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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 27, 1997
Commission File Number: 1-1790
DI GIORGIO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-0431833
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
380 Middlesex Avenue
Carteret, New Jersey 07008
Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (732) 541-5555
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Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 2, 1998, there were outstanding 101.62 shares of Class A Common
Stock and 100 shares of Class B Common Stock. The aggregate market value of the
voting stock held by non-affiliates of the registrant is $0 because all voting
stock is held by affiliates of the registrant.
<PAGE>
PART I
ITEM 1. BUSINESS.
Overview
Di Giorgio Corporation (the "Company") is one of the largest independent
wholesale food distributors in the New York City metropolitan area, which is one
of the largest food retail markets in the United States. Across its grocery,
frozen and dairy product categories, the Company supplies approximately 18,000
food and non-food items, predominantly national brand name items, to more than
1,600 customer locations. The Company also markets products using its
well-recognized White Rose(TM) label, which has been established in the New York
City metropolitan area for over 110 years. The Company serves supermarkets,
including independent retailers (including members of voluntary cooperatives)
and chains principally in the five boroughs of New York City, Long Island,
Northern New Jersey and, to a lesser extent, the Philadelphia area.
Approximately 850 grocery, frozen and dairy items are offered with the White
Rose(TM) label. For the year ended December 27, 1997, the Company had total
revenue of $1,071.8 million and EBITDA (as defined herein) of $36.2 million.
Formed in 1920, the Company was acquired in 1990 by a corporation controlled by
Arthur M. Goldberg, the Company's current Chairman, President and Chief
Executive Officer (the "1990 Acquisition"). Since the 1990 Acquisition, Mr.
Goldberg and his management team have implemented a strategy focused on
enhancing productivity, growing through the acquisition of complementary
businesses, identifying and developing new revenue opportunities and promoting
brand name recognition through the Company's White Rose(TM) label.
On June 20, 1997, the Company completed a refinancing (the "Refinancing") of
itself and its former parent, White Rose Foods, Inc. ("White Rose"), intended to
extend debt maturities, reduce interest expense and improve financial
flexibility. The components of the Refinancing were (i) the offering of $155
million 10% senior notes (the "10% Notes") due 2007 (the "Offering"), (ii) the
modification of the Company's bank credit facility (the "Bank Credit Facility"),
(iii) the receipt of $8.9 million from the repayment of a note held by the
Company from Rose Partners, LP ("Rose Partners"), which owns 98.5% of the
Company, (iv) the consummation of the tender offers and consent solicitations
commenced by the Company (the "Company Tender Offer") and White Rose (the "White
Rose Tender Offer," and together with the Company Tender Offer, the "Tender
Offers") on May 16, 1997 in respect of the Company's 12% Senior Notes due 2003
(the "12% Notes") and White Rose's 12-3/4% Senior Discount Notes due 1998 (the
"12-3/4% Notes"), respectively, (v) the $4.2 million dividend by the Company to
White Rose of certain non-cash assets which were unrelated to the Company's
primary business and the subsequent dividend of those assets to White Rose's
stockholders and (vi) the merger ("Merger") of White Rose with and into the
Company with the Company surviving the merger.
Products
General. Management believes that the distribution of multiple product
categories gives the Company an advantage over its competitors by affording
customers the ability to purchase grocery, frozen and dairy products from a
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single supplier. In addition, the Company is able to merchandise its
well-recognized White Rose(TM) label consistently across all three categories of
products. While some customers purchase items from all three product lines,
others purchase items from only one or two product lines.
Products are sold at prices which reflect the manufacturer's stated price plus a
profit margin. Prices are automatically adjusted on a regular basis based on
vendor pricing.
White Rose(TM) Label. The White Rose(TM) label is a well-recognized regional
brand for quality merchandise across approximately 850 grocery, frozen and dairy
products, and has been marketed in the New York metropolitan area for over 110
years. Products under the White Rose(TM) brand are formulated to the Company's
specifications, often by national brand manufacturers, and are subject to random
testing to ensure quality. The White Rose(TM) brand allows independent retail
customers to carry a regionally-recognized label across numerous products
similar to chain stores while providing consumers with an attractive alternative
to national brands. The Company believes that White Rose(TM) labeled products
generally produce higher margins for its customers than national brands, and
help the Company to attract and retain customers.
Customer Support Services. Certain of the Company's customers require varying
levels of retail support services in order to compete effectively in the
marketplace. The Company provides a broad spectrum of retail support services,
including advertising, promotional and merchandising assistance; retail
operations counseling; computerized ordering services; and store layout and
equipment planning. The Company has a staff of customer representatives who
visit stores on a regular basis to advise store management regarding their
operations. Most of the Company's customers utilize computerized order entry,
which allows them to place and confirm orders 24 hours a day, 7 days a week. The
Company's largest customers generally provide their own retail support.
The Company periodically provides financial assistance to independent retailers
by providing (i) financing for the purchase of new grocery store locations; (ii)
financing for the purchase of inventories and store fixtures, equipment and
leasehold improvements; (iii) extended payment terms for initial inventories
and/or (iv) extended payment terms for existing receivable balances. The primary
purpose of such assistance is to provide a means of continued growth for the
Company through development of new customer store locations and the enlargement
and remodeling of existing stores. Stores receiving financing purchase the
majority of their grocery, frozen and dairy inventory requirements from the
Company. Financial assistance is usually in the form of a secured,
interest-bearing loan, generally repayable over a period of one to three years.
As of December 27, 1997, the Company's customer financing portfolio had an
aggregate balance of approximately $16.1 million. The portfolio consisted of
approximately 85 loans with a range of $4,000 to $650,000.
To further serve the needs of its customers, the Company has recently expanded
its customer support services. Under the Company's insurance program, the
Company offers customers the ability to purchase liability, property and crime
insurance through a master policy purchased by the Company. The Company's coupon
redemption service facilitates the redemption of vendor coupons by the Company's
customers. Finally, through its technologies division, the Company distributes
and supports supermarket scanning equipment which is compatible with the
Company's information systems.
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Markets and Customers
As of December 27, 1997, the Company's principal markets encompass the five
boroughs of New York City, Long Island, northern New Jersey and, to a lesser
extent, the Philadelphia area. The Company also has customers in upstate New
York, Connecticut, Pennsylvania and Delaware, and is pursuing expansion into
markets adjacent to the New York City metropolitan area.
The Company's customers include single and multiple store owners consisting of
chains and independent retailers which generally do not maintain their own
internal distribution operations for one or more of the Company's product lines.
Some of the Company's customers are independent food retailers or members of
voluntary cooperatives which seek to achieve the operating efficiencies enjoyed
by supermarket chains through common purchasing and advertising. Unlike larger
retail chains which predominate in suburban areas, the independent retailers
served by the Company tend to be located in urban areas. The Company's customers
include food markets operating under some of the following trade names: the
Superfresh, Waldbaums, Food Emporium and A & P Metro operations of the Great
Atlantic & Pacific Tea Co., Inc. ("A&P"), Associated Food Stores ("Associated"),
Gristedes and Sloans Supermarkets, King Kullen, Kings Super Markets, Quick Chek,
Royal Farms, Scaturros, and Western Beef, as well as the Met(TM), Pioneer(TM)
and Super Food cooperatives.
The Met(TM) and Pioneer(TM) trade names are owned by the Company, however, the
customers using the trade names are independently owned stores. The Company and
the customer stores operate as voluntary cooperatives allowing a customer to
take advantage of the benefits of advertising and merchandising on a scale
usually available only to large chains, as well as certain other retail support
services provided by the Company. In order to use the trade names as part of the
cooperative arrangement, customers who use these names purchase the majority of
their grocery, frozen food and dairy inventory requirements from the Company,
thereby enhancing the stability of this portion of the Company's customer base.
These customers represented approximately 19% and 18% of net sales for the years
ended December 28, 1996 and December 27, 1997, respectively.
During the fifty-two weeks ended December 27, 1997, the Company's largest
customers, A&P and Associated, accounted for approximately 27% and 19%,
respectively, of net sales, and the Company's five largest customers accounted
for approximately 64% of net sales. The Company or certain of its principal
executive officers have long-standing relationships with most of the principal
customers of the Company. The loss of certain of these principal customers or a
substantial decrease in the amount of their purchases could be disruptive to the
Company's business.
Warehousing and Distribution
The Company presently supplies its customers from three warehouse and
distribution centers. All of these facilities are equipped with modern equipment
for receiving, storing and shipping large quantities of merchandise. Management
believes that the efficiency of its warehouse and distribution centers enables
the Company to compete effectively. A warehouse and inventory management system
directs all aspects of the material handling process from receiving through
shipping, thus minimizing cost while maintaining the highest service level
possible.
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The Company normally has in-stock approximately 95% of its grocery product line,
approximately 97% of its dairy product line and approximately 96% of its frozen
food product line. Immediate product availability, efficient warehousing
techniques and flexible delivery schedules generally make it possible for the
Company to ship to customers within 24 to 48 hours of receipt of their orders.
The Company's trucking system consists of 119 tractors (all of which are
leased), 300 trailers (of which 273 are leased) and 11 trucks (all of which are
leased). On approximately 35% of its deliveries, the Company is able to arrange
"backhauls" of products from manufacturers' or other suppliers' distribution
facilities located in the markets served by the Company, thereby enabling the
Company to reduce its procurement costs. The Company regularly uses independent
owner/operators to make deliveries on an "as needed" basis to supplement the use
of its own employees and equipment. The Company makes on average approximately
1,000 deliveries per day each weekday to its customers through a combination of
its own transportation fleet and that of third parties.
Due to the different storage and distribution requirements of each of the
Company's product lines, the Company handles each product line in a separate
facility. All of the Company's warehouse and distribution facilities are fully
integrated through the Company's computer, accounting, and management
information systems to promote operating efficiency and coordinated quality
customer service.
Purchasing
The Company purchases products for resale to its customers from approximately
1,400 suppliers in the United States and abroad. Brand name products are
purchased directly from the manufacturer, through the manufacturer's
representatives or through food brokers by buyers in each operating division.
White Rose(TM) label and customers' private label products are purchased from
producers, manufacturers or packers who are licensed by the Company, in the case
of the White Rose(TM) label, or by the owners of the respective private labels .
The Company purchases products in large volume and resells them in the smaller
quantities required by its customers. Management believes that the Company has
the purchasing power to obtain competitive volume discounts from its suppliers.
Substantially all categories of products distributed by the Company are
available from a variety of manufacturers and suppliers, and the Company is not
dependent on any single source of supply for any specific category, however,
market conditions dictate that certain nationally prominent brands, available
from single suppliers, be available for distribution. Order size and frequency
are determined by management based upon historical sales experience, sales
projections and computer forecasting. A modern procurement system provides the
buying department with extensive data to measure the movement and profitability
of each inventory item, forecast seasonal trends, and recommend the terms of
purchases. This system, which operates in concert with the warehouse management
system, features full electronic data interchange capabilities and accounting
interfaces.
The Company from time to time buys increased quantities of inventory items when
the manufacturer is selling the item at a discount pursuant to a special
promotion, an industry practice known as "forward buying." These special
promotions are run by various manufacturers at their sole discretion. The
Company earns income from additional margins realized in connection with these
promotional purchasing arrangements, although there are currently less of these
deals then there used to be.
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Competition and Trademarks
The wholesale food distribution industry is highly competitive. The Company is
one of the largest independent wholesale food distributors to supermarkets in
the New York City metropolitan area. The Company's principal competitors are C &
S Wholesale Grocers, Inc.; Krasdale Foods, Inc., and General Trading Co.
("General Trading") with respect to grocery distribution, General Trading with
respect to dairy distribution, and Nassau Suffolk Frozen Food Company, Inc. with
respect to frozen food distribution. Many of the Company's smaller competitors
generally do not provide retail support services and financing services to
independent retailers in the Company's market.
The Company also competes with cooperatives such as Key Food Stores Co-operative
Inc. and Twin County Grocers Inc., which provide distribution and support
services to their affiliated independent retailers doing business under trade
names licensed to them by the cooperatives. Unlike these competitors, the
Company does not require payment of capital contributions to the Company by
retailers desiring to use the Met(TM) and Pioneer(TM) name.
Management believes that the principal competitive factors in the Company's
business include price, service, scope of products and services offered,
strength of private label brand offered, strength of store trademarks offered
and store financing support. Management believes that the Company competes
effectively by offering a full product line, including its well-recognized,
regional White Rose(TM) label, the retail support and financing services
associated with its Met(TM) and Pioneer(TM) voluntary cooperative trademarks,
flexible delivery schedules, competitive prices, competitive levels of customer
service including newly introduced insurance, coupon-redemption and scanner
distribution services, including computerized order entry, and its
well-positioned and efficient distribution networks.
The Company believes there is significant competitive value in its trademark
White Rose(TM) brand, as well as its trademark Met(TM) and Pioneer(TM) names.
Employees
As of February 13, 1998, the Company employed approximately 1,156 persons, of
whom approximately 717 were covered by collective bargaining agreements with
various International Brotherhood of Teamsters locals.
The Company is a party to certain collective bargaining agreements with its
warehouse and trucking employees at its dairy operation (expiring November
2000), its grocery operation (warehouse expiring October 2002 and trucking
expiring May 2000) and its frozen operation (expiring January 2000).
Management believes that the Company's present relations with its work force are
satisfactory.
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ITEM 2. PROPERTIES
The Company's three principal warehouse and distribution facilities are set
forth below along with its former dairy distribution center (currently being
used as an auxiliary facility) and its new frozen food facility.
In November 1997, the Company amended its lease for its grocery facility, adding
additional leased property, extending the term and increasing the annual lease
obligations ("the Amended Grocery Facility Lease"). These changes in the
provisions of the lease resulted in the Amended Grocery Facility Lease being
treated as a new lease and accounted for as an operating lease.
In November 1997, the Company acquired the building and leasehold improvements,
formerly the subject of a capital lease for its Garden City frozen facility for
a purchase price of $9 million, consisting of cash and a $7.2 million note
payable. The Company is currently under contract to buy the underlying land at
its frozen facility for $1.6 million. In February 1998, the Company entered into
a contract to sell the Garden City frozen facility and underlying land for
approximately $14.5 million. The terms of the agreement require the Company to
lease back the facility for a period of two years at an annual rent of
approximately $1.5 million.
In November 1997, the Company signed an agreement to lease a new frozen food
facility in Carteret, New Jersey, a property adjacent to its current grocery
facility. The facility is expected to be fully operational and distributing
product to the majority of its customers in the second fiscal quarter of 1998.
The lease term is expected to commence March 15, 1998.
Location Use Square Footage Lease Expiration
- -------- --- -------------- ----------------
Carteret, New Groceries and other Non- 645,000 2018 (plus two 5-year
Jersey Perishables renewal options)
Garden City, New Frozen 325,000 2000 (plus one 5-year
York renewal option)
Woodbridge, New Dairy 200,000 2001 (plus four 5-year
Jersey renewal options)
Kearny, New Auxilliary 98,000 1999
Jersey
Carteret, New Frozen 181,000 2018 (plus two 5-year
Jersey options)
The aggregate operating lease rent paid in connection with the Company's
facilities was approximately $1.2 million in fiscal 1997.
Currently, the Carteret grocery division distribution facility operates at
approximately 70% of capacity and the dairy division distribution facility
operates at 80% of capacity (both on a three shift basis), while the frozen
foods division distribution facility operates at approximately 60%of capacity
(on a two shift basis).
