537,976 1,564,643
Construction in progress 746,914 531,483
------------ ------------
54,443,230 52,636,863
Less- Accumulated depreciation (28,103,842) (25,620,352)
------------ ------------
$ 26,339,388 $ 27,016,511
============ ============
</TABLE>
3. LONG-TERM DEBT:
Long-term debt at December 31 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Note payable to bank, East Dubuque, Illinois, noninterest bearing,
principal due in equal monthly installments of $3,703 through July 2003.
The note is collateralized by a $315,000 irrevocable letter
of credit. $ 248,148 $ 292,592
Note payable to bank, East Dubuque, Illinois, with principal and interest,
at 8.0 percent, due in equal monthly installments of $20,169 through
December 1998, with the final principal and interest payment of $473,311
due January 1999. The note is collateralized by certain equipment of
the Company. 649,718 830,160
Note payable to bank, East Dubuque, Illinois, with principal and interest,
at 8.0 percent, due in equal monthly installments of $3,211 through
December 1998, with the final principal and interest payment of $75,337
due January 1999. The note is collateralized by certain equipment of
the Company. 103,423 134,206
Note purchase agreement to bank, East Dubuque, Illinois,consisting of four,
7.78 percent secured notes payable, principal and interest due in equal
monthly installments of $94,300 through April 2009, collateralized by a
mortgage on the Company's Dubuque processing facility, an assignment of
leases and rents, and guaranteed by a stockholder of the
</TABLE>
<PAGE> 96
- 4 -
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Company. The stockholder's guarantee is limited to a top of $2,500,000
which has been reduced to $965,036. Interest on the notes payable is
fixed at 7.78 percent until April 1, 2004, at which time the interest
rate on the remaining unpaid principal balance is to be renegotiated. $ 8,465,036 $ 8,917,598
Industrial Revenue Bonds, Phoenix, Arizona, interest equal to 65 percent of
the prime rate charged by the lending institution with maximum rate of 15
percent per annum (5.5 percent at December 31, 1996). Principal due in
equal quarterly installments of $117,000 through 1997. - 453,000
Note payable to bank, Phoenix, Arizona, interest at the Treasury rate plus
two hundred basis points or at the index rate, principal and interest due
in monthly installments through September 2002, with the final principal
and interest payment of $65,000 due October 2002. The note is
collateralized by certain property and equipment of the Company. 3,585,000 3,925,000
Industrial Revenue Bonds, Garden City, Kansas, Series B, 1992, interest
ranging from 6.50 percent to 7.25 percent, annual maturities on November
1, through 2002, in amounts varying from $225,000 to $525,000, with
sinking fund redemptions required. Monthly principal and interest
payments ranging from $27,259 to $52,108 are being held by the trustee
to be applied to the retirement of the bonds. 1,320,000 1,820,000
Industrial Revenue Bonds, Garden City, Kansas, Series A, 1993, interest
ranging from 5.25 percent to 7.50 percent, annual maturities on November
1, through 2003, in amounts varying from $160,000 to $220,000, with
sinking fund redemptions required. Monthly principal and interest
payments of approximately $19,500 are being held by the trustee
to be applied to the retirement of the bonds. 1,155,000 1,315,000
Real estate mortgage, Norfolk, Nebraska, principal and interest due in
monthly installments of $76,296, with interest at 10.25 percent. This
note was repaid during 1997. - 4,090,496
----------- -----------
15,526,325 21,778,052
Less- Current maturities 2,382,758 2,641,488
----------- -----------
$13,143,567 $19,136,564
=========== ===========
</TABLE>
<PAGE> 97
- 5 -
Scheduled maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
1998 $ 2,382,758
1999 1,763,117
2000 1,851,851
2001 1,923,006
2002 1,812,884
2003 and thereafter 5,792,709
-----------
$15,526,325
===========
</TABLE>
Certain of the debt agreements contain financial and other restrictive covenants
including maintenance of minimum current ratio, working capital, net tangible
assets, fixed charge coverage ratio and net worth levels. The Company was in
compliance with all such covenants at December 31, 1997.
The Company is the guarantor of a portion (approximately $3.5 million as of
December 31, 1997) of a note payable of an affiliated partnership, Unifreeze
Services Partnership. The note payable is also collateralized by the processing
facility owned by the affiliated partnership and is due May 1998.
At December 31, 1997, the estimated fair value of long-term debt approximated
its carrying value.