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Depending on the type of new business introduced ( e.g. high turn product that
is already slotted in inventory), each warehouse has greater capacity to grow
then stated above. The frozen foods division distribution facility has the
flexibility of further increasing capacity because the Company uses some of the
space leased by it for public storage.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in claims, litigation and administrative proceedings of
various types in various jurisdictions. In addition, the Company has agreed to
indemnify various transferees of its divested operations with regard to certain
known and potential liabilities which may arise out of such operations. The
Company also has incurred and may in the future incur liability arising under
environmental laws and regulations in connection with these divested properties
and properties presently owned or acquired. Although management believes that it
has established adequate reserves for known contingencies, there can be no
assurances that the costs of environmental remediation or an unfavorable outcome
in any litigation or governmental proceeding will not have an adverse effect on
the Company.
Environmental. The Company has incurred and may in the future incur
environmental liability to clean up potential contamination at a number of
properties under certain federal and state laws, including the Federal
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended ("CERCLA"). Under such laws, liability for the cleanup of property
contaminated by hazardous substances may be imposed on both the present owner
and operator of a property and any person who owned or operated the property at
the time hazardous substances were disposed thereon. Persons who arranged for
the disposal of hazardous substances found on a disposal site may also be liable
for cleanup costs. In certain cases, the Company has agreed to indemnify the
purchaser of its former properties for liabilities arising thereon or has agreed
to remain liable for certain potential liabilities that were not assumed by the
transferee.
The Company has recorded an estimate of its total potential environmental
liability arising from specifically identified environmental problems (including
those discussed below) in the amount of approximately $1.8 million as of
December 27, 1997. The Company believes such reserves are adequate and that
known and potential environmental liabilities will not have a material adverse
effect on the Company's financial condition. However, there can be no assurance
that the identification of contamination at its current or former sites or
changes in cleanup requirements would not result in significant costs to the
Company.
The Company is responsible for the cleanup and/or monitoring of various sites
previously owned or operated by the Company, the most significant of which are
located in St. Genevieve, Missouri and Three Rivers, Michigan.
In addition, the Company has been identified as a potentially responsible party
("PRP") under CERCLA for clean-up costs at the Seaboard waste disposal site in
North Carolina. The Company is a member of the de minimus group comprised of
parties who allegedly contributed less than 1% of the total waste at the site.
The other two sites in which the Company had previously been named as a PRP have
been settled with nominal contributions from the Company.
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The Company is not a party to any material litigation, other than routine
litigation incidental to the business of the Company, which is individually or
in the aggregate material to the business of the Company. Management does not
believe that the outcome of any of its current litigation, either individually
or in the aggregate, will have a material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
There is no established public offering market for the outstanding common equity
of the Company and the majority of its outstanding common equity is owned by
Rose Partners, LP.
The ability of the Company to pay dividends is governed by restrictive covenants
contained in the indenture governing its publicly held debt as well as
restrictive covenants contained in the Company's senior bank lending arrangement
and the indenture governing its publicly held debt. As a result of these
restrictive covenants, the Company was not permitted to pay dividends on
December 27, 1997.
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ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected historical data of the Company
for the periods indicated and has been prepared by adjusting the consolidated
financial statements of the Company as if the merger between White Rose and the
Company, with the Company as the survivor, had taken place as of January 3,
1993. Since the stockholders of the Company, upon consummation of the Merger are
identical to the stockholders of White Rose, the exchange of shares was a
transfer of interest among entities under common control, and is being accounted
for at historical cost in a manner similar to pooling of interests accounting.
The results of operations include the expansion of the dairy division since
April 1994 (initial date of the purchase of substantially all of the assets of
the Royal Food Division of Fleming Foods East, Inc., a subsidiary of Fleming
Companies, Inc. (the "Royal Acquisition"). Such data should be read in
conjunction with the consolidated financial statements and related notes
included herein.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
January 1, December 31, December 30, December 28, December 27,
1994 1994 1995 1996 1997
----------- ------------ ------------- ----------- -------------
(In thousands)
Income Statement Data:
<S> <C> <C> <C> <C> <C>
Total revenue ....................... $ 774,105 $ 936,847 $ 1,023,041 $ 1,050,206 $ 1,071,800
Gross profit(a) ..................... 91,131 101,321 107,505 114,487 112,633
Warehouse expense ................. 32,980 37,945 39,676 41,038 42,453
Transportation expense ............ 17,916 21,354 22,759 21,624 22,042
Selling, general and
administration expenses ......... 18,740 19,835 21,877 22,694 21,598
Facility integration exp .......... -- 3,986 -- -- --
Amortization--excess of cost over
net assets acquired ............. 2,616 2,766 2,892 2,892 2,459
Operating income .................... 18,879 15,435 20,301 26,239 24,081
Interest expense .................. 18,232 20,370 24,887 23,955 21,890
Amortization--deferred financing
costs ........................... 1,600 1,479 1,457 1,138 944
Other (income) , net .............. (1,888) (2,939) (3,842) (3,758) (3,242)
Income (loss) from continuing
operations before income taxes and
extraordinary items ............... 935 (3,475) (2,201) 4,904 4,489
Income taxes ........................ 109 63 105 3,053 (1,241)
Income (loss) from continuing
operations and extraordinary items 826 (3,538) (2,306) 1,851 5,730
(Loss) from discontinued
operations ....................... (1,178) -- -- -- --
Extraordinary (loss)/gain on
extinguishment of debt, net of tax (3,976) -- 510 219 (8,693)
Net (loss) income ................... $ (4,328) $ (3,538) $ (1,796) $ 2,070 $ (2,963)
</TABLE>
<TABLE>
<CAPTION>
January 1, December 31, December 30, December 28, December 27,
1994 1994 1995 1996 1997
----------- ------------ ------------- ----------- -------------
(In thousands)
Balance Sheet Data:
<S> <C> <C> <C> <C> <C>
Total assets ........................ $ 274,988 $ 304,147 $ 318,430 $ 301,069 $ 279,961
Working capital ..................... 6,012 2,746 7,344 12,342 23,365
Total debt incl capital leases ...... 184,421 197,339 223,543 215,308 196,966
Total Stockholder's equity (deficiency) 8,588 5,050 2,035 4,105 (3,081)(b)
</TABLE>
- -----------
(a) Gross profit excludes warehouse expense shown separately.
(b) The decrease in stockholders' equity was the result of the $8.7 million
extraordinary charge, net of tax, on the extinguishment of debt
relating to premiums paid as a result of the Tender Offers and the
write-off of the deferred financing fees associated with the 12% Notes,
the 12-3/4% Notes and the Farmingdale mortgage. In addition, the
Company dividended non-cash, non-core assets consisting of land in
Colorado and notes receivable with a book value of approximately $4.2
million and $61,400 in cash to its stockholders on June 20, 1997.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward- Looking Statements
Forward-looking statements in this Form 10-K include, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or achievement
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. These
factors include, among others, the following: general economic and business
conditions and those in particular in the New York City metropolitan area;
restrictions imposed by the documents governing the Company's indebtedness;
competition; the Company's reliance on several significant customers; potential
losses from loans to its retailers; potential environmental liabilities which
the Company may have; the Company's labor relations; dependence on key
personnel; changes in business regulation; business abilities and judgment of
personnel; and changes in, or failure to comply with government regulations.
General
On June 20, 1997, the Company consummated the Refinancing. The following
discussion assumes that the Merger between White Rose and the Company had taken
place as of January 1, 1995. Since the stockholders of the Company are identical
to the stockholders of White Rose, the exchange of shares was a transfer of
interest among entities under common control, and is being accounted for at
historical cost in a manner similar to pooling-of-interests accounting.
Accordingly, the discussion presented herein reflects the assets and liabilities
and related results of operations for the combined entity for all periods.
Results of Operations
Fifty-two weeks ended December 27, 1997 and December 28, 1996
Net sales for the fifty-two weeks ended December 27, 1997 were $1,065.4 million
as compared to $1,045.2 for the fifty-two weeks ended December 28, 1996. This
1.9% increase primarily reflects increased frozen food sales to a division of
A&P and temporary supplemental supply arrangements offset by a $60 million
decrease in sales to a customer which terminated its contract for dairy division
products in the fourth quarter of 1996.
Other revenue, consisting of reclamation service fees, storage income, label
income, and other customer related services, increased to $6.4 million for the
fifty-two weeks ended December 27, 1997 as compared to $5.0 million in the prior
period primarily due to providing a produce distribution service for a
particular customer which ended in June 1997. Excluding this produce service,
other revenue would have been $5.8 million for the fifty-two weeks ended
December 27, 1997 as a result of new services being offered by the Company, as
well as, increased services based on additional 1997 revenues.
Gross margin (excluding warehouse expense) decreased to 10.6% of net sales or
$112.6 million for the fifty-two weeks ended December 27, 1997 as compared to
11.0% of net sales or $114.5 million for the
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prior period as a result of a change in mix of both customers and product sold.
The Company has, and will continue to, take steps intended to maintain and
improve its margins; however, factors such as the decrease in promotional
activities, changes in product mix, additions of high volume, low margin
customers, or competitive pricing pressures will have an effect on gross margin.
Warehouse expense increased to 4.0% of net sales or $42.5 million for the
fifty-two weeks ended December 27, 1997 as compared to 3.9% of net sales or
$41.0 million for the prior period.
Transportation expense remained constant at 2.1% of net sales or $22.0 million
for the fifty-two weeks ended December 27, 1997 as compared to 2.1% of net sales
or $21.6 million in the prior period.
Selling, general and administrative expense decreased to 2.0% of net sales or
$21.6 million for the fifty-two weeks ended December 27, 1997 as compared to
2.2% of net sales or $22.7 million in the prior period.
Other income, net of other expenses, decreased to $3.2 million for the fifty-two
weeks ended December 27, 1997 from $3.8 million in the prior period due to
$476,000 less interest income on the Rose Partners note receivable which was
repaid in June 1997. In addition, as a result of the Farmingdale option sale in
August 1997, net rental income from that property decreased $828,000 in 1997.
These decreases were offset to some degree by income from a program run for the
benefit of a group of customers.
Interest expense decreased to $21.9 million for the fifty-two weeks ended
December 27, 1997 from $24.0 million for the prior period. The comparative
decrease from the 1996 period represents a decline in both the average
outstanding level of the Company's funded debt and the average interest rate as
a result of the Company's Refinancing on June 20, 1997.
During the third quarter of fiscal 1997, the Company reversed the valuation
allowance related to its deferred tax assets. In the opinion of management,
sufficient evidence now exists, such as the positive trend in operating
performance and the favorable effects of the recently completed refinancing,
which indicates that it is more likely than not that the Company will be able to
realize its deferred income tax assets. The reversal of the valuation allowance
resulted in an income tax benefit of $3.9 million and a reduction in goodwill of
$11.5 million. The reduction in goodwill reflects benefits which were
attributable to the pre-acquisition period.
For the year ended December 27, 1997, the Company recorded an income tax benefit
from continuing operations of $1.2 million (including the $3.9 million benefit)
compared to an income tax expense of $3.1 million for the year ended December
28, 1996. The Company's recorded income tax (benefit) provision is higher than
the statutory rate primarily because of the nondeductibility of certain of the
Company's amortization of the excess of cost over net asset acquired; however,
due to net operating loss carryforwards for tax purposes, the Company does not
expect to pay federal income tax for the current year, with the possible
exception of some alternative minimum tax.
The Company recorded a net loss for the fifty-two weeks ended December 27, 1997
of $3.0 million, including an extraordinary loss on the extinguishment of debt,
net of tax, of $8.7 million as compared to net income of $2.1 million for the
prior period which included a $219,000 extraordinary gain on the extinguishment
of debt.
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<PAGE>
Fifty-two weeks ended December 28, 1996 and December 30, 1995
Net sales for the fifty-two weeks ended December 28, 1996 increased 2.6% to
$1,045.2 million as compared to $1,018.2 million in the fifty-two weeks ended
December 30, 1995. The increased sales primarily reflects higher same customer
sales, a temporary supplemental third party supply agreement, and higher selling
prices stemming from increased cost of product sold.
Other revenue, consisting of reclamation service fees, storage income, label
income, and other customer related services, increased 4.6% to $5.0 million in
the fifty-two weeks ended December 28, 1996 as compared to $4.8 million in the
prior period.
Gross margin (excluding warehouse expense) increased to 11.0% of net sales or
$114.5 million in the fifty-two weeks ended December 28, 1996 from 10.6% of net
sales or $107.5 million in the prior period as a result of a more favorable mix
of product sold. Although the Company has taken steps and will continue to take
steps to maintain and improve its margins, there can be no assurance the
decrease in promotional activities, that management believes is any industry
wide trend, will not continue.
Warehouse expense remained relatively constant at 3.9% of net sales or $41.0
million in the fifty-two weeks ended December 28, 1996 as compared to 3.9% of
net sales or $39.7 million in the prior period, as cost improvements in the
grocery and frozen divisions were offset by higher temporary costs in the dairy
division as it related to a change in its receiving and warehousing systems.
Transportation expense decreased to 2.1% of net sales or $21.6 million in the
fifty-two weeks ended December 28, 1996 from 2.2% of net sales or $22.8 million
in the prior period as a result of better utilization of the Company's
transportation fleet. This was accomplished by reducing the number of deliveries
through the use of larger trailers acquired in a long-term lease and more
structured delivery schedules. These savings were partly offset by higher wages.
Selling, general and administrative expense increased to 2.2% of net sales or
$22.7 million during the fifty-two weeks ended December 28, 1996 as compared to
2.1% of net sales or $21.9 million in the prior year.
Other income, net of other expenses, remained constant at $3.8 million during
the fifty-two weeks ended December 28, 1996 as compared to the prior period.
Other income in 1996 included a cancellation fee of $376,000 from a customer who
prematurely terminated a supply agreement while other income in 1995 included a
settlement of a lawsuit for approximately $500,000.
Interest expense decreased to $24.0 million in the fifty-two weeks ended
December 28, 1996 from $24.9 million in the prior period. The comparative
decrease in the 1996 period represents a decline in the average outstanding
level of the Company's funded debt partially offset by the inclusion of the
Carteret facility capital lease for the full period and additional accretion of
the senior discount interest.
The Company recorded an income tax provision of $3.1 million resulting in an
effective income tax rate of 62%. The Company's estimated effective tax rate is
higher than its statutory tax rate primarily because of the nondeductibility of
certain of the Company's amortization of the excess of cost over net assets
acquired; however, due to net operating loss carryforwards for tax purposes, the
Company does not expect to pay federal income tax for the current year with the
exception of some alternative minimum tax.
13
<PAGE>
The Company recorded net income for the fifty-two weeks ended December 28, 1996
of $2.1 million, which included a $219,000 gain on the extinguishment of debt,
net of tax, as compared to a loss of $1.8 million in the prior period, which
included a $510,000 gain on the extinguishment of debt, net of tax.
Liquidity and Capital Resources
Cash flows from operations and amounts available under the Company's Bank Credit
Facility are the Company's principal sources of liquidity. The Company's Bank
Credit Facility will mature on June 30, 2000 and bears interest at a rate per
annum equal to (at the Company's option): (i) the Euro Dollar Offering Rate plus
2.25% or (ii) Bankers Trust Company's prime rate plus 0.75%. Borrowings under
the Company's revolving Bank Credit Facility were $19.7 million at December 27,
1997 at an average interest of 8.64%. Additional borrowing capacity of $61.2
million was available at that time under the Company's borrowing base formula.
The Company believes that these sources will be adequate to meet its anticipated
working capital needs, capital expenditures, and debt service requirements
during fiscal 1998.
During the fifty-two weeks ended December 27, 1997, cash flows provided by
operating activities was $8,000, consisting primarily of (i) cash generated from
income before extraordinary items and non-cash expenses of $17.9 million and
(ii) an increase in accounts payable of $9.4 million which were primarily offset
by (i) an increase in net receivable levels of $12.3 million, (ii) an increase
in inventory of $6.6 million and (iii) an increase in other assets of $5.1
million.
Cash flow provided by investing activities during the fifty-two weeks ended
December 27, 1997 was approximately $8.6 million, consisting of proceeds of
$12.4 million from the sale of the Farmingdale option offset by $3.9 million
used for capital expenditures. Net cash used in financing activities was
approximately $7.9 million as a result of the Refinancing and the payoff of the
Farmingdale mortgage.
Earnings before interest expense, income taxes, depreciation and amortization,
non-recurring charges such as extraordinary gains or losses ("EBITDA"), was
$36.2 million during the fifty-two weeks ended December 27, 1997 as compared to
$36.9 million in the comparable prior year period. In addition to lower gross
margins, the decrease in EBITDA is a result of $500,000 less in cash
contributions from the Farmingdale facility as a result of the option sale in
August although net income increased due to the reduced interest expense after
the $12.4 million in debt reduction and no further Farmingdale depreciation
expense. In addition, the change in the treatment of the grocery division
facility lease from a capital lease to an operating lease in December 1997 had a
$240,000 negative impact on EBITDA. For 1998, the change in lease treatment will
reduce EBITDA an additional $2.6 million; however pretax income is expected to
increase by approximately $500,000 due to reduced interest and depreciation
charges with respect to the grocery division capital lease.
The consolidated indebtedness of the Company decreased to $197.0 million at
December 27, 1997 as compared to $215.3 million at December 28, 1996. The
Company raised an aggregate of $155.0 million through the issuance of the 10%
Notes and received $8.9 million from the repayment of the Rose Partners note
which aggregate funds were used (i) to fund the purchase of $85.4 million of the
12% Notes leaving $7.5 million outstanding, (ii) to fund the $53.7 million
purchase of 100% of the 12 3/4% Notes, (iii) to pay premiums of $10.8 million
related to such purchases, (iv) to pay accrued interest and the fees and
expenses of the Refinancing, and (v) to reduce the Bank Credit Facility by $4.9
million. As a result of the Amended Grocery Facility Lease, the net book value
of the related capitalized asset of $24.3 million and $27.1 million of lease
obligations were eliminated resulting in a gain of approximately $2.8 million.
The gain was classified in warehouse expense in the accompanying consolidated
statement of operations for the year
14
<PAGE>
ended December 27, 1997. In addition, the Company recorded an impairment of
certain previously acquired leasehold improvements related to its frozen
facility. The impairment recognized was measured as the amount by which the
carrying value of the assets exceeded the fair value of the assets.
Stockholders' equity/(deficiency) decreased to a deficiency of $3.1 million on
December 27, 1997 from $4.1 million of equity on December 28, 1996.The decrease
was the result of the $8.7 million extraordinary charge, net of tax, on the
extinguishment of debt relating to premiums paid as a result of the Tender
Offers and the write-off of the deferred financing fees associated with the 12%
Notes, the 12-3/4% Notes and the Farmingdale mortgage. In addition, the Company
dividended non-cash, non-core assets consisting of land in Colorado and notes
receivable with a book value of approximately $4.2 million and $61,400 in cash
to its stockholders on June 20, 1997.
In August 1997, the Company completed the sale of the option it held on its
Farmingdale facility, the site of its former grocery warehouse and headquarters,
which had been under lease to a third party. The Company realized net cash
proceeds of approximately $7.3 million after the repayment of a mortgage in the
amount of approximately $5.2 million. For book purposes the Company recognized a
$40,000 gain (before a noncash writeoff of deferred expenses in the amount of
approximately $400,000) due to the original valuation of the property. For
federal income tax purposes, the Company expects to use its net operating loss
carryforwards to offset an approximate $12.0 million taxable gain on the sale.
In November 1997, the Company purchased the building at its Garden City frozen
food facility for $9.0 million, consisting of $1.8 million in cash, a $ 7.2
million note due in May 1998 with interest payable monthly at an annualized rate
of 6.7% In addition, the Company entered into a contract to purchase the
underlying land for $1.6 million. In February 1998, the Company signed a
contract to sell the facility in the first half of 1998, for $14.5 million. As
part of the deal the Company will lease the facility for a minimum of 2 years.
The Company intends to increase it's cold storage business at that facility, as
well as exploring continued use as a secondary frozen food distribution center.
The Company expects to begin shipping frozen food product from its new frozen
facility in Carteret, NJ in the fiscal second quarter of 1998. The Company
expects future frozen division transportation costs from the new facility to be
approximately the same as from its current location as increased costs to Long
Island will be offset by decreased costs to New Jersey and Philadelphia. The
Company expects the cost of the move to be offset by various new warehouse
vendor incentives.
On February 19, 1998, the Company called for redemption of the remaining
outstanding $7.5 million of its 12% Senior Notes at 104.5% of par. The
transaction is expected to close in March 1998 and result in annual savings for
the Company of approximately $250,000 given the current difference in interest
rates between the 12% Senior Notes and the Bank Credit Facility.
The 10% Notes also provide that the Company may repurchase, and retire into
treasury (i) up to $5 million of its outstanding Common Stock if the Company
converts the capital lease relating to its Carteret, New Jersey distribution
facility into an operating lease on or before December 20, 1998 and (ii)
additional Common stock up to an amount equal to $7.3 million relating to its
sale of the Farmingdale Option on or before June 20, 1998. Currently the Bank
Credit Facility permits (i) but not (ii).
Under the terms of the Company's revolving Bank Credit Facility, the Company is
required to meet certain financial tests, including minimum interest coverage
ratios and minimum net worth. As of December 27, 1997, the Company was in
compliance with its covenants.
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<PAGE>
The indenture governing the Company's 10% Notes, as well as the agreement
governing the Bank Credit Facility, impose various restrictions upon the
Company, including, among other things, limitations on the occurrence of
additional debt and the making of certain payments and investments.
From time to time when the Company considers market conditions attractive, as
the Company has demonstrated in the past, the Company has purchased on the open
market a portion of its 12% Notes and may in the future purchase and retire a
portion of its outstanding 10% Notes. In addition, the Company continuously
reviews its capital structure, including its funded debt and capital leases, to
determine if it can more advantageously finance its operations.
Excluding the Garden City building purchase, the Company spent approximately
$2.1 million on capital expenditures during the fifty-two weeks ended December
27, 1997, and currently does not expect to spend more than $2.5 million during
1998 on capital expenditures.
The Company expended approximately $243,000 in fiscal 1997 and does not expect
to expend more than $1.0 million in fiscal 1998 in conection with the
environmental remediation of certain presently owned or divested properties. At
December 27, 1997, the Company has reserved $1.8 million for those known
environmental liabilities. The Company intends to finance such remediation
through internally generated cash flow or borrowings. Management believes that
should the Company become liable as a result of any material adverse
determination of any legal or governmental proceeding beyond the expected
expenditures, it could have an adverse effect on the Company's liquidity
position.
The Company has begun an assessment as to the existence of any material Year
2000 issues in its computer systems, has identified potential areas of concern
and will begin to undertake remediation of these areas in the fiscal second
quarter of 1998. The Company anticipates the remediation will be complete by the
end of 1998, which will allow adequate time for testing. The cost is expected to
be more of a lost opportunity cost than an increased incremental direct dollar
cost since the remediation is expected to be preformed by the Company's
personnel.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Page
Financial Statements
Consolidated Financial Statements of Di Giorgio Corporation and Subsidiaries
Index to Consolidated Financial Statements................................. F-1
Independent Auditors' Report............................................... F-2
Consolidated Balance Sheets as of December 28, 1996 and December 27, 1997.. F-3
Consolidated Statements of Operations for each of the
three years in the period ended December 27, 1997......................... F-4
Consolidated Statements of of Changes in Stockholder's
Equity (Deficiency) for each of the three years in the period
ended December 27, 1997................................................... F-5
Consolidated Statements of Cash Flows for each of
the three years in the period ended December 27, 1997..................... F-6
Notes to Consolidated Financial Statements................................. F-8
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
Not Applicable.
17
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
MANAGEMENT
The following table sets forth certain information regarding the directors and
executive officers of Di Giorgio:
Age Position
Arthur M. Goldberg(2)(3) 56 Chairman of Board of Directors, President
and Chief Executive Officer
Richard B. Neff(3) 49 Executive Vice President, Chief Financial
Officer and Director
Stephen R. Bokser 55 Executive Vice President, President of
White Rose Food Division of Di Giorgio
and Director
Jerold E. Glassman(3) 62 Director
Emil W. Solimine(2) 53 Director
Charles C. Carella(1) 64 Director
Jane Scaccetti Fumo(1) 43 Director
Joseph R. DeSimone 58 Senior Vice President Distribution
Robert A. Zorn 43 Senior Vice President and Treasurer
Lawrence S. Grossman 36 Vice President and Corporate Controller
- -----------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Executive Committee
Directors are elected for one year terms and hold office until their successors
are elected and qualified. The executive officers are appointed by and serve at
the discretion of the Board of Directors.
Mr. Goldberg has been Chairman of the Board, President and Chief Executive
Officer of Di Giorgio since 1990. Mr. Goldberg is also a Director and Executive
Vice President and President -- Gaming Operations, Hilton Hotels Corporation,
since December 1996. Prior thereto, he was President, Chairman and Chief
Executive Officer and a director of Bally Entertainment Corporation from October
1990 to December 1996. He is also Managing Partner, Arveron Investments, LP,
since 1986. Mr. Goldberg is also a director of Bally Total Fitness Holding
Corporation, Bally's Grand, Inc., and First
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Union Corporation. Mr. Goldberg, in his capacity as the sole general partner of
Rose Partners, L.P., controls the voting and investment of 98.5% of the
outstanding common stock of the Company.
Mr. Neff has been Executive Vice President, Chief Financial Officer and Director
of Di Giorgio since 1990. He is also a Director and Chairman of the Board of
Ryan Beck & Co., an investment banking concern.
Mr. Glassman has been a Director of Di Giorgio since 1990. Since prior to 1990,
Mr. Glassman has been a Partner of Grotta, Glassman & Hoffman, a law firm which
has offices in Roseland, New Jersey.
Mr. Bokser has been Executive Vice President of Di Giorgio since February 1990
and a Director of Di Giorgio since 1990. In addition, Mr. Bokser has served as
President of White Rose Foods Division of Di Giorgio since prior to 1991. Mr.
Bokser has also served as a director of Western Beef, Inc. since 1993.
Mr. Solimine has been a Director of Di Giorgio since 1990. He also is the Chief
Executive Officer of the Emar Group, Inc., an insurance concern, since prior to
1991. Mr. Solimine has served as a director of Strober Organization, Inc., a
building material distributor, since prior to 1991.
Mr. Carella became a Director of Di Giorgio in 1995. Since prior to 1991, Mr.
Carella has been a Partner of Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart &
Olstein, a law firm which has offices in Roseland, New Jersey. Since 1991, he
has served as Chairman for the Board of Trustees of the University of Medicine
and Dentistry of New Jersey and since 1983 has served on the Board of
Administrations of Archdiocese of Newark.
Mrs. Fumo became a Director of Di Giorgio in 1996. Mrs. Fumo has been a
shareholder for the past six years of Drucker & Scaccetti, P.C., a firm
specializing in accounting and business advisory services. She is also a
Director for Nutrition Management Services Company and Pennsylvania Savings
Bank.
Mr. DeSimone has been Senior Vice President of Distribution since January 1995.
From 1990 through January 1995, he was Vice President of Warehousing and
Distribution.
Mr. Zorn has been Senior Vice President and Treasurer of Di Giorgio since 1992.
He served as a Vice President of Bankers Trust Company, New York, New York since
prior to 1992.
Mr. Grossman has been employed by Di Giorgio since 1990. He has served as Vice
President of Di Giorgio since January 1994 and Corporate Controller since
February 1992. Mr. Grossman is a certified public accountant.
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ITEM 11. EXECUTIVE COMPENSATION.
Compensation
The following table sets forth compensation paid or accrued to the Chief
Executive Officer and each of the four most highly compensated executive
officers of Di Giorgio whose cash compensation, including bonuses and deferred
compensation, exceeded $100,000 for the three fiscal years ended December 27,
1997.
<TABLE>
<CAPTION>
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
- --------------------------- ---- -------- ------- ------------ ------------
(1)
<S> <C> <C> <C> <C> <C>
Arthur M. Goldberg, 1997 $400,000 -- -- --
Chairman of the Board, President 1996 $400,000 -- -- --
and Chief Executive Officer 1995 $400,000 -- -- --
Richard B. Neff, 1997 $275,923 $261,000 -- $2,400(2)
Executive Vice President 1996 $260,900 $145,000 -- $2,250(2)
and Chief Financial Officer 1995 $240,000 $130,000 -- $2,250(2)
Stephen R. Bokser, 1997 $313,000 $250,000 -- $2,400(2)
Executive Vice President 1996 $288,600 $145,000 -- $2,250(2)
and President of White Rose 1995 $272,255 $130,000 -- $2,250(2)
Division
Robert A. Zorn, 1997 $210,600 $32,000 -- $2,400(2)
Senior Vice President and 1996 $200,600 $20,000 -- $2,250(2)
Treasurer 1995 $191,100 $12,500 -- $2,175(2)
Joseph R. DeSimone 1997 $163,300 $25,000 -- $2,400(2)
Senior Vice President 1996 $155,300 $20,000 -- $2,250(2)
Warehousing and Distribution 1995 $147,900 $18,000 -- $1,800(2)
</TABLE>
(1) Certain incidental personal benefits to executive officers of the Company
may result from expenses incurred by the Company in the interest of
attracting and retaining qualified personnel. These incidental personal
benefits made available to executive officers during fiscal years 1995,
1996, and 1997 are not described herein because the incremental cost to
the Company of such benefits is below the Securities and Exchange
Commission disclosure threshold.
(2) Represents contributions made by the Company pursuant to the Company's
Retirement Savings Plan. See "Executive Compensation -- Retirement Savings
Plan."
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Employment Agreements
The Company is a party to an Agreement with Mr. Neff which will terminate on
October 31, 2000. Currently, Mr. Neff is entitled to receive an annual salary of
$325,000 pursuant to the Agreement ("Salary"). In addition, Mr. Neff has been
paid pursuant to the Agreement $100,000 in 1997, and will be paid an additional
$100,000 on or before June 30, 1998, and will receive additional compensation
(the "Additional Compensation") upon the occurrence of certain change of control
type of events or distribution of assets to shareholders, as both are defined in
the Agreement ("Recognition Event") and determined pursuant to a formula. In the
event of death or disability, Mr. Neff or his estate, will be entitled to
continue to receive compensation and employee benefits for one year following
such event and in certain circumstances will receive Additional Compensation. If
Mr. Neff's employment is terminated by the Company other than for cause, Mr.
Neff will be entitled to receive the Salary through the end of the Agreement. If
Mr. Neff's employment is terminated by the Company for cause, Mr. Neff will be
entitled to receive Salary prorated through the end of the week.