4. REVOLVING CREDIT AGREEMENT:
As of December 31, 1997, the Company had a revolving credit agreement with a
bank. The maximum borrowing amount on the revolving credit agreement was
$10,875,000, reduced by irrevocable letters of credit totaling $1,515,000
maintained by the Company. Unused available credit was $9,616,000 at December
31, 1997. Borrowings accrue interest at 1/4 percent below the bank's prime rate,
which at December 31, 1997, was 8.25 percent. The agreement was collateralized
by the Company's processing facilities at Fremont, Nebraska, and Sioux Falls,
South Dakota. The agreement contains certain financial and other restrictive
covenants including maintenance of tangible net worth and a minimum debt service
coverage ratio. The Company was in compliance with all such covenants at
December 31, 1997.
5. CONTRACT REVENUE:
During the year ended December 31, 1993, the Company and a food processing
company entered into an agreement for the construction and operation of a
processing facility in East Dubuque, Illinois. Approximately 70 percent of
<PAGE> 98
- 6 -
the processing facility is dedicated to the refrigerated storage and
distribution of the food processor's products and the remaining portion is
operated as a public cold storage warehouse.
Under terms of the agreement, the food processor pays the Company an annual fee
for operating the dedicated portion of the processing facility on its behalf.
This fee includes reimbursement of certain operating and fixed costs and a
management fee. The reimbursed operating costs are included in distribution
center operating revenue with the corresponding costs reflected as plant
operating expenses in the accompanying statements of income. The fixed cost
reimbursement is based on the final construction completion costs of the
processing facility and on the Company's invested equity in the processing
facility.
The term of the agreement runs through December 2003 with a five-year renewal
option. The agreement provides the food processor an option to purchase the
processing facility during two separate periods (February - April 1998 or
February - April 2003). The option price is determined under terms of the
agreement.
The food processor has the right to terminate the agreement under certain
circumstances. In the event of such termination, the food processor is required
to pay the Company certain annual amounts until December 1999.
Another customer leases the public cold storage warehouse for processing and
distribution of food products under month-to-month operating leases which expire
December 31, 1997. Revenue generated from these leases was $1,532,294 and
$501,181 in the years ended December 31, 1997 and 1996, respectively.
6. LEASING OPERATIONS:
The Company leases portions of its processing facilities for processing and
distribution of frozen/chilled products under operating lease agreements.
Scheduled payments to be received under leases and other contractual obligations
as of December 31, 1997, are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
1998 $1,151,562
1999 575,202
2000 187,233
----------
$1,913,997
==========
</TABLE>
<PAGE> 99
- 7 -
During the year ended December 31, 1996, the Company leased a portion of its
processing facility in Norfolk, Nebraska, to a meat processor for the
production, storage and distribution of refrigerated food products under an
operating lease agreement. The lease agreement provided for payment of a portion
of insurance and real estate taxes by the lessee and an annual adjustment of
rent based on certain price indices. The Company sold its Norfolk processing
facility to the lessee in 1997 (see Note 9).
7. RELATED-PARTY TRANSACTIONS:
The Company obtains management, accounting and administrative services from an
affiliated company. The accompanying financial statements include expenses of
approximately $2,736,315 and $3,289,400 for these services during the years
ended December 31, 1997 and 1996, respectively.
During the year ended December 31, 1994, an affiliate of the Company commenced
construction of new corporate offices in Omaha, Nebraska. During the year ended
December 31, 1995, the Company advanced amounts to the affiliate to fund the
construction project on an interim basis. As of December 31, 1996, the amount
due from the affiliate was $52,419 and was fully paid in 1997. The advance is
due on demand and bears interest at 7.75 percent per annum. An affiliate of the
Company performed other general repairs or construction at the Company's
processing facilities during the years ended December 31, 1997 and 1996 at a
cost of approximately $762,000 and $88,374, respectively.
During the year ended December 31, 1994, the Company's stockholders advanced
$2,000,000 to the Company, of which $720,000 remained outstanding at December
31, 1996, and was fully paid in 1997. The advance bears interest at 6.00 percent
per annum.
During the year ended December 31, 1995, the Company advanced $700,927 to an
affiliate for the construction of an addition to the affiliate's facility. All
principal and interest at 7.75 percent per annum was paid during 1996.
During the year ended December 31, 1996, a stockholder advanced $310,000 to the
Company, of which $310,000 remained outstanding at December 31, 1996, and was
fully paid in 1997. The advance bears interest at 6.00 percent per annum.
8. EMPLOYEE BENEFIT PLANS:
The Company, together with other affiliated companies, sponsors a health benefit
plan for its employees. The plan constitutes a voluntary employee benefits
association under Section 501(c)(9) of the Internal Revenue Code and was
established within the guidelines of the Employee Retirement Income Security Act
of 1974. The Company's contributions to the plan are determined on the specific
cost of each employee covered by the plan. The Company's health benefit costs
charged to expense during the years ended December 31, 1997 and 1996, were
$684,195 and $674,384, respectively.