The Company is a party to an Agreement with Mr. Bokser which will terminate on
June 30, 2000. Currently, Mr. Bokser is entitled to receive an annual salary of
$325,000 pursuant to the Agreement ("Salary"). In addition, Mr. Bokser has been
paid pursuant to the Agreement $100,000 in 1997, and will be paid an additional
$100,000 on or before June 30, 1998, and will receive additional compensation
(the "Additional Compensation") upon the occurrence of certain change of control
type of events or distribution of assets to shareholders, as both are defined in
the Agreement ("Recognition Event") and determined pursuant to a formula. In the
event of death or disability, Mr. Bokser or his estate, will be entitled to
continue to receive compensation and employee benefits for one year following
such event and in certain circumstances will receive Additional Compensation. If
Mr. Bokser's employment is terminated by the Company other than for cause, Mr.
Bokser will be entitled to receive the Salary through the end of the Agreement.
If Mr. Bokser's employment is terminated by the Company for cause, Mr. Bokser
will be entitled to receive Salary prorated through the end of the week.
The Company is a party to an agreement with Mr. Zorn which provides for
employment through March 10, 1999. The agreement remains in effect pursuant to
its evergreen provisions and will remain in effect subject to six months notice
is given by either party to terminate. Currently, Mr. Zorn is entitled to
receive an annual salary of $220,600, as adjusted by annual cost of living
adjustments, if any, and annual bonuses, at the sole discretion of the Company.
Mr. Zorn may also receive additional incentive compensation upon the occurrence
of (i) the termination of Mr. Zorn's employment with the Company; or (ii)
certain change of control type for events, determined pursuant to a formula.
Under the terms of the agreement, if the employment of Mr. Zorn is terminated
for any reason other than for cause or disability, Mr. Zorn is entitled to
receive compensation and benefits for six months, provided that he uses his best
efforts to secure other executive employment.
Retirement Plan
The Company maintains the Di Giorgio Retirement Plan (the "Retirement Plan")
which is a defined benefit pension plan. Employees of the Company and its
affiliates who are not covered by a collective bargaining agreement (unless a
bargaining agreement expressly provides for participation) are eligible to
participate in the Retirement Plan after completing one year of employment.
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All benefits under the Retirement Plan are funded by contributions made by the
Company. In general, a participant's retirement benefit consists of the sum of
(a) with respect to employment on or after September 1, 1990, an annual amount
equal to the participant's aggregate compensation (excluding income from the
exercise of certain stock option and stock appreciation rights) while he is
eligible to participate in the Retirement Plan multiplied by 1.5% and (b) with
respect to employment prior to September 1, 1990, an annual amount equal to the
sum of (i) the benefit earned under the Retirement Plan as of December 31, 1987,
the product of the participant's 1988 compensation and 1.5%, and the product of
the participant's 1988 compensation in excess of $45,000 and .5% plus (ii) the
product of the participant's aggregate compensation earned after 1988 and prior
to September 1, 1990 and 1.5%. In certain circumstances, the amount determined
under (b)(i) above may be determined in an alternative manner.
Benefits under the Retirement Plan are payable at a participant's normal
retirement date (i.e., Social Security retirement age) in the form of an annuity
although a limited lump-sum payment is available. In addition, an actuarially
reduced early retirement benefit is available after a participant reaches age
55.
A participant earns a nonforfeitable (i.e., vested) right to a retirement
benefit after reaching age 65, becoming disabled, or completing five years of
employment. The estimated annual retirement income payable in the form of a life
annuity to the individuals named in the Cash Compensation Table commencing at
their respective normal retirement ages under the Retirement Plan is as follows:
Mr. Goldberg, $22,921; Mr. Neff, $20,841; Mr. Bokser $87,896; Mr. Zorn, $10,470;
Mr. De Simone, $14,261.
Retirement Savings Plan
The Company maintains the Di Giorgio Retirement Savings Plan (the "Savings
Plan") which is a defined contribution plan with a cash or deferred arrangement
(as described under Section 401(k) of the Internal Revenue Code of 1986). In
general, employees of the Company and its affiliates who are not covered by a
collective bargaining agreement (unless a bargaining agreement expressly
provides for participation) are eligible to participate in the Savings Plan
after completing one year of employment.
Eligible employees may elect to contribute on a tax deferred basis from 1% to
10% of their total compensation (as defined in the Savings Plan), subject to
statutory limitations. A contribution of up to 5% is considered to be a "basic
contribution" and the Company makes a matching contribution equal to a
designated percentage of a participant's basic contribution (which all may be
subject to certain statutory limitations). This percentage is based on the
Company's consolidated pre-tax rate of return (i.e., the quotient obtained by
dividing the Company's adjusted consolidated pre-tax earnings by its
consolidated net worth) and ranges from 30% to 50%.
Each participant has a fully vested (i.e., nonforfeitable) interest in all
contributions made by them and in the matching contributions made by the Company
on their behalf and has full investment discretion over their contributions.
A participant may withdraw certain amounts credited to his account prior to
termination of employment. Certain withdrawals require financial hardship or
attainment of age 59 1/2. In general, amounts credited to a participant's
account will be distributed upon termination of employment.
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<PAGE>
Compensation of Directors
Directors of the Company who are not employees or otherwise affiliated with the
Company receive a quarterly retainer fee of $4,000 plus fees of $1,000 per day
for attendance at Board of Directors and Committee meetings. All directors of
the Company are also reimbursed for out-of-pocket expenses associated with
attendance at Board meetings.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 27, 1997, the Compensation Committee
consisted of Arthur M. Goldberg and Emil W. Solimine. Mr. Goldberg currently
serves as Chairman of the Board of Directors, President and Chief Executive
Officer of the Company. Mr. Solimine currently serves as a Director of the
Company.
See "Certain Transactions".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Mr. Goldberg, through his indirect beneficial ownership of the Company, controls
the affairs of the Company, the majority of the common stock of which is owned
by Rose Partners, LP (98.5%). Mr. Goldberg controls the affairs of Rose Partners
in his capacity as sole general partner.
Mr. Goldberg, through his indirect beneficial ownership of the Company,
effectively has the ability to determine the outcome of most corporate actions
requiring stockholder approval, including the election of the Board of
Directors, adoption of certain amendments to the charter and approval of
mergers, and sales of all or substantially all assets.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
BT Commercial Corporation ("BTCC"), an affiliate of BTNY, acts as agent and
lender under the Di Giorgio Revolving Credit Facility, entered into concurrently
with the Di Giorgio Senior Note Offering, between the Company and a syndicate of
banks. In Fiscal 1997 the Company paid fees in the amount of approximately
$242,000 and interest in the amount of approximately $2.2 million, of which BTCC
received its portion. In addition, the Company paid an annual fee of $100,000 to
BTCC for services as agent.
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On August 3, 1992, White Rose Frozen Food ("Frozen Food") and WRGFF Associates,
L.P. ("WRGFF"), a New Jersey limited partnership controlled by Mr. Goldberg,
acquired in two simultaneous transactions substantially all of the operating
properties and assets of Global from Sysco Corporation. To facilitate the Global
Acquisition,WRGFF purchased and subsequently leased certain assets of Global to
the Company. In Fiscal 1997, the Company paid approximately $2.4 million to
WRGFF in connection with the lease and buyout of such assets.
Mr. Bokser is a director of Western Beef, Inc. In fiscal 1997, the Company sold
various food products to Western Beef, Inc. in the amount of $37.2 million.
The Company employs Grotta, Glassman & Hoffman, a law firm in which Jerold E.
Glassman, a director of the Company, is a partner, for legal services on an
on-going basis. The Company paid approximately $171,000 to the firm for fiscal
1997.
The Company employs Emar Group, Inc. ("Emar Group"), a risk management and
insurance brokerage company controlled by Emil W. Solimine, a director of the
Company, for risk management and insurance brokerage services. The Company paid
Emar Group approximately $150,000 for fiscal 1997 for such services.
In fiscal 1997, the Company recorded income of $166,000 from Hilton Hotel
Corporation and subsidiaries, a company in which Mr. Goldberg serves as
Executive Vice President - President Gaming Operations, in connection with the
sharing of its office facilities and sundry other expenses.
The Company believes that the transactions set forth above are on terms no less
favorable than those which could reasonably have been obtained from unaffiliated
parties.
In connection with the Refinancing, Rose Partners repaid the Rose Partners Note
in the amount of approximately $8.9 million and received a dividend of certain
non-cash assets (including the indebtedness of Las Plumas to the Company) with a
book value of approximately $4.2 million from White Rose. Management believes
that the market value of such assets approximates their book value.
24
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
a. Documents filed as part of this report.
1. Financial Statements
Independent Auditors' Report ................................ F-2
Consolidated Balance Sheets as of December 28, 1996
and December 27, 1997 ....................................... F-3
Consolidated Statements of Operations for each of the
three years in the period ended December 27, 1997 ........... F-4
Consolidated Statements of Changes in Stockholder's
Equity (Deficiency) for each of the three years in the period
ended December 27, 1997...................................... F-5
Consolidated Statements of Cash Flows for each of
the three years in the period ended December 27, 1997........ F-6
Notes to Consolidated Financial Statements................... F-8
2. Financial Statement Schedule
Schedule II--Valuation and Qualifying Accounts............... S-1
3. Exhibits
A. Exhibits
Exhibit No. Exhibit
1.1(15) - Purchase Agreement among Di Giorgio Corporation,
Merrill Lynch & Co., Merrill Lynch, Pierce & Smith
Incorporated and BT Securities Corporation.
2.1(16) - Certificate of Ownership and Merger merging White
Rose Foods, Inc. With and into Di Giorgio
Corporation.
3.1(2) - Restated Certificate of Incorporation.
3.2(2) - Bylaws.
25
<PAGE>
4.1(15) - Indenture between Di Giorgio Corporation and The
Bank of New York, as Trustee, including the form
of Note, dated as of June 20, 1997.
4.2(15) - Registration Rights Agreement among Di Giorgio
Corporation, Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and BT
Securities Corporation, dated as of June 20, 1997.
4.3(3) - Indenture, dated February 2, 1993 under which Di
Giorgio's Senior Notes due 2003 are issued.
4.4(15) - Supplemental Indenture, dated June 9, 1997 between
Di Giorgio Corporation and The Bank of New York,
as Trustee.
4.5(3) - Di Giorgio 12% Senior Note Certificate Specimen,
dated as of February 1, 1993.
10.1(3) - Credit Agreement dated as of February 10, 1993
among the Di Giorgio Corporation, various
financial institutions, BT Commercial Corporation,
as agent and Bankers Trust Company as Issuing Bank
10.2(5) - Sublease Agreement between MF Corp. (sublandlord)
and PC Richard & Son Long Island Corporation
(subtenant), dated July 27, 1993, relating to
facilities located in Farmingdale, New York
10.3(17)+ - Amended and Restated Employment Agreement
effective as of October 31, 1997 between the
Company and Richard B. Neff.
10.4(1)+ - Employment Agreement dated February 18, 1992
between the Company and Robert A. Zorn
10.5(16)+ - Second Amended and Restated Employment Agreement
dated June 30, 1997 between the Company and
Stephen R. Bokser
10.6(3)+ - Di Giorgio Retirement Plan as Amended and Restated
effective January 1, 1989 (dated January 26, 1996)
10.7(11)+ - Di Giorgio Retirement Savings Plan as Amended and
Restated effective January 1, 1989
10.8(13)+ - Amendment to the Di Giorgio Retirement Savings
Plan effective January 1, 1989 (dated November 28,
1995)
10.9(1) - Lease between The Four B's (landlord) and White
Rose Dairy, a division of Di Giorgio (tenant)
dated November 21, 1988, as amended May 11, 1989,
relating to facilities located in Kearny, New
Jersey
10.11(2) - Sub-Sublease between WRGFF (sublandlord) and
Frozen Food (subtenant), dated August 3, 1992
relating to facilities located in Garden City, New
York
10.12(4) - Consent and Amendment No. 1 dated as of June 25,
1993 to Credit Agreement dated as of February 10,
1993
26
<PAGE>
10.13(5) - Consent and Amendment No. 2 dated as of November
3, 1993 to Credit Agreement dated as of February
10, 1993
10.14(3) - Note Pledge Agreement dated as of February 1,
1993, by Di Giorgio Corporation in favor of BT
Commercial Corporation, as agent
10.15(3) - License and Security Agreement dated as of
February 1, 1993, by Di Giorgio Corporation in
favor of BT Commercial Corporation, as agent
10.16(3) - Promissory Note dated as of February 2, 1993 made
by Las Plumas Lumber Corporation in favor of Di
Giorgio
10.18(1) - Settlement Agreement dated July 30, 1992, by and
between White Rose Foods, Inc. and the Furniture,
Flour, Grocery, Teamsters and Chauffeurs Union,
Local No. 138
10.19(3) - Tax Sharing Agreement effective January 1, 1992
among DIG Holding, Di Giorgio and certain other
parties
10.20(6) - Amendment to Tax Sharing Agreement effective
January 1, 1993 among DIG Holding, Di Giorgio and
certain other parties
10.30(7) - Lease between AMAX Realty Development, Inc. and V.
Paulius and Associates and the Company dated
February 11, 1994 relating to warehouse facility
at Carteret, New Jersey
10.31(7) - Consent and Amendment No. 3 dated March 30, 1994
to Credit Agreement dated as of February 10, 1993
10.32(8) - Consent and Amendment No. 4 dated April 22, 1994
to Credit Agreement dated as of February 10, 1993.
10.33(9) - Asset Purchase Agreement made as of the 1st day of
April 1994 by and among Di Giorgio Corporation,
Fleming Foods East Inc. and Fleming Companies,
Inc., and First Amendment dated April 7, 1994 and
Second Amendment dated April 20, 1994.
10.34(10) - Third Amendment dated as of June 20, 1994 to Asset
Purchase Agreement of April 1, 1994 between Di
Giorgio Corporation, Fleming Foods East, Inc. and
Fleming Companies, Inc.
10.35(11) - Amendment No. 5 dated November 15, 1994 to Credit
Agreement dated as of February 10, 1993.
10.36(11) - Waiver and Amendment No. 6 dated as of March 3,
1995 to Credit Agreement dated as of February 10,
1993.
27
<PAGE>
10.37(11) - Sublease Agreement dated June 20, 1994 between
Fleming Foods East Inc. (landlord) and Di Giorgio
Corporation (tenant) relating to facilities
located in Woodbridge, New Jersey.
10.38(12) - Amendment No. 7 dated September 30, 1995 to Credit
Agreement dated as of February 10, 1993.
10.39(14) - Amendment No. 8, dated as of September 26, 1996 to
Credit Agreement dated as of February 10, 1993.
10.40(15) - Amendment No. 9, dated as of May 23, 1997 to
Credit Agreement dated as February 10, 1993.
10.41(15) - Amendment No. 10, dated as of June 11, 1997 to
Credit Agreement dated as of February 10, 1993.
10.42(18) - Lease between AMAX Realty Development, Inc. and V.
Paulius and Associates and the Company dated
November 26, 1997 for a frozen food warehouse
facility at Carteret, New Jersey.
10.43(18) - Third Amendment, dated as of November 26, 1997, to
Carteret grocery warehouse lease dated as of
February 11, 1994.
10.44(18) - Agreement of Sale between the Company and United
States Steel and Carnegie Pension Fund, Inc. to
acquire the fee interest in the land and its
rights as landlord under the ground lease with
Waldbaum, Inc. at the Company's Garden City, New
York frozen food facility dated as of November 26,
1997.
10.45(18) - Agreement to Assign Ground Lease and Sublease
between the Company and Waldbaum, Inc. at the
Company's Garden City, New York frozen food
facility dated as of November 28, 1997.
10.46(18) - Agreement of Purchase and Sale between the Company
and FR Acquisitions, Inc. of the Company's Garden
City, New York frozen food facility dated as of
February 19, 1998.