<PAGE> 100
- 8 -
The Company, together with other affiliated entities, sponsors a 401(k)
retirement plan for all eligible employees. Participants may contribute up to 17
percent of their eligible wages. The Company matched 25 percent and 50 percent
of the first 6 percent contributed by the employees in 1997 and 1996,
respectively. The Company's 401(k) contributions charged to expense during the
years ended December 31, 1997 and 1996, were $53,286 and $129,907, respectively.
9. SALE OF NORFOLK PROCESSING FACILITY:
The Company completed the sale of the Norfolk processing facility on February
14, 1997, for approximately $10,600,000. The net assets related to the Norfolk
processing facility are reflected in the accompanying December 31, 1996, balance
sheet as assets held for sale. The Company recognized a gain on the sale of the
Norfolk processing facility of approximately $7.1 million that is included in
miscellaneous income in the accompanying 1997 statement of income.
10. SUBSEQUENT EVENT:
Subsequent to December 31, 1997, the Company executed a letter of intent to sell
substantially all of the assets and liabilities of the Company to an independent
third party at a negotiated price. The management of the Company expects to
execute an asset purchase agreement in March 1998.
<PAGE> 101
[Baird, Kurtz & Dobson Letterhead]
Independent Accountants' Report
The Board of Directors and Stockholders
The Carmar Group of Companies
Carthage, Missouri
We have audited the accompanying combined balance sheet of THE CARMAR GROUP
OF COMPANIES as of December 31, 1997, and the related combined statements of
income, stockholders' and members' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of THE CARMAR GROUP OF
COMPANIES as of and for the year ended December 31, 1996, were audited by other
accountants whose report dated February 14, 1997, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1997 combined financial statements referred to above
present fairly, in all material respects, the financial position of THE CARMAR
GROUP OF COMPANIES as of December 31, 1997, and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.
/s/ Baird, Kurtz & Dobson
Joplin, Missouri
February 13, 1998
<PAGE> 102
THE CARMAR GROUP OF COMPANIES
COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 838,000 $ 6,683,000
Available-for-sale securities -- 3,541,000
Notes receivable 1,194,000 1,000
Accounts receivable, less allowance for doubtful
accounts of $50,000 in 1997 and $95,000 in 1996 4,045,000 3,700,000
Interest receivable 15,000 14,000
Inventories 706,000 160,000
Prepaid expenses 522,000 271,000
------------ -----------
Total Current Assets 7,320,000 14,370,000
------------ -----------
PROPERTY AND EQUIPMENT, At Cost
Land and stone deposits 2,816,000 2,620,000
Buildings 88,151,000 72,126,000
Land improvements 2,892,000 2,214,000
Machinery and equipment 12,623,000 11,478,000
Trucks and automobiles 1,374,000 1,364,000
Furniture and fixtures 3,780,000 3,345,000
Airplane 1,887,000 1,552,000
Construction in progress 1,062,000 4,986,000
------------ -----------
114,585,000 99,685,000
Less accumulated depreciation 37,650,000 31,904,000
------------ -----------
76,935,000 67,781,000
------------ -----------
INVESTMENTS AND OTHER ASSETS
Cash value of life insurance 315,000 281,000
Rock coring, net of accumulated amortization -- 18,000
Organization costs, net of accumulated amortization 19,000 25,000
Debt issue costs, net of accumulated amortization 301,000 318,000
Other assets 218,000 --
------------ -----------
853,000 642,000
------------ -----------
$ 85,108,000 $82,793,000
============ ===========
</TABLE>
See Notes to Combined Financial Statements
-2-
<PAGE> 103
LIABILITIES AND STOCKHOLDERS' AND MEMBERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Notes payable to individuals $ 1,157,000 $ 1,497,000
Current portion of long-term debt 3,605,000 3,337,000
Accounts payable 1,907,000 6,911,000
Accrued payroll and employee benefits 1,001,000 891,000
Deferred handling income 540,000 458,000
Accrued expenses 257,000 487,000
Dividends payable 348,000 305,000
----------- -----------
Total Current Liabilities 8,815,000 13,886,000
----------- -----------
LONG-TERM LIABILITIES
Deferred compensation 758,000 509,000
Long-term debt 50,799,000 47,240,000
----------- -----------
51,557,000 47,749,000
----------- -----------
STOCKHOLDERS' AND MEMBERS' EQUITY
Common stock 60,000 60,000
Additional paid-in capital 4,000,000 4,000,000
Members' capital 1,433,000 975,000
Retained earnings 25,540,000 22,420,000
----------- -----------
31,033,000 27,455,000
Less cost of treasury stock 6,297,000 6,297,000
----------- -----------
24,736,000 21,158,000
----------- -----------
$85,108,000 $82,793,000
=========== ===========
</TABLE>
2
<PAGE> 104
THE CARMAR GROUP OF COMPANIES
COMBINED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<C> <S> <S>
SALES AND REVENUES $ 51,579,000 $ 46,156,000
COST OF SALES AND REVENUES 35,617,000 31,684,000
------------ ------------
GROSS MARGIN ON SALES AND REVENUES 15,962,000 14,472,000
SELLING AND ADMINISTRATIVE EXPENSES 7,390,000 6,397,000
------------ ------------
INCOME FROM OPERATIONS 8,572,000 8,075,000
------------ ------------
OTHER INCOME (EXPENSE)
Interest income 203,000 237,000
Interest expense (4,101,000) (3,562,000)
Miscellaneous income 766,000 493,000
Miscellaneous expense (74,000) (29,000)
------------ ------------
(3,206,000) (2,861,000)
------------ ------------
NET INCOME $ 5,366,000 $ 5,214,000
============ ============
</TABLE>
See Notes to Combined Financial Statements
-3-
<PAGE> 105
THE CARMAR GROUP OF COMPANIES
COMBINED STATEMENTS OF STOCKHOLDERS' AND MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Common Stock Additional Members' Treasury Stock
------------------- Paid-In Capital Retained ----------------
Shares Par Value Capital (Deficit) Earnings Shares Cost
------ --------- ------- --------- -------- ------ ----
<C> <S> <S> <S> <S> <S> <S> <S>
BALANCE,
JANUARY 1,
1996 60,521 $ 60,000 $4,000,000 $ (142,000) $ 20,267,000 22,814 $6,297,000
Contributed
capital -- -- -- 10,000 -- -- --
Net income -- -- -- 1,107,000 4,107,000 -- --
Dividends
declared -- -- -- -- (1,954,000) -- --
------ -------- ---------- ---------- ------------ ------ ----------
BALANCE,
DECEMBER 31,
1996 60,521 60,000 4,000,000 975,000 22,420,000 22,814 6,297,000
Net income -- -- -- 458,000 4,908,000 -- --
Dividends
declared -- -- -- -- (1,788,000) -- --
------ -------- ---------- ---------- ------------ ------ ----------
BALANCE,
DECEMBER 31,
1997 60,521 $ 60,000 $4,000,000 $1,433,000 $ 25,540,000 22,814 $6,297,000
====== ======== ========== ========== ============ ====== ==========
</TABLE>
See Notes to Combined Financial Statements
-4-
<PAGE> 106
THE CARMAR GROUP OF COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers ...................... $ 51,316,000 $ 45,362,000
Cash paid to suppliers and employees .............. (39,894,000) (30,110,000)
Interest received ................................. 202,000 223,000
Interest paid, net of amount capitalized .......... (4,188,000) (3,590,000)
Other operating receipts .......................... 847,000 464,000
----------- ------------
Net cash provided by operating activities ...... 8,283,000 12,349,000
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale (purchase) of available-for-sale securities... 3,541,000 (3,541,000)
Sale of property and equipment .................... 59,000 192,000
Purchase of property and equipment ................ (18,092,000) (11,417,000)
Net payments of notes receivable .................. (1,193,000) 368,000
----------- ------------
Net cash used in investing activities .......... (15,685,000) (14,398,000)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt ........................ 14,982,000 7,303,000
Payments on long-term debt ........................ (11,174,000) (2,832,000)
Net payments on notes payable to individuals ...... (506,000) (103,000)
Member's capital contributed ...................... -- 10,000
Dividends paid .................................... (1,745,000) (1,885,000)
----------- ------------
Net cash provided by financing activities ...... 1,557,000 2,493,000
----------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .... (5,845,000) 444,000
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ........ 6,683,000 6,239,000
----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR .............. $ 838,000 $ 6,683,000
=========== ============
</TABLE>
See Notes to Combined Financial Statements
-5-
<PAGE> 107
THE CARMAR GROUP OF COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
(CONTINUED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Reconciliation of net income to net cash
provided by operating activities
Net income $ 5,366,000 $ 5,214,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 5,953,000 5,261,000
Provision for bad debts 130,000 100,000
Amortization 111,000 28,000
Gain (loss) on sale of property and equipment 155,000 (11,000)
Increase in cash value of life insurance (34,000) (33,000)
Decrease (increase) in:
Accounts receivable (475,000) (907,000)
Interest receivable (1,000) (14,000)
Inventories (546,000) 171,000
Prepaid expenses (251,000) (88,000)
Other assets (269,000) (26,000)
Increase (decrease) in:
Accounts payable (2,014,000) 2,223,000
Accrued payroll and employee benefits 110,000 180,000
Deferred handling income 82,000 13,000
Accrued expenses (283,000) 20,000
Deferred compensation 249,000 218,000
----------- -----------
Net cash provided by operating activities $ 8,283,000 $12,349,000
=========== ===========
</TABLE>
Non-cash investing and financing activities
Interest payable to stockholders was added to notes payable to stockholders
rather than being paid, which totaled $166,000 in 1997 and $51,000 in 1996.