10.47(18) - Agreement of Lease between the Company and FR
Acquisitions, Inc. for the Garden City, New York
frozen food facility dated as of February 19,
1998.
12.1(15) - Statement Regarding Computation of Ratio of
Earnings to Fixed Charges.
21(18) - Subsidiaries of the Registrant
28
<PAGE>
- ------------------------------------------
+ Compensation plans and arrangements of executives and others.
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33- 53886) filed with the Commission on October 28, 1992
(2) Incorporated by reference to Amendment No. 2 to the Company's Registration
Statement on Form S-1 of Di Giorgio (File No. 33-53886) filed with the
Commission on January 11, 1993
(3) Incorporated by reference to Amendment No. 3 to the Company's Registration
Statement on Form S-1 (File No. 33-53886) filed with the Commission on
February 1, 1993
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
(File No. 1-1790) filed with the Commission on August 16, 1993
(5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
(File No. 1-1790) filed with the Commission on November 12, 1993
(6) Incorporated by reference to the Registration Statement on Form S-4 of
White Rose Foods, Inc. (File No. 33-72284) filed with the Commission on
November 24, 1993.
(7) Incorporated by reference to the Company's Annual Report on Form 10-K for
year ended January 1,1994 (File 1-1790)
(8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for quarter ended April 2, 1994 (File 1-1790)
(9) Incorporated by reference to the Company's Current Report on Form 8-K
dated April 25, 1994 (File 1-1790)
(10) Incorporated by reference to the company's Quarterly Report on Form 10-Q
for quarter ended July 2, 1994 (File 1-1790)
(11) Incorporated by reference to the Company's Annual Report on Form 10-K for
year ended December 31, 1994 (File 1-1790)
(12) Incorporated by reference to the Quarterly Report on Form 10-Q of White
Rose Foods, Inc. for quarter ended September 30, 1995 (File 33-72284)
(13) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 30, 1995 (File 1-1790)
(14) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for quarter ended September 28, 1996 (File 1-1790).
(15) Incorporated by reference to Registration Statement No. 333-30557 on Form
S-4 filed with the Securities and Exchange Commission on July 1, 1997.
29
<PAGE>
(16) Incorporated by reference to Amendment No. 1 to the Company's Registration
Statement on Form S-4 (Registration No. 333-30557) filed with the
Commission on July 16, 1997.
(17) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 27, 1997 (File 1-1790).
(18) Filed herewith.
b. Reports on Form 8-K
The Company did not file a Current Report on Form 8-K during the last
quarter of the period covered by this Report.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 3rd day of
March, 1998.
DI GIORGIO CORPORATION
By: /s/ Arthur M. Goldberg
-------------------------------------
Arthur M. Goldberg, Chairman,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Arthur M. Goldberg March 3, 1998
- ----------------------------- Chairman, President and Chief
Arthur M. Goldberg Executive Officer (Principal
Executive Officer)
/s/ Jerold E. Glassman March 3, 1998
- ----------------------------- Director
Jerold E. Glassman
/s/ Emil W. Solimine March 3, 1998
- ----------------------------- Director
Emil W. Solimine
/s/ Charles C. Carella March 3, 1998
- ----------------------------- Director
Charles C. Carella
/s/ Jane Scaccetti Fumo March 3, 1998
- ----------------------------- Director
Jane Scaccetti Fumo
/s/ Richard B. Neff March 3, 1998
- ----------------------------- Executive Vice President and
Richard B. Neff Chief Financial Officer (Principal
Financial and Accounting
Officer); Director
/s/ Stephen R. Bokser March 3, 1998
- ----------------------------- Executive Vice President and
Stephen R. Bokser Director
<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
<S> <C>
INDEPENDENT AUDITORS' REPORT ON CONSOLIDATED FINANCIAL STATEMENTS F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of December 28, 1996 and December 27, 1997 F-3
Consolidated Statements of Operations for Each of the Three Years in the Period
Ended December 27, 1997 F-4
Consolidated Statements of Changes in Stockholder's Equity (Deficiency) for Each of the
Three Years in the Period Ended December 27, 1997 F-5
Consolidated Statements of Cash Flows for Each of the Three Years in the Period
Ended December 27, 1997 F-6
Notes to Consolidated Financial Statements F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Di Giorgio Corporation
Carteret, New Jersey
We have audited the consolidated balance sheets of Di Giorgio Corporation and
subsidiaries (the "Company") as of December 28, 1996 and December 27, 1997, and
the related consolidated statements of operations, stockholders' equity
(deficiency) and cash flows for each of the three years in the period ended
December 27, 1997. Our audits also included the financial statement schedule
listed in the Index at Item 14(a)(2). These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an 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 at December 28, 1996
and December 27, 1997, and the results of their operations and their cash flows
for each of the three years in the period ended December 27, 1997 in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 20, 1998
F-2
<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 1996 AND DECEMBER 27, 1997
(In Thousands, Except Share Data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 28, December 27,
ASSETS 1996 1997
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 1,749 $ 2,426
Accounts and notes receivable - Net 61,550 71,715
Inventories 49,563 56,121
Prepaid expenses 3,706 8,234
----- -----
Total current assets 116,568 138,496
PROPERTY, PLANT AND EQUIPMENT - Net 56,270 22,144
LONG-TERM NOTES RECEIVABLE 19,276 7,428
DEFERRED TAXES - 12,266
DEFERRED FINANCING COSTS 4,172 5,657
OTHER ASSETS 12,216 15,341
EXCESS OF COST OVER NET ASSETS ACQUIRED 92,567 78,629
------ ------
TOTAL $ 301,069 $ 279,961
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Revolving credit facility $ 26,719 $ 19,669
Current installment - long-term debt and capital lease liability 3,677 15,465
Accounts payable - trade 49,468 58,899
Accrued expenses 24,362 21,098
------ ------
Total current liabilities 104,226 115,131
LONG-TERM DEBT 153,389 159,333
CAPITAL LEASE LIABILITY 31,523 2,499
OTHER LONG-TERM LIABILITIES 7,826 6,079
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, Class A, $.01 par value - authorized, 1,000 shares;
issued and outstanding, 101.62 shares - -
Common stock, Class B, $.01 par value - authorized, 1,000 shares;
issued and outstanding, 100 shares - -
Additional paid-in capital 17,225 13,002
Accumulated deficit (13,120) (16,083)
------- -------
Total stockholders' equity (deficiency) 4,105 (3,081)
----- ------
TOTAL $ 301,069 $ 279,961
========= =========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 27, 1997
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 30, December 28, December 27,
1995 1996 1997
<S> <C> <C> <C>
REVENUE:
Net sales $ 1,018,218 $ 1,045,161 $ 1,065,381
Other revenue 4,823 5,045 6,419
----- ----- -----
Total revenue 1,023,041 1,050,206 1,071,800
COST OF PRODUCTS SOLD 915,536 935,719 959,167
------- ------- -------
Gross profit - exclusive of warehouse
expense shown separately below 107,505 114,487 112,633
OPERATING EXPENSES:
Warehouse expense 39,676 41,038 42,453
Transportation expense 22,759 21,624 22,042
Selling, general and administrative expenses 21,877 22,694 21,598
Amortization - excess of cost over net assets
acquired 2,892 2,892 2,459
----- ----- -----
OPERATING INCOME 20,301 26,239 24,081
INTEREST EXPENSE 24,887 23,955 21,890
AMORTIZATION - Deferred financing costs 1,457 1,138 944
OTHER INCOME - Net (3,842) (3,758) (3,242)
------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (2,201) 4,904 4,489
INCOME TAXES 105 3,053 (1,241)
--- ----- ------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM (2,306) 1,851 5,730
EXTRAORDINARY ITEM:
Gain (loss) on extinguishment of debt - net of tax 510 219 (8,693)
--- --- ------
NET INCOME (LOSS) $ (1,796) $ 2,070 $ (2,963)
======== ======= ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 27, 1997
(In Thousands, Except Share Data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B Additional
Common Stock Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1994 101.62 $ - 100.00 $ - $ 18,444 $ (13,394) $ 5,050
Net loss - - - - - (1,796) (1,796)
Dividend to
stockholders - - - - (1,219) - (1,219)
------ ---- ------ ---- -------- --------- --------
BALANCE,
DECEMBER 30, 1995 101.62 - 100.00 - 17,225 (15,190) 2,035
Net income - - - - - 2,070 2,070
------ ---- ------ ---- -------- --------- --------
BALANCE,
DECEMBER 28, 1996 101.62 - 100.00 - 17,225 (13,120) 4,105
Net loss - - - - - (2,963) (2,963)
Dividend to
stockholders - - - - (4,223) - (4,223)
------ ---- ------ ---- -------- --------- --------
BALANCE,
DECEMBER 27, 1997 101.62 $ - 100.00 $ - $ 13,002 $ (16,083) $ (3,081)
====== ==== ====== ==== ======== ========= ========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 27, 1997
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 30, December 28, December 27,
1995 1996 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (1,796) $ 2,070 $ (2,963)
Adjustments to reconcile net (loss) income to
net cash provided by operations:
Extraordinary (gain) loss on extinguishment
of debt - net of tax (510) (219) 8,693
Depreciation and amortization 3,949 4,488 4,544
Amortization of deferred financing costs 1,457 1,138 944
Amortization of excess of cost over net
assets acquired 2,892 2,892 2,459
Other amortization 527 527 1,840
Provision for doubtful accounts 2,100 1,850 1,300
Increase in prepaid pension cost (720) (461) (667)
Non-cash interest expense 5,775 5,890 3,010
Non-cash interest income (846) (981) --
Deferred tax benefit -- -- (1,241)
Income tax benefit offset against excess of cost
over net assets acquired -- 3,008 --
Gain on reclassification of capitalized lease - net -- -- (2,838)
Impairment loss on leasehold improvements -- -- 2,698
Changes in assets and liabilities:
(Increase) decrease in:
Accounts and notes receivable 1,609 7,464 (11,465)
Inventories 1,272 2,768 (6,558)
Prepaid expenses (327) (169) 660
Other assets 595 661 (5,103)
Long-term receivables 1,560 (3,666) (804)
Increase (decrease) in:
Accounts payable (6,304) (8,946) 9,431
Accrued expenses and other liabilities (2,426) (2,250) (3,932)
--------- --------- ---------
Net cash provided by operating activities 8,807 16,064 8
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,920) (1,004) (3,829)
Proceeds from Farmingdale sale -- -- 12,432
Proceeds from contingent reimbursement 1,063 -- --
--------- --------- ---------
Net cash (used in) provided by
investing activities (857) (1,004) 8,603
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) from revolving
credit facility - net (6,529) (5,584) (7,050)
New note offering -- -- 155,000
Premiums on completed tender offers -- -- (10,829)
Finance fees paid (600) -- (6,017)
Repayments of debt (3,529) (5,942) (145,295)
Collection of Rose Partners note receivable -- -- 8,917
Dividend to stockholders (1,219) -- (61)
Repayments of capital lease obligations (3,990) (2,232) (2,547)
Premiums on mortgage payoff -- -- (52)
Refinancing 6,600 -- --
--------- --------- ---------
Net cash used in financing activities (9,267) (13,758) (7,934)
--------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
(Continued)
F-6
<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 27, 1997
(In Thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 30, December 28, December 27,
1995 1996 1997
<S> <C> <C> <C>
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS $ (1,317) $ 1,302 $ 677
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 1,764 447 1,749
--------- --------- ---------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 447 $ 1,749 $ 2,426
========= ========= =========
SUPPLEMENTAL SCHEDULE OF
NON-CASH INVESTING ACTIVITIES:
Acquisition of warehouse facility
and machinery in exchange for
capital lease $ 28,391 -- --
Reduction of fixed assets -- -- $ 25,422
Acquisition of building with issuance of
note payable -- -- 7,200
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Elimination of capital lease obligations -- -- $ 28,660
Issuance of note payable in connection with
acquisition of building -- -- 7,200
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period:
Interest $ 19,635 $ 18,569 $ 25,285
========= ========= =========
Income taxes $ 125 $ 73 $ 195
========= ========= =========
NON-CASH DIVIDEND OF NOTES
RECEIVABLE AND LAND HELD FOR SALE $ -- $ -- $ 4,162
========= ========= =========
REDUCTION OF GOODWILL FOR REVERSAL
OF VALUATION ALLOWANCE ON
DEFERRED TAX ASSET $ -- $ -- $ 11,479
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
(Concluded)
F-7
<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 27, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Di Giorgio Corporation (the "Company") is a wholesale food
distributor serving both independent retailers and supermarket chains
principally in the New York City metropolitan area including Long Island,
northern New Jersey and to a lesser extent, the Philadelphia area. The
Company distributes three primary supermarket product categories: grocery,
frozen and dairy.
On December 27, 1996, the Company's parent, White Rose Foods, Inc. ("White
Rose") and its parent, DIG Holding Corp. ("DIG Holding"), effected a
merger with White Rose continuing as the surviving corporation. As the
stockholders of White Rose were identical to the stockholders of DIG
Holding, the exchange of shares was a transfer of interest among entities
under common control, and was accounted for at historical cost in a manner
similar to pooling of interests accounting.
On June 20, 1997, the Company and White Rose consummated a merger in which
White Rose was merged with and into the Company, with the Company as the
survivor. Since the stockholders of the Company were identical to the
stockholders of White Rose, the exchange of shares was a transfer of
interest among entities under common control, and is being accounted for
at historical cost in a manner similar to pooling-of-interests accounting.
Accordingly, the consolidated financial statements presented herein
reflect the assets and liabilities and related results of operations for
the combined entity for all periods. Revenue for the years ended December
30, 1995, December 28, 1996 and December 27, 1997 were the same for the
separate entities prior to the combination. Income before extraordinary
items would have been approximately $2.3 million, $3.0 million and $1.5
million higher for the Company than White Rose for the years ended
December 30, 1995, December 28, 1996 and December 27, 1997, respectively,
prior to the combination due to additional White Rose net interest
expense.
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. All
intercompany accounts and transactions have been eliminated.
Inventories - Inventories, primarily consisting of finished goods, are
valued at the lower of cost (weighted average cost method) or market.
Property, Plant and Equipment - Owned property, plant and equipment is
stated at cost. Capitalized leases are stated at the lesser of the present
value of future minimum lease payments or the fair value of the leased
property. Depreciation and amortization are computed using the
straight-line method over the lesser of the estimated life of the asset or
the lease.
In the event that facts and circumstances indicate that the cost of
long-lived assets may be impaired, an evaluation of recoverability would
be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset would be compared to the
asset's carrying amount to determine if a write-down to market value or
discounted cash flow value is required.
F-8
<PAGE>
Excess of Cost Over Net Assets Acquired - The excess of cost over net
assets acquired ("goodwill") is being amortized by the straight-line
method over 40 years.
Management assesses the recoverability of goodwill by comparing the
Company's forecasts of cash flows from future operating results, on an
undiscounted basis, to the unamortized balance of goodwill at each
quarterly balance sheet date. If the results of such comparison indicate
that an impairment may be likely, the Company will recognize a charge to
operations at that time based upon the difference of the present value of
the expected cash flows from future operating results (utilizing a
discount rate equal to the Company's average cost of funds at the time),
and the then balance sheet value. The recoverability of goodwill is at
risk to the extent the Company is unable to achieve its forecast
assumptions regarding cash flows from operating results. Management
believes, at this time, that the goodwill carrying value and useful life
continues to be appropriate.