Property and equipment additions included in accounts payable as of December
31, 1997 and 1996 were $555,000 and $3,557,000, respectively.
See Notes to Combined Financial Statements
-6-
<PAGE> 108
THE CARMAR GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Carmar Group, Inc., has underground storage facilities which it rents and
leases to business and industry. In connection with this activity, the Company
provides handling services for stored goods. Additionally, the Company is
involved in crushed stone mining activities which consist of the production of
high grade limestone, construction aggregates, agricultural lime and calcium
carbonate. Carmar Freezers, Inc., Carmar Freezers - Russellville, L.L.C., and
Carmar Freezers - Thomasville, L.L.C., operate above-ground freezer storage
facilities and provide handling services for stored goods. Carmar Logistics
Group, Inc., operates a freight consolidation, distribution and brokerage
service.
The Companies' sales by business activity are as follows:
<TABLE>
<CAPTION> 1997 1996
---- ----
<S> <C> <C>
Public warehousing 56% 55%
Freight consolidation, distribution and brokerage 30% 24%
Crushed stone 12% 14%
Other 2% 8%
</TABLE>
Most of the Companies' business activity is with customers located within
Missouri and Arkansas. A major portion of the Companies' sales and accounts
receivable are from customers in the food processing industry. A single
customer in this industry generated 38% and 41% of the Companies' combined
sales and revenues for 1997 and 1996, respectively.
Principles of Combination
The combined financial statements include the accounts of Carmar Group,
Inc.; Carmar Freezers, Inc.; Carmar Logistics Group, Inc.; Carmar Freezers -
Thomasville, L.L.C.; and Carmar Freezers - Russellville, L.L.C., which have
common ownership and management. Significant intercompany accounts and
transactions have been eliminated in combination.
-7-
<PAGE> 109
THE CARMAR GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Securities
Investments in debt securities which the Companies have the positive intent
and ability to hold to maturity, are classified as "held to maturity". All
other investment securities are classified as "available for sale". Securities
classified as "held to maturity" are carried at amortized cost. Securities
classified as "available for sale" are carried in the financial statements at
fair value. Realized gains and losses, determined using the specific
identification method, are included in earnings; unrealized holding gains and
losses are reported as a separate component of stockholders' and members'
equity.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method.
Property and Equipment
Property and equipment are carried at cost and depreciated over their
estimated useful lives using the straight-line method.
The Companies capitalize interest costs as a component of construction in
progress, based on the weighted average rates paid for long-term borrowing.
Total interest incurred each year was:
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Interest costs capitalized $ 231,000 $ 34,000
Interest costs charged to expense 4,101,000 3,562,000
---------- ----------
Total interest incurred $4,332,000 $3,596,000
========== ==========
</TABLE>
-8-
<PAGE> 110
THE CARMAR GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Amortization
Organization and debt issue costs are amortized using the straight-line
method over 60 months and the life of the debt, respectively.
Revenue Recognition
Handling charges from the storage facilities are billed to the customer at
the time goods are received. Revenue for the portion of handling charges
relating to the shipment of goods from storage is deferred until the stored
goods are shipped. Sales of other products and services are recorded based on
shipment of products or performance of services.
Revenue and Expense Recognition for Freight Services
The Companies recognize freight service revenue when the freight is
delivered to the customer. All expenses associated with shipments are
recognized as incurred.
Income Taxes
Income taxes on net income are payable personally by the stockholders
pursuant to elections under Subchapter S of the Internal Revenue Code for all
Companies except Carmar Freezers - Russellville, L.L.C. and Carmar Freezers -
Thomasville, L.L.C., which are taxed as partnerships. Accordingly, no provision
for income taxes has been made in the financial statements.
Cash Equivalents
The Companies consider all liquid investments with original maturities of
three months or less to be cash equivalents. There were no cash equivalents at
December 31, 1997. At December 31, 1996, cash equivalents consisted of
municipal funds invested in Corporate preferred stock and money market accounts.