Deferred Financing Costs - Deferred financing costs are being amortized
over the life of the related debt using the straight-line method.
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 Equivalents - Cash equivalents are investments with original
maturities of three months or less from the date of purchase.
Fiscal Year - The Company's fiscal year-end is the Saturday closest to
December 31. The financial statements for each of the three years in the
period ended December 27, 1997 comprised 52 weeks.
Reclassifications - Previously, the Company classified as other income
reclamation service fees, label income and other customer-related
services. Commencing in the year ended December 28, 1996, the Company is
classifying these items as other revenue. Prior year amounts have been
reclassified accordingly. The change in classification has no effect on
previously reported net income.
Certain other reclassifications were made to prior years' financial
statements to conform to the current year presentation.
New Accounting Pronouncement - In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards (SFAS)
No. 131, Disclosures about Segments of an Enterprise and Related
Information, which will be effective for financial statements beginning
after December 15, 1997. SFAS No. 131 redefines how operating segments are
determined and requires expanded quantitative and qualitative disclosures
relating to a company's operating statements. The Company has not yet
completed its analysis of how it will be effected.
F-9
<PAGE>
2. ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable consists of the following:
December 28, December 27,
1996 1997
(In Thousands)
Accounts receivable $ 52,688 $ 57,263
Notes receivable 7,192 8,627
Other receivables 5,981 10,028
Less allowance for doubtful accounts (4,311) (4,203)
------ ------
$ 61,550 $ 71,715
======== ========
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
Estimated
Useful Life December 28, December 27,
in Years 1996 1997
(In Thousands)
Land - $ 900 $ 900
Buildings and improvements 10 19,492 19,322
Machinery and equipment 3-10 10,495 10,826
Less accumulated depreciation (9,102) (12,674)
------ -------
21,785 18,374
------ ------
Capital leases:
Building and improvements 32,488 4,419
Equipment 8,410 370
Less accumulated amortization (6,413) (1,019)
------ ------
34,485 3,770
------ -----
$ 56,270 $ 22,144
======== ========
Grocery Facility - In November 1997, the Company amended its lease for its
grocery facility, adding additional leased property, extending the term
and increasing the annual lease obligation. These changes in the
provisions of the lease resulted in the amended lease being treated as a
new lease and accounted for as an operating lease. The net book value of
the related capitalized asset of $24.3 million and $27.1 million of lease
obligations were removed resulting in a gain of approximately $2.8
million. The gain was classified in warehouse expense in the accompanying
consolidated statement of operations for the year ended December 27, 1997.
Frozen Facility - In November 1997, the Company acquired the building and
leasehold improvements, formerly the subject of a capital lease for its
frozen facility located in Garden City, New York, for a purchase price of
$9 million, consisting of cash and a $7.2 million note payable (Note 6g).
As a result of this transaction, the building and leasehold improvements
acquired were recorded and the net book value of the related capitalized
asset of $1.7 million and $1.6 million of lease obligation were removed
F-10
<PAGE>
resulting in a loss of approximately $0.1 million. In addition, the
Company entered into a contract to purchase the underlying land for $1.6
million.
In February 1998, the Company entered into a contract to sell its Garden
City, New York frozen facility and underlying land for approximately $14.5
million and management anticipates the transaction to close by March 31,
1998. The terms of the agreement require the Company to lease back the
facility for a period of two years with one five year option, at an annual
rent of approximately $1.5 million. The Company anticipates operating a
storage facility at this location. In connection with this transaction,
the Company recorded a pre-tax charge of approximately $2.2 million for an
impairment of certain previously acquired leasehold improvements. The
impairment recognized was measured as the amount by which the carrying
value of the assets exceeded the fair value of the assets. The charge is
included in warehouse expense in the accompanying consolidated statement
of operations for the year ended December 27, 1997.
The Company anticipates moving its existing frozen food distribution
business from its Garden City, New York facility to its Carteret, New
Jersey facility (Note 11).
4. EXCESS OF COST OVER NET ASSETS ACQUIRED
Di Giorgio Acquisition - The Company was acquired by the current
stockholders on February 9, 1990. The acquisition was accounted for as a
purchase and the cost of the Company's stock, together with the related
acquisition fees and expenses was allocated to the assets acquired and
liabilities assumed based on fair values. As of December 28, 1996 and
December 27, 1997, accumulated amortization of excess costs over net
assets acquired was approximately $18,193,000 and $20,376,000,
respectively.
Royal Acquisition - In June 1994, the Company acquired substantially all
of the operating properties, assets and business of the dairy and deli
distribution business. The acquisition was accounted for as a purchase and
the cost was allocated to the assets acquired and liabilities assumed
based on fair values. As of December 28, 1996 and December 27, 1997,
accumulated amortization of excess costs over net assets acquired was
approximately $702,000 and $978,000, respectively.
5. FARMINGDALE WAREHOUSE FACILITY
On July 27, 1993, the Company, through its wholly-owned subsidiary, MF
Corp., entered into an agreement for the sublease of Farmingdale, the
Company's old grocery facility. The initial term of the sublease was five
years. The sublessee was also granted an option, which was exercisable
under certain circumstances, to purchase the property. The Company and the
fee owner would share the economic benefits, if any, of the resulting
income stream, and any excess proceeds of financing related thereto with
80% to the Company and 20% to the fee owner.
On March 9, 1995, the Company, through MF Corp. and in conjunction with
the fee owner, completed a $6.6 million mortgage financing of Farmingdale.
The Company realized proceeds in the amount of $3.4 million after
deducting a $2.2 million capital lease liability payment and $1 million
representing associated fees, escrow deposits and a payment to the fee
owner.
In August 1997, the Company completed the sale of the option it held on
its Farmingdale facility. The Company realized net cash proceeds of
approximately $7.3 million after the repayment of the mortgage in the
amount of approximately $5.2 million. The Company recognized a $40,000
F-11
<PAGE>
gain (before a noncash write off of deferred expenses in the amount of
approximately $400,000) in the statement of operations for the year ended
December 31, 1997 on the transaction.
Included in other income for the three years ended December 27, 1997 is
net rental income of approximately $954,000, $1 million and $192,000,
respectively, related to the facility.
6. FINANCING
On June 20, 1997, the Company completed a refinancing (the "Refinancing")
intended to extend debt maturities, reduce interest expense and improve
financial flexibility. The components of the Refinancing were (i) the
offering of $155 million 10% senior notes due 2007, (ii) the modification
of the Company's bank credit facility, (iii) the receipt of an $8.9
million payment for the extinguishment of a note held by the Company from
Rose Partners, LP ("Rose Partners"), which owns 98.53% of the Company,
(Note 16) (iv) the consummation of the tender offers and consent
solicitations commenced by the Company and White Rose, and together with
the "Tender Offers" on May 16, 1997 in respect of the Company's 12% senior
notes due 2003 and White Rose's 12-3/4% senior discount notes due 1998,
respectively, (v) the $4.2 million dividend by the Company to White Rose
of certain assets which were unrelated to the Company's primary business
and the subsequent dividend of those assets to White Rose's stockholders
(Note 12) and (vi) the merger (Note 1).
As a result of the Refinancing, the Company recorded an $8.5 million
extraordinary charge, net of a tax benefit of $5.7 million, on the
extinguishment of debt relating to premiums paid in the aggregate of
approximately $10.8 million as a result of the Tender Offers and the
write-off of approximately $3.2 million of deferred financing fees
associated with the 12% senior notes and 12-3/4% senior discount notes.
Debt consists of the following:
Interest Rate
at December 27, December 28, December 27,
1997 1996 1997
(In Thousands)
Revolving credit facility (b) 8.64 % $ 26,719 $ 19,669
======== ========
Current portion of long-term debt:
12% senior notes (c) 12.00 $ - $ 7,450
Mortgage payable (e) 9.00 685 -
Fleming note payable (f) 6.97 614 620
Note payable (g) 6.67 - 7,200
------- -----
$ 1,299 $ 15,270
======= ========
Long-term debt:
10% senior notes (a) 10.00 $ - $ 155,000
12% senior notes (c) 12.00 92,890 -
12 3/4% senior discount notes (d) 12.75 50,646 -
Mortgage payable (e) 9.00 4,901 -
Fleming note payable (f) 6.97 4,952 4,333
----- -----
$ 153,389 $ 159,333
========= =========
F-12
<PAGE>
(a) 10% Senior Notes - The senior notes were issued under an Indenture
dated as of June 20, 1997 between the Company and The Bank of New
York, as Trustee. The senior notes are general unsecured obligations
of the Company initially issued in $155,000,000 principal amount
maturing on June 15, 2007. The notes bear interest at the rate of
10% payable semi-annually, in arrears, on June 15 and December 15 of
each year, commencing December 15, 1997.
The notes will be redeemable at the Company's option, in whole or in
part, at any time on or after June 15, 2002, at redemption prices
defined in the Indenture agreement. In addition, on or prior to June
15, 2000, the Company may redeem up to 35% of the originally issued
notes, at a price of 110% of the principal amount together with
accrued and unpaid interest with the net proceeds of public equity
offerings as defined by the Indenture. Upon the occurrence of a
change of control, holders of the notes will have the right to
require the Company to repurchase all or a portion of the notes at a
purchase price equal to 101% of the principal amount, plus accrued
interest.
Payments of principal and interest on the notes are subordinate to
the Company's secured obligations, including borrowings under the
revolving credit facility, capital lease obligations (Note 6b and
Note 11) and other existing and future senior indebtedness of the
Company.
The Indenture limits the ability of the Company and its restricted
subsidiaries to create, incur, assume, issue, guarantee or become
liable for any indebtedness, pay dividends, redeem capital stock of
the Company or a restricted subsidiary, and make certain
investments. The Indenture further restricts the Company's and its
restricted subsidiaries' ability to sell or issue a restricted
subsidiaries' capital stock, create liens, issue subordinated
indebtedness, sell assets, and undertake transactions with
affiliates. No consolidation, merger or other sale of all or
substantially all of its assets in one transaction or series of
related transactions is permitted, except in limited instances.
(b) Revolving Credit Facility - As of December 28, 1996, borrowings
under the $90 million credit facility bore interest at the Company's
option, at the rate of bank prime plus 1.0% or the adjusted
Eurodollar rate plus 2.5%. Prior to September 1995, borrowings bore
interest, at Di Giorgio's option, at the rate of bank prime plus
1.5% or the adjusted Eurodollar rate plus 3%. On February 1, 1997,
the interest rate was lowered by .25% to prime plus .75% or the
adjusted Eurodollar rate plus 2.25% because of the Company's ability
to meet certain financial tests.
In May and June 1997, the bank credit facility was modified to,
among other things, extend the expiration date of the facility to
June 30, 2000, reset certain financial covenants, permit the
Refinancing and increase the rate under the borrowing base formula.
Availability for direct borrowings and letter of credit obligations
under the revolving credit facility is limited, in the aggregate to
the lesser of i) $90 million or ii) a borrowing base of 80% of
eligible amount of receivable and 60% of eligible inventory. After
the Refinancing, the allowable advance against eligible inventory
increased to 70% and subsequently declines to 60% at the rate of 1%
each quarter commencing on October 1, 1997. As of December 27, 1997,
the Company had an additional $61.2 million of borrowing base
availability.
The borrowings under the revolving credit facility are secured by
the Company's inventory and accounts receivable. Among other
matters, the revolving credit facility contains certain restrictive
covenants relating to net worth, interest coverage and capital
expenditures. The facility also prohibits the payment of dividends.
The Company was in compliance with the covenants as of December 27,
1997.
F-13
<PAGE>
(c) 12% Senior Notes - The senior notes which were issued in
$100,000,000 principal amount in 1993, were due in February 2003,
and bear interest at the rate of 12%.
During the years ended December 30, 1995 and December 28, 1996 prior
to the Tender Offers, the Company retired $2,345,000 and $4,765,000,
respectively, of the senior notes that it purchased on the open
market and recorded an extraordinary gain of $510,000 (net of $-0-
taxes) and $219,000 (net of taxes of $146,000), respectively.
In June 1997, the notes were redeemed pursuant to the Tender Offers
at $85,440,000 principal and a premium of approximately $6,586,000.
As of December 27, 1997, $7,450,000 aggregate principal amount of
the notes remain outstanding. During February 1998, pursuant to the
Indenture, the Company has elected to redeem, and will redeem on
March 26, 1998 all the notes outstanding at December 27, 1997, at a
redemption price equal to 104.5% of the principal amount with
accrued interest through the redemption date.
(d) 12 3/4% Senior Discount Notes - In November 1993 $63.5 million
principal amount at maturity of Series A senior discount notes due
1998 were issued by White Rose. The notes were issued net of an
original issue discount of $29.2 million. The yield to maturity was
12.75% per annum and the notes did not pay any periodic cash
interest. In June 1997, the notes were redeemed in full pursuant to
the Tender Offers at approximately $53,656,000 principal, which
included accreted interest and a premium of approximately
$4,243,000.
(e) Mortgage Payable - The terms of the eight-year, nonrecourse mortgage
payable of the Company's wholly-owned subsidiary, MF Corp., were
payments of $96,691 a month, including interest at 9% through 2004.
The mortgage was paid off in full in conjunction with the sale of
the Farmingdale facility (Note 5) and the Company recorded a
$200,000 extraordinary charge, net of a tax benefit of $124,000, on
the write-off of deferred financing fees associated with the
mortgage.
(f) Fleming Note Payable - The terms of the note require quarterly
principal payments of $200,000 plus interest at a rate equal to the
prime rate (as stated in the Wall Street Journal) minus 2%, divided
by two. Currently, cash interest is 3.25% and is to be reset every
eighteen months. The note matures on June 20, 1999. The note has
been discounted at a rate of 6.97% for financial statement purposes
which resulted in an amount outstanding at December 27, 1997 of $5.0
million. As of December 27, 1997, the remaining principal amount on
the note is $5.2 million. The note is secured by a $1.5 million
letter of credit.
(g) Note Payable - The note payable was issued in connection with the
purchase of the building for its frozen facility (Note 3) and
matures on May 27, 1998.
F-14
<PAGE>
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Company's financial
instruments are as follows:
December 28, 1996 December 27, 1997
Carrying Fair Carrying Fair
Value Amount Value Amount
(In Thousands)
Debt (Note 6):
Revolving credit facility $ 26,719 $ 26,719 $ 19,669 $ 19,669
Note payable -- -- 7,200 7,200
10% senior notes -- -- 155,000 152,288
12% senior notes 92,890 99,968 7,450 7,897
12-3/4% senior discount notes 50,646 50,406 -- --
Other notes payable 11,152 11,152 4,953 4,953
Accounts and notes receivable -
current (Note 2) 61,550 61,550 71,715 71,715
Notes receivable - long-term 19,276 19,276 7,428 7,428
The fair value of the 10% senior notes as of December 27, 1997 is based on
a yield of 10.29% (as of December 26, 1997). The fair value of the 12%
senior notes as of December 28, 1996 and December 27, 1997 are based on
yields of 10.28% (as of December 30, 1996) and 10.45% (as of December 26,
1997), respectively. The fair value of the 12-3/4% senior discount notes
as of December 28, 1996 is based on the trade price representing a yield
of 13.0% (as of December 30, 1996). Based on the borrowing rate currently
available to the Company, the revolving credit facility is considered to
be equivalent to its fair value. The fair value of the note payable is
assumed to reasonably approximate its carrying amount since it was
recently issued and is short-term in nature. The fair values of other
notes payable were assumed to reasonably approximate their carrying
amounts since they have variable interest rates.