Reclassification
Certain reclassifications have been made to the 1996 financial statements
to conform to the 1997 financial statement presentation. These
reclassifications had no effect on net earnings.
-9-
<PAGE> 111
THE CARMAR GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 2: NOTES RECEIVABLE
Notes receivable at December 31 consist of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Notes receivable from stockholders with interest
at the prime rate - unsecured........................ $1,194,000 $ --
Other.................................................. -- 1,000
---------- ----------
$1,194,000 $ 1,000
========== ==========
</TABLE>
NOTE 3: INVENTORIES
Inventories at December 31 consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Crushed stone......................................... $670,000 $149,000
Slats................................................. 25,000 --
Computer equipment.................................... 3,000 --
Fuel.................................................. 8,000 11,000
-------- --------
$706,000 $160,000
======== ========
</TABLE>
NOTE 4: NOTES PAYABLE TO INDIVIDUALS
Notes payable to individuals consist of unsecured demand notes payable to
individuals related to the Companies' stockholders. Interest rates range from 4%
to 8.5%. Interest expense on these notes totaled $166,345 and $51,313 in 1997
and 1996, respectively.
-10-
<PAGE> 112
THE CARMAR GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 5: LONG-TERM DEBT
Long-term debt at December 31 consists of the following:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Note payable to an institution, payable in monthly installments
of $141,000, including interest at 7.75%, due in 2003;
collateralized by real estate and equipment. (A) $12,455,000 $13,154,000
Note payable to an institution, payable in monthly installments
of $72,000, including interest at 8.14%, due in 2003;
collateralized by real estate and equipment. (A) 7,414,000 --
Note payable to an institution, payable in monthly installments
of $16,000, plus interest at a rate equal to the average daily
yield of 30 day commercial paper plus 2%, due in 2000;
collateralized by an airplane. 918,000 1,106,000
Note payable to an institution, payable in monthly installments
of $6,000, plus interest at a rate equal to the average daily
yield of 30 day commercial paper plus 2%, due in 2001;
collateralized by equipment. 257,000 328,000
Note payable to an individual, payable in annual installments
of $10,000, plus interest at 8%, due in 2000. 30,000 40,000
Note payable to bank, payable in monthly installments of
$80,000, including interest at 8.75%, due in 2000;
collateralized by real estate. -- 7,627,000
Note payable to an institution, payable in monthly installments
of $10,000, plus interest at a rate equal to the average daily
yield of 30 day commercial paper plus 2%, due in 2000;
collateralized by equipment. 363,000 487,000
Note payable to an institution, payable in monthly installments
of $8,000, plus interest at a rate equal to the average daily
yield of 30 day commercial paper plus 2%, due in 2002;
collateralized by equipment. 491,000 591,000
Note payable to an institution, payable in monthly installments
of $51,000, plus interest at a rate equal to the average daily
yield of 30 day commercial paper plus 2%, due in 2005;
collateralized by equipment. 4,799,000 5,405,000
</TABLE>
-11-
<PAGE> 113
THE CARMAR GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 5: LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Note payable to financial institution, payable in monthly
installments of $46,000, including interest at 7.34%, due
in 2003; collateralized by real estate and equipment. (A) $ 4,149,000 $ 4,385,000
Note payable to bank, payable in monthly installments
of $81,000, including interest at 8%, due in 2002;
collateralized by real estate. (A) 7,439,000 --
Note payable to bank, payable in monthly installments
of $97,000, including interest at 7.6%, due in 1999;
collateralized by real estate. 8,618,000 9,101,000
Note payable to an individual, payable in annual
installments of $33,000, including interest at 9%,
due in 2012; collateralized by real estate. 265,000 273,000
Note payable to an institution, payable in monthly
installments of $2,000, plus interest at a rate equal to
the average daily yield of 30 day commercial paper
plus 2.5%, due in 2001; collateralized by equipment. -- 105,000
Note payable to an institution, payable in monthly
installments of $5,000, plus interest at a rate equal to the
average daily yield of 30 day commercial paper plus 2.5%,
due in 1998; collateralized by equipment. -- 74,000
Note payable to an institution, payable in monthly
installments of $6,000, plus interest at a rate equal to the
average daily yield of 30 day commercial paper plus
2.5%, due in 2001; collateralized by equipment. -- 325,000
Note payable to an institution, payable in monthly
installments of $5,000, plus interest at a rate equal to
the average daily yield of 30 day commercial paper plus
2.5%, due in 1998; collateralized by equipment. -- 76,000
Note payable to an institution, payable in monthly
installments of $72,000, including interest at 7.98%,
due in 2003; collateralized by real estate and equipment.(A) 7,206,000 7,500,000
----------- -----------
54,404,000 50,577,000
Less current portion 3,605,000 3,337,000
----------- -----------
$50,799,000 $47,240,000
=========== ===========
</TABLE>
-12-
<PAGE> 114
THE CARMAR GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 5: LONG-TERM DEBT (Continued)
(A) Under the loan agreements for notes payable to financial institution,
certain restrictions are placed on the Companies pertaining to maintenance
of net worth, net tangible assets in relation to long-term debt, cash flows
and reinvestment in collateralized property and equipment.
Aggregate annual maturities of long-term debt at December 31, 1997 are:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1998..................................................... $ 3,605,000
1999..................................................... 11,339,000
2000..................................................... 3,761,000
2001..................................................... 3,253,000
2002..................................................... 8,520,000
Thereafter............................................... 23,926,000
-----------
$54,404,000
===========
</TABLE>
NOTE 6: PENSION PLANS
The Companies sponsor defined contribution pension plans that cover all
eligible employees. The Companies' contributions are discretionary but may not
exceed 15% of participant's annual compensation. The plans permit employees to
make pre-tax contributions and provide for discretionary employer matching
benefits. The total pension expense for all qualified plans was $280,000 and
$193,000 in 1997 and 1996, respectively.
-13-
<PAGE> 115
THE CARMAR GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 7: COMMON STOCK
Common stock at December 31 consists of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Carmar Group, Inc., $1 par value; authorized 50,000
shares; issued 46,311 shares; outstanding 23,497 shares....... $46,000 $46,000
Carmar Freezers, Inc., $1 par value; authorized 50,000
shares; issued and outstanding 4,210 shares................... 4,000 4,000
Carmar Logistics Group, Inc., $1 par value; authorized
50,000 shares; issued and outstanding 10,000 shares........... 10,000 10,000
------- -------
$60,000 $60,000
======= =======
</TABLE>
NOTE 8: SIGNIFICANT ESTIMATES AND CONCENTRATIONS
Generally accepted accounting principles require disclosure of certain
significant estimates and current vulnerabilities due to certain
concentrations. Those matters include the following:
MAJOR CUSTOMER
Accounts receivable from one customer comprise 32% of the total accounts
receivable balance at December 31, 1997. The Companies have a lien on and are
in possession of the customer's inventory in sufficient quantity to insure
payment of the related accounts receivable.
NEW LABOR AGREEMENT
Approximately one-third of the Companies' employees are covered by a
collective bargaining agreement. The collective bargaining agreement expires
within the next year.
SELF INSURANCE
Under the Companies' insurance programs, coverage is obtained for
catastrophic exposures as well as those risks required to be insured by law or
contract. It is the policy of the Companies to retain a significant portion of
certain expected losses related primarily to health care and workers'
compensation. Provisions for losses expected under these programs are recorded
based upon the Companies' estimates of the aggregate liability for claims
incurred and totaled $1,296,000 for 1997. The amount of actual losses incurred
could differ materially from the estimates reflected in these financial
statements.
-14-
<PAGE> 1
Exhibit 99.3
On March 12, 1999, the Company and Crescent Operating Inc. ("Crescent
Operating") formed a new partnership that has purchased all of the non-real
estate assets of the cold storage companies which do business under the name of
AmeriCold Logistics encompassing the operations of the cold storage business for
approximately $48 million from the Vornado/Crescent Partnership. The new
partnership leases 88 cold storage warehouses used in this business from the
Vornado/Crescent Partnership, which continues to own the real estate. In
addition to the leased warehouses AmeriCold Logistics manages 13 additional
warehouses containing approximately 80 million cubic feet of space.
The Company owns 60% of the new partnership through Company L.P. and
Crescent Operating indirectly owns 40% of the new partnership. The Company is
the sole general partner of, and owns a 90.1% partnership interest in, Company
L.P.
To fund its share of the purchase price, the Company utilized $4.6 million
of cash and borrowed $18.6 million under its revolving credit facility. Further,
the Company will pay $6 million to close the warehousing operation of one of the
leased facilities.
The following unaudited data presents the combination of the historical
income statements of the separate component companies of AmeriCold Logistics as
follows: (1) AMERICOLD CORPORATION year ended December 31, 1998, URS Logistics,
Inc. year ended December 31, 1998, the Freezer Services Companies (acquired
6/12/98) and The Carmar Group of Companies (acquired 7/1/98), (2) AMERICOLD
CORPORATION ten months ended December 31, 1997 and URS Logistics, Inc. year
ended December 31, 1997 and (3) AMERICOLD CORPORATION year ended February 28,
1997 and URS Logistics, Inc. year ended December 31, 1996. Such companies are
considered to be predecessors.