The book value of the current and long-term accounts and notes receivable
is equivalent to fair value which is estimated by management by
discounting the future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings and for the
same remaining maturities.
8. ACCRUED EXPENSES
Accrued expenses consist of the following:
December 28, December 27,
1996 1997
(In Thousands)
Legal and environmental $ 1,831 $ 1,176
Interest 4,412 1,018
Employee benefits 5,957 6,354
Due to vendors/customers 3,219 4,286
Other 8,943 8,264
----- -----
$ 24,362 $ 21,098
======== ========
F-15
<PAGE>
9. RETIREMENT
a. Pension Plans - The Company maintains a noncontributory defined
benefit pension plan covering substantially all of its
non-collective bargaining employees. Pension costs for these plans
and related disclosures are determined under the provisions of
Statement of Financial Accounting Standards No. 87, "Employers'
Accounting for Pensions." The Company makes annual contributions to
the plans in accordance with the funding requirements of the
Employee Retirement Income Security Act of 1974. Assets of the
Company's pension plan are invested in Treasury notes, U.S.
Government agency bonds, and temporary investments.
Plan Changes - Effective January 1, 1995, the method for determining
market and related value of assets was changed from the market value
to a five-year moving market value with asset gains/losses
recognized over five years.
The pension credit included in operations for the years ended
December 30, 1995, December 28, 1996 and December 27, 1997 includes
the following components:
Year Ended
--------------------------------------------
December 30, December 28, December 27,
1995 1996 1997
(In Thousands)
Service cost-benefits earned
during the period $ 345 $ 585 $ 598
Interest cost on projected
benefit obligation 3,350 3,350 3,334
Return on assets - actual (7,138) (4,302) (4,357)
Net amortization and deferral 2,746 (117) (67)
----- ---- ---
Net periodic pension credit $ (697) $ (484) $ (492)
====== ====== ======
The following sets forth the status of the plan as of the most recent actuarial
report:
December 28, December 27,
1996 1997
(In Thousands)
Actuarial present value of benefit obligations:
Vested benefit obligation $ 45,179 $ 45,534
======== ========
Accumulated benefit obligation $ 46,187 $ 46,752
======== ========
Projected benefit obligation $ 46,976 $ 47,906
Plan assets at fair value 50,213 51,189
------ ------
Plan assets in excess of projected
benefit obligation 3,237 3,283
Unrecognized prior service cost 165 151
Unrecognized net loss 5,017 5,477
----- -----
Prepaid pension cost $ 8,419 $ 8,911
======= =======
The prepaid pension cost is included in other assets on the consolidated balance
sheets.
F-16
<PAGE>
The following table provides the assumption used in determining the actuarial
present value of the projected benefit obligation at December 28, 1996 and
December 27, 1997:
December 28, December 27,
1996 1997
Weighted average discount rate 7.50 % 7.25 %
Rate of increase in future compensation levels 6.00 6.00
Expected long-term rates of return on plan assets 9.00 9.00
The Company also contributes to pension plans under collective bargaining
agreements. These contributions generally are based on hours worked. Pension
expense included in operations was as follows:
Year Ended (In Thousands)
December 30, 1995 $ 836
December 28, 1996 1,082
December 27, 1997 1,030
b. Savings Plan - The Company maintains a defined contribution 401(k)
savings plan. Employees of the Company who are not covered by a
collective bargaining agreement (unless a bargaining agreement
expressly provides for participation) are eligible to participate in
the plan after completing one year of employment.
Eligible employees may elect to contribute on a tax deferred basis
from 1% to 10% of their total compensation (as defined in the
savings plan), subject to statutory limitations. A contribution of
up to 5% is considered to be a "basic contribution" and the Company
makes a matching contribution equal to a designated percentage of a
participant's basic contribution (which all may be subject to
certain statutory limitations). Company contributions to the plan
are summarized below:
Year Ended (In Thousands)
December 30, 1995 $ 144
December 28, 1996 171
December 27, 1997 193
10. OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of the following:
December 28, December 27,
1996 1997
(In Thousands)
Employee benefits $ 3,520 $ 2,269
Legal 2,733 2,575
Environmental 1,337 1,235
Other 236 -
------- -------
$ 7,826 $ 6,079
======= =======
F-17
<PAGE>
11. COMMITMENTS AND CONTINGENCIES
Leases - The Company conducts certain of its operations from leased
warehouse facilities and leases transportation and warehouse equipment. In
addition to rent, the Company pays property taxes, insurance and certain
other expenses relating to leased facilities and equipment.
The Company subleased a frozen warehouse facility through November 1997
and certain equipment through April 1997 from WRGFF Associates, L.P.
("WRGFF"), an affiliate of the Company. For each of the years in the
three-year period ended December 27, 1997, rental expense under these
leases with WRGFF amounted to approximately $1.2 million, $1.4 million and
$0.5 million, respectively (Note 3). In May 1997 the Company acquired
tangible property formerly the subject of a capital lease at its frozen
facility from WRGFF for approximately $2 million.
The Company had entered into a lease agreement to lease a dry warehouse
facility which the Company is using for its grocery division as well as
for its administrative headquarters. The lease commitment commenced on
February 1, 1995. The lease was amended during 1997 (Note 3). The term of
the new lease expires in 2018 with two five-year renewal options. Rental
payments under the lease are approximately $2.9 million per year (through
the expiration date).
In November 1997, the Company entered into an agreement to lease a new
frozen warehouse facility in Carteret, New Jersey. The lease will be
accounted for as an operating lease. The lease expires in 2018 with two
five year renewal options. Rental payments under the lease are
approximately $1.8 million for the first ten years and approximately $2.0
million for the last ten years.
Although the Company continues to investigate subleasing its Kearny
facility (formerly its dairy facility), the facility was placed back into
operations in the second quarter of fiscal 1996. During fiscal 1997, the
Company operated a storage facility, a juice depot and a produce
distribution business at the location. The Company currently operates a
storage facility at the location. Also, during the fourth quarter of
fiscal 1997, the Company recorded a pretax charge of approximately
$480,000 to write down certain leasehold improvements to estimated fair
value. The charge is included in operating expense in the accompanying
consolidated statement of operations.
The following is a schedule of net minimum lease payments required under capital
and operating leases in effect as of December 27, 1997:
Capital Operating
Fiscal Year Ending Leases Leases
(In Thousands)
1998 $ 366 $ 11,453
1999 366 11,075
2000 308 8,103
2001 196 6,434
2002 186 5,677
Thereafter 3,382 74,164
----- ------
Net minimum lease payments 4,804 $ 116,906
=========
Less interest 2,110
-----
Present value of net minimum lease
payments (including current
installments of $195) $ 2,694
=======
F-18
<PAGE>
Total rent expense included in operations was as follows:
Year Ended (In Thousands)
December 30, 1995 $ 6,337
December 28, 1996 6,622
December 27, 1997 7,240
Letters of Credit - In the ordinary course of business, the Company is at
times required to issue letters of credit. The Company was contingently
liable for $11,979,000 and $7,185,851 on open letters of credit with a
bank as of December 28, 1996 and December 27, 1997, respectively.
Employment Agreements - The Company has employment agreements with three
key executives which will expire in June 2000, October 2000 and February
1999. Under these agreements, combined annual salaries of approximately
$871,000 are expected to be paid in fiscal 1998. In addition, the
executives are entitled to additional compensation upon occurrence of
certain events.
12. EQUITY
In November 1993 in connection with the senior discount note offering
(Note 6(d)), the Company entered into a warrant agreement with a bank. The
bank currently owns 1.47% of the outstanding shares of common stock of the
Company. The bank holds warrants to purchase approximately 2.6% of the
outstanding Di Giorgio Corporation common stock. A warrant entitles a
holder to purchase one share of Di Giorgio Corporation Class B common
stock for $.10 per share. The warrants are exercisable on the earlier of
January 1, 1996, or the date of an initial public offering of the Company
or its subsidiaries or the occurrence of other events as defined in the
agreement. The warrants expire in February 2003.
In May 1995, DIG Holding purchased the Company's senior discount notes
with a face value of $3 million on the open market. The purchase price was
$960,000 with an accreted value of $1,967,000. DIG Holding distributed the
bonds to the stockholders in December of 1995 when the bonds had a fair
value of approximately $1.2 million. The accreted value at the time of the
dividend was approximately $2,114,000. Interest income of $125,000 and
bond amortization of $115,000 was recorded in 1995.
In connection with the Refinancing (Note 6), certain assets consisting of
the Las Plumas note (Note 16), land and other assets, with an aggregate
book value of approximately $4.2 million were distributed to the
stockholders of the Company in the form of a dividend.
F-19
<PAGE>
13. OTHER INCOME - NET
Other income consists of the following:
Year Ended
---------------------------------------------
December 30, December 28, December 27,
1995 1996 1997
(In Thousands)
Interest income $ 2,301 $ 2,390 $ 2,380
Net rental income 954 1,020 192
Net gain on disposal of assets - 63 157
Other - net 374 285 513
Non-compete 213 - -
------- ------- -------
$ 3,842 $ 3,758 $ 3,242
======= ======= =======
14. INCOME TAXES
The Company files a consolidated Federal tax return. The consolidated
group has adopted Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes."
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 amounts used for income tax purposes. The tax
effects of significant items comprising the Company's deferred tax assets
and deferred tax liabilities are as follows:
December 28, December 27,
1996 1997
(In Thousands)
Deferred tax assets:
Allowance for doubtful accounts $ 1,814 $ 1,817
Accrued expenses not deductible until paid 5,494 3,313
Net tax operating loss carryforwards 15,400 16,160
------ ------
Deferred tax asset 22,708 21,290
====== ======
Deferred tax liabilities:
Difference between book and tax basis
of property (4,038) (483)
Pension asset valuation (3,296) (3,441)
------ ------
Deferred tax liabilities (7,334) (3,924)
------ ------
Net deferred tax assets 15,374 17,366
Less valuation allowance (15,374) -
------- ------
$ - $ 17,366
====== ========
The valuation allowance as of December 31, 1996 related to net deferred tax
assets relating to preacquisition temporary differences and operating loss
carryforwards as well as postacquisition temporary differences and
F-20
<PAGE>
loss carryforwards. The elimination of the valuation allowance relating to
(i) preacquisition amount is credited to the excess of cost over net
assets of business acquired and (ii) postacquisition amount is credited to
the income tax provision.
There was no Federal provision for the year ended December 30, 1995 as a
result of operating losses for financial statement and tax purposes. For
the year ended December 30, 1995, the tax provision has been reduced by
approximately $319,000 for the corresponding elimination of the valuation
allowance. For the year ended December 28, 1996, the excess of cost over
the net assets of business acquired has been reduced by approximately $2.8
million because of the utilization of preacquisition amounts. As of
December 28, 1996, the Company's deferred tax assets were fully reserved
based on the then current evidence indicating that is was more likely than
not that the future benefits of the deferred tax assets would not be
realized.
During the third quarter of fiscal 1997, the Company reversed the
valuation allowance related to its deferred income tax assets. In the
opinion of management, sufficient evidence now exists, such as the
positive trend in operating performance and the favorable effects of the
recently completed refinancing, which indicates that it is more likely
than not that the Company will be able to realize its deferred income tax
assets. The reversal of the valuation allowance resulted in an income tax
benefit of $3.9 million and a reduction in goodwill of $11.5 million. The
reduction in goodwill reflects benefits which were attributable to the
pre-acquisition period.
At December 27, 1997, the net deferred tax assets of $17.4 million consist
principally of operating loss carryforwards which expire from 2006 to
2010. The deferred tax assets are classified for balance sheet purposes as
$12.3 million noncurrent and $5.1 million included in prepaid expenses.
As of December 27, 1997, approximately $40 million of net tax operating
loss carryforwards (which expire between the years 2006 and 2010) and
approximately $28.7 million of New Jersey state tax operating loss
carryforward (which expire between the years 1998 and 2002) are available.
As of December 27, 1997, there were no taxes currently payable.
The income tax benefit consist of the following (in thousands):
Year Ended
December 27,
1997
Deferred income tax $ 2,659
Reduction in valuation allowance (3,900)
------
$ (1,241)
========
F-21
<PAGE>
A reconciliation of the Company's effective tax rate with the statutory Federal
tax rate is as follows:
Years Ended
-----------------------------------------
December 30, December 28, December 27,
1995 1996 1997
(In Thousands)
Tax at statutory rate $ (846) $ 1,667 $ 1,526
State and local taxes -
net of federal benefit 287 497 391
Permanent differences -
amortization of excess cost
over net assets acquired 983 889 742
Reduction in valuation reserve (319) - (3,900)
---- ------- ------
$ 105 $ 3,053 $ (1,241)
===== ======= ========
15. LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES
Various suits and claims arising in the course of business are pending
against the Company and its subsidiaries. In the opinion of management,
dispositions of these matters are appropriately provided for and are not
expected to materially affect the Company's financial position, cash flows
or results from operations.
The Company has been named in various claims and litigation relating to
potential environmental problems. In the opinion of management, these
claims are either without merit, covered by insurance, adequately provided
for, or not expected to result in any material loss to the Company.
16. RELATED PARTY TRANSACTIONS
In November 1993 approximately $11 million face value discount note was
loaned to Rose Partners, the current holder of 98.53% of the common stock
of the Company. The note was issued at an original discount of
approximately $5.3 million. The note evidencing this indebtedness was
scheduled to mature in April 1999 and was secured by an amount of shares
of common stock owned by Rose Partners representing approximately 20% of
the class outstanding. The note bore interest at a rate equal to the
Series B senior discount notes yield to maturity of 12 3/4% per annum. As
of December 28, 1996, the $8.4 million note was classified as long-term in
the consolidated balance sheet. In connection with the Refinancing (Note
6) the Company received an $8.9 million payment for the extinguishment of
the note. For the years ended December 30, 1995, December 28, 1996 and
December 27, 1997, other income includes approximately $846,000, $981,000
and $502,000, respectively, of interest income related to the note.
F-22
<PAGE>
At December 28, 1996, Las Plumas, an affiliate of the Company, owed the
Company approximately $3.5 million, evidenced by a subordinated note. The
entire note receivable was classified as long-term in the consolidated
balance sheet as of December 28, 1996. The note was secured by deeds of
trust relating to parcels of property of Las Plumas. The loan was
scheduled to mature in June 1998 and bore interest at a fluctuating rate
equal to the weighted average of the interest rates paid by the Company.
In connection with the Refinancing, the note was distributed to the
stockholders of the Company in the form of a dividend (Note 12).
A director of the Company is a director of a customer. During the
three-year period ended December 27, 1997, the Company sold various foods
products in the amounts of $22.6 million, $27.5 million and $37.2 million,
respectively, to this customer.
A director of the Company is a partner in a firm which provides legal
services to the Company on an on-going basis. The Company paid
approximately $98,000, $111,000 and $171,000, during each of the three
years in the period ended December 27, 1997, respectively, to the law firm
for legal services.
The Company employs the services of a risk management and insurance
brokerage firm which is controlled by a director of the Company. Included
in the statement of operations are fees paid to the related party of
$150,000 for each of the three years in the period ended December 27,
1997.
The Company recorded income of $154,000, $245,000 and $166,000 for each of
the three years in the period ended December 27, 1997, respectively, from
an affiliated entity of the President of the Company in connection with
the sharing of office facilities and administrative expenses.
Included in the consolidated statement of operations for the year ended
December 30, 1995 was $119,000 of expenses related to services provided by
a consulting and investment banking firm whose general partner is a former
officer of the Company.