COMBINED STATEMENT OF INCOME
(amounts in thousands) For the Year Ended December 31,
-----------------------------------------
1998 1997 1996
------------- ----------- -----------
Revenues........................... $ 567,867 $ 414,280 $ 454,996
Expenses:
Cost of services ............. 411,874 286,314 323,693
General & administrative ..... 26,877 39,957 45,086
Depreciation & amortization .. 59,337 37,151 17,080
Compensation expense ......... -- 12,115 --
------------- ----------- -----------
Total Expenses .................... 498,088 375,537 385,859
------------- ----------- -----------
Operating income .................. 69,779 38,743 69,137
Interest expense .................. (45,828) (63,263) (74,715)
Other income (expense) ............ 2,275 3,210 1,125
------------- ----------- -----------
Income (loss) before income tax ... 26,226 (21,310) (4,453)
Income taxes (benefit) ............ 9,238 (7,278) (777)
------------- ----------- -----------
Income (loss) before extraordinary
item .............................. 16,988 (14,032) (3,676)
Extraordinary item ................ -- (4,649) --
------------- ----------- -----------
Net income (loss) ................. $ 16,988 $(18,681) $ (3,676)
============= =========== ===========
<PAGE> 2
The following unaudited proforma Balance Sheet as of December 31, 1998
presents the Company on a historical basis and reflects proforma adjustments for
the purchase of the non-real estate assets of AmeriCold Logistics and the
disposition of the Company's interest in CESCR.
December 31, 1998
----------------------------------------
(amounts in thousands)
Proforma
Historical Adjustments Proforma
---------- ----------- --------
Assets:
Cash .......................... $ 11,832 $ (4,647)(1) $20,105
12,920 (2)
Investment in partnership -
AmeriCold .................... 23,234 (1) 23,234
Investment in partnership -
CESCR ........................ 12,920 (12,920)(2)
Prepaid insurance ............. 475 475
-------- ----------- -------
$ 25,227 $ 18,587 $43,814
======== =========== =======
Liabilities and Stockholders'
Equity:
Due to Vornado Realty Trust ... $ 1,067 $ 1,067
Debt .......................... $ 18,587 18,587
Accrued expenses .............. 127 127
Minority interest ............. 2,379 2,379
Commitments and contingencies..
Stockholders' equity .......... 21,654 21,654
-------- ----------- -------
Total stockholders' equity. $ 25,227 $ 18,587 $43,814
======== =========== =======
(1) Purchase of 60% of the non-real estate assets of AmeriCold Logistics
(2) Put of investment in CESCR to Vornado
The following unaudited proforma income data reflects the purchase of the
non-real estate assets of AmeriCold Logistics as if it had occurred on January
1, 1998:
December 31, 1998
------------------------------------------
(amounts in thousands)
Proforma
Historical Adjustments Proforma
---------- ----------- --------
Revenues $567,867 $ 44,458 (3) $612,325
Expenses:
Cost of services .............. 411,874 27,775 (3) 439,649
Rent expense .................. -- 146,568 (4) 146,568
General & administrative ...... 26,877 2,404 (3) 29,281
Depreciation and amortization . 59,337 (51,371)(5) 7,966
-------- -------- -------
Total expenses .................... 498,088 125,376 623,464
-------- -------- -------
Operating income (loss) ........... 69,779 (80,918) (11,139)
Interest expense .................. (45,828) 42,304 (6) (3,524)
Other income (expense) ............ 2,275 -- 2,275
-------- -------- -------
Income (loss) before income tax ... 26,226 (38,614) (12,388)
Income taxes (benefit) ............ 9,238 (9,238)(7) --
-------- -------- -------
Net income ........................ $ 16,988 $ (29,376) $(12,388)
======== ======== =======
The Company's share of net
income (60%) ................... $ 10,193 $ (7,433)
======== =======
Footnotes 3-7 are explained on the following page.
<PAGE> 3
(3) To reflect operations of Freezer Services Inc. and the Carmar Group prior
to their respective dates of acquisition (June 12, 1998 and July 1, 1998)
(4) To record rent expense under leases with the Vornado/Crescent Partnership.
(5) To adjust (i) depreciation expense for assets not acquired and (ii)
amortization of the purchase price over a period of 20 years. Valuations
and other studies are not yet complete. Accordingly, they are subject to
change as such information is finalized.
(6) To reflect (i) interest for debt under the revolving credit agreement of
$18,587 at LIBOR plus 3% per annum (currently 8.02%), (ii) elimination
of interest on historical debt not asummed and (iii) reduced interest
income for cash portion of the purchase price ($4,657 at 5% per annum).
(7) Tax effect of proforma adjustments.