17. MAJOR CUSTOMERS
During the year ended December 30, 1995, sales to two individual customers
represented 22.2% and 19.7% of net sales, respectively, and sales to a
group of customers represented 13.1%.
During the year ended December 28, 1996, sales to two individual customers
represented 22.4% and 20.1% of net sales, respectively, and sales to a
group of customers represented 12.4%.
During the year ended December 27, 1997, sales to two individual customers
represented 27.4% and 19.5% of net sales, respectively, and sales to a
group of customers represented 10.9%.
******
F-23
<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Additions Column D Column E
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Description Of Period Expenses Accounts Deductions of Period
Allowance for doubtful accounts
for the period ended:
<S> <C> <C> <C> <C> <C>
December 30, 1995 $ 3,844 $ 2,100 $ - $(2,003)(1) $ 3,941
December 28, 1996 3,941 1,850 63 (2) (1,543)(1) 4,311
December 27, 1997 4,311 1,300 - (1,277)(1) 4,203
(131)(3)
</TABLE>
(1) Accounts written off during the year.
(2) Transfers from other accounts.
(3) Transfers to other accounts
S-1
LEASE AGREEMENT
BY AND BETWEEN
AMAX REALTY DEVELOPMENT, INC.
AND
V. PAULIUS AND ASSOCIATES, T/A
PORT CARTERET, A JOINT VENTURE,
Landlord,
- and -
DI GIORGIO CORPORATION,
Tenant.
----------------------------
DATED: November 26, 1997
----------------------------
<PAGE>
TABLE OF CONTENTS
Page
PREAMBLE 1
BASIC LEASE PROVISIONS AND DEFINITIONS 1
1. Premises 3
2. Term 3
3. Completion and Possession 3
4. (Intentionally Omitted) 6
5. Rental 6
6. Use 7
7. Insurance 9
8. (Intentionally Omitted) 12
9. Fire and Other Casualty 12
10. Repairs and Maintenance 14
11. Covenants Against Liens 15
12. Alterations 16
13. Condemnation 17
14. Access and Right to Exhibit 19
15. Assignment 19
16. Rules and Regulations, Compliance With Laws 23
17. Utilities 25
18. Signs 26
19. Taxes 26
20. Additional Charges 28
21. Non-Liability of Landlord 28
22. Indemnity 29
23. Right to Cure Default 29
24. Remedies Upon Default 30
25. Waiver of Redemption 33
26. Mortgage Priority 33
27. Surrender of Premises 35
28. Unavoidable Delays 35
29. Landlord Consent 36
30. Certification 36
31. Waiver of Trial by Jury 37
32. Quiet Enjoyment 37
<PAGE>
33. Landlord 37
34. Notices 38
35. Covenants, Effect of Waiver 38
36. Holding Over 38
37. References 39
38. Entire Agreement 39
39. Attornment 39
40. Security 39
41. Option to Purchase 42
42. Real Estate Broker 45
43. Future Easements 45
44. Adjacent Excavation and Shoring 46
45. Validity of Lease 46
46. Representations 46
47. Environmental Provisions 46
48. Renewal Option 55
49. Option to Lease Additional Lands 56
50. Additional Building 59
51. Tenant's Rights 61
52. Waiver of Distraint 62
53. No Option 62
54. Memorandum of Lease 62
<PAGE>
AGREEMENT OF LEASE
Between AMAX REALTY DEVELOPMENT, INC., a Delaware corporation, and V.
PAULIUS AND ASSOCIATES, a New Jersey corporation, collectively t/a PORT
CARTERET, a joint venture (hereinafter called "Landlord"), and DI GIORGIO
CORPORATION, a Delaware corporation (hereinafter called "Tenant").
PREAMBLE
BASIC LEASE PROVISIONS AND DEFINITIONS.
In addition to other terms elsewhere defined in this lease, the
following terms whenever used in this lease should have only the meanings set
forth in this section, unless such meanings are expressly modified, limited or
expanded elsewhere herein.
(1) Date of Lease: November 26, 1997
(2) Exhibits: The following Exhibits attached to this lease are
incorporated herein and made a part hereof:
Exhibit "A": Legal Description of the Property
Exhibit "A-1": Title Matters
Exhibit "B": Plans and Specifications
Exhibit "C": Site Plan
Exhibit "D": Intentionally Omitted
Exhibit "E": Intentionally Omitted
Exhibit "F": Ground Lessor Non-Disturbance,
Recognition and Attornment Agreement
Exhibit "G": Declaration of Environmental
Restrictions
Exhibit "H": Prepayment Penalty Cap
Exhibit "I": Lender Non-Disturbance, Subordination
and Attornment Agreement
Exhibit "J": (Intentionally Omitted)
Exhibit "K": Additional Lands
Exhibit "L": Grocery Products
Exhibit "L-1": Frozen Food Products
Exhibit "L-2" Dairy Products
(3) Building: One (1) building consisting of approximately
one hundred sixty-nine thousand nine hundred fifteen
(169,915) square feet of base building ("Base
Building"), approximately four thousand six hundred
seventy-five (4,675) square feet of maintenance and/or
mezzanine area ("Initial Mezzanine Area"), and
approximately four thousand two hundred sixty-two
(4,262) square feet of maintenance and/or mezzanine
area ("Subsequent Mezzanine Area"), collectively the
"Mezzanine Area", and in the aggregate being approximately one
hundred seventy-eight thousand eight hundred fifty-two
(178,852) square feet, located in Carteret, New Jersey.
(4) Premises: The Land together with the Building and other
improvements as shown on Exhibit "C".
(5) Land: The parcel of land described on Exhibit "A", consisting
of 13.5+/- acres.
(6) Term: From and after the Commencement Date and ending twenty
(20) years from the Commencement Date, unless sooner
terminated as provided for herein or extended as similarly
provided for herein.
(7) Commencement Date: The Delivery of Possession of the Base
Building and Initial Mezzanine Area by Landlord to Tenant, as
defined in subparagraph 3(a) or the date upon which Tenant
1
<PAGE>
shall commence the delivery of merchandise from the Base
Building whichever shall occur first.
(8) Subsequent Mezzanine Area Commencement Date: The Delivery of
Possession of the Subsequent Mezzanine Area by Landlord to
Tenant, as defined in subparagraph 3(a) or the date upon which
Tenant shall conduct business therefrom, whichever shall occur
first.
(9) Fixed Rent: The Fixed Rent shall be as follows:
Base Building and Initial Mezzanine Area
Annual
Lease Leased Rent Per Annual Monthly
Year Premises Square Foot Fixed Rent Fixed Rent
1-10 174,590 s.f. $10.15 $1,772,088.50 $147,674.04
11-20 174,590 s.f. $11.30 $1,972,867.00 $164,405.58
Subsequent Mezzanine Area
Annual
Lease Leased Rent Per Annual Monthly
Year Premises Square Foot Fixed Rent Fixed Rent
1-10 4,262 s.f. $10.15 $ 43,259.30 $ 3,604.94
11-20 4,262 s.f. $11.30 $ 48,160.60 $ 4,013.38
(collectively the Fixed Rent)
The actual initial Fixed Rent shall be determined and paid on the
actual square footage of the Base Building and the Mezzanine Area, based upon
outside measurements, as determined upon the respective Commencement Dates.
(10) Termination Date: On midnight of the day prior to the 241st
month following the Commencement Date, as such date may be
extended as provided in subparagraph 3(b).
(11) Permitted Use: Any lawfully permitted use which does not
require any variance or other relief from applicable law and
for no other purpose.
(12) Tenant's Standard Industrial Classification Number:
5141.
(13) Tenant's address: 380 Middlesex Avenue, Carteret, New
Jersey 07008
(14) Landlord's address: c/o Amax Realty Development, Inc.,
300 Middlesex Avenue, Suite D, Carteret, New Jersey
07008
(15) Broker: Jacobson, Goldfarb & Tanzman Associates
(16) Security: By good funds and/or Letter of Credit an amount
equal to two (2) months Fixed Rent.
2
<PAGE>
W I T N E S S E T H
1. Premises. The Landlord hereby leases the Premises to Tenant and
Tenant hereby takes the Premises from Landlord, subject however, to all of the
terms, covenants, provisions and conditions herein set forth, mortgages and
ground leases as set forth on Exhibit "A-1", and to all other liens,
encumbrances, conditions, rights, easements, restrictions, rights-of-way,
covenants and matters of record shown on Exhibit "A-1", and all present and
future zoning and building laws, ordinances, regulations and codes affecting or
governing the Building and/or Land or which hereafter may affect or govern the
Building and/or Land.
TO HAVE AND TO HOLD the Premises for the Term and at the rents herein
set forth.
2. Term.
(a) The Term shall commence on the Commencement Date and shall
terminate on the Termination Date, unless sooner terminated or extended as
herein expressly provided.
(b) For purposes of this lease, a "Lease Year" shall be deemed
to be each consecutive period of twelve (12) months during the Term, starting on
the Commencement Date, except that the last Lease Year shall include the period
of time from the expiration of the prior Lease Year to the Termination Date.
3. Completion and Possession.
(a) Landlord shall construct and complete the Building in a
good, workmanlike and diligent manner and in compliance with all applicable
laws, ordinances, rules and regulations of any duly constituted governmental
authority having jurisdiction thereof and shall deliver possession of the Base
Building and the Initial Mezzanine Area on March 1, 1998 ("Delivery of
Possession Date"). For purposes of this Paragraph 3, Initial Mezzanine Area
shall mean the Battery Charging Area as shown on Exhibit "B" attached hereto,
and the Subsequent Mezzanine Area shall mean all other work relating to the
Mezzanine Area, as shown on Exhibit B. Delivery of Possession of (i) the Base
Building and the Initial Mezzanine Area including the parking area or (ii) the
Subsequent Mezzanine Area, as the case may be, by Landlord to Tenant shall be
deemed to have been made when Landlord shall have given Tenant notice of all of
the following:
(i) The Base Building and the Initial Mezzanine
Area, including the parking area, or the Subsequent Mezzanine Area, and all
improvements required on Exhibit "B" as shall be necessary to obtain a
Certificate of Occupancy for (i) the Base
Building and the Initial Mezzanine Area or (ii) the Subsequent Mezzanine Area
have been Substantially Completed, as hereinafter defined, in accordance with
the requirements hereof, subject however to the provisions of subparagraph 3(c)
hereof; and
(ii) All utilities, refrigeration, heating and air
conditioning systems serving the Base Building and the Initial Mezzanine Area or
the Subsequent Mezzanine Area are new, have been installed and are in working
order; and
(iii) The issuance of a Certificate of Occupancy
for the Base Building and the Initial Mezzanine Area or the
Subsequent Mezzanine Area.
(b) The parties hereto agree that this Paragraph 3 constitutes
an express provision as to the times at which Landlord shall deliver possession
of the Premises to Tenant. Tenant shall not have any claim against Landlord, and
Landlord shall have no liability to Tenant, by reason of any postponement of the
Delivery of Possession of (i) the Base Building
3
<PAGE>
and the Initial Mezzanine Area, or (ii) the Subsequent Mezzanine Area, except as
provided in subparagraphs 3(d) and 5(a) hereof, and Tenant hereby waives any
rights to rescind this lease which Tenant otherwise might have pursuant to any
law now or hereafter in force, except as otherwise provided in this Paragraph 3.
(c) The Base Building and the Initial Mezzanine Area, including
the parking area shall be deemed "Substantially Complete" or "Substantially
Completed," and Delivery of Possession thereof shall be deemed to have occurred
notwithstanding that the truck heaters and striping for the parking area shall
not be completed, that the landscaping shall not be completed and that minor or
insubstantial details of construction, installation, decoration, finishing work
or mechanical adjustments remain to be done therein provided same would not
unreasonably interfere with Tenant's use and occupancy thereof. The Subsequent
Mezzanine Area shall be deemed "Substantially Complete" or "Substantially
Completed" and Delivery of Possession thereof shall be deemed to have occurred
notwithstanding that the landscaping shall not be completed and that minor or
insubstantial details of construction, installation, decoration, finishing work
or mechanical adjustments remain to be done therein provided same would not
unreasonably interfere with Tenant's use and occupancy thereof.
(d) If Landlord shall not cause Delivery of Possession of the
Base Building and the Initial Mezzanine Area to occur within one hundred eighty
(180) days following the Delivery of Possession Date, then Tenant, at any time
thereafter, but prior to the Commencement Date, shall have the right to
terminate this lease on notice to Landlord. The provisions of this subparagraph
3(d) and subparagraph 5(a) shall constitute the sole and
exclusive rights and remedies to which Tenant shall be entitled in the event the
Commencement Date does not occur in accordance with the provisions of Paragraph
3 of this lease.
(e) Landlord shall proceed diligently, subject to Tenant
Delay, as defined in subparagraph 3(g) hereof and/or Unavoidable Delays, as
defined in Paragraph 28 hereof, to Substantially Complete the remainder of the
parking area and the Subsequent Mezzanine Area on or before June 1, 1998, and in
no event prior to the Substantial Completion of the Base Building and Initial
Mezzanine Area.
(f) (Intentionally Omitted)
(g) If as a consequence of any Tenant Delay, the Delivery of
Possession of the Base Building and the Initial Mezzanine Area or the Subsequent
Mezzanine Area shall be delayed, despite the application by Landlord of due
diligence (which shall not include overtime or weekend work), then and in such
event, the Commencement Date and/or the Subsequent Mezzanine Area Commencement
Date, as the case may be, shall be deemed to be the date on which the Delivery
of Possession of the Base Building and the Initial Mezzanine Area or the
Subsequent Mezzanine Area would have occurred had it not been for said Tenant
Delay as set forth in a notice delivered by Landlord to Tenant, provided,
however, Landlord's declaration of such date shall be without prejudice to
Tenant's rights to object to said date. Tenant Delay shall be defined as the
actual delay incurred in Landlord's failure to cause Delivery of Possession of
the Base Building and the Initial Mezzanine Area and/or the Subsequent Mezzanine
Area as a result of any of the following: (i) changes resulting in work orders
requested by Tenant only to the extent Landlord shall have notified Tenant at
the time of such work order(s) of its reasonable estimate of the number of days
the Delivery of Possession of the Base Building and the Initial Mezzanine Area
and/or the Subsequent Mezzanine Area may be extended and Tenant consents to the
performance of such work order(s); (ii) Tenant's default under the terms or
provisions of this lease and failure to cure such default within the time
4
<PAGE>
periods provided for in this lease following delivery of notice to Tenant by
Landlord; or (iii) the performance or non-performance of any other work
performed, or which is to be performed, by Tenant which delays or prevents the
Substantial Completion of the Base Building and Initial Mezzanine Area or the
Subsequent Mezzanine Area, including the issuance of a Certificate of Occupancy
or any other required governmental approval.
(h) (Intentionally Omitted)
(i) (Intentionally Omitted)
(j) If, as a result of any Tenant Delay, Landlord
incurs additional costs in excess of the cost Landlord would have incurred but
for such Tenant Delay, such additional cost shall be paid by Tenant to Landlord,
as Additional Rental, within thirty (30) days after Landlord submits a bill to
Tenant for the same.
(k) Subject to the provisions of subparagraph 5(a), Tenant,
upon Delivery of Possession of the Base Building and the Initial Mezzanine Area
or the Subsequent Mezzanine Area, shall be conclusively deemed to have certified
to Landlord and its mortgagee that the Term and the date for the payment of
Rental therefor pursuant to this lease shall have commenced, that there is not
then any offset against any Rental to be paid pursuant to this lease nor any
violation of any of the terms of this lease on the part of Landlord, that
Landlord, as of the date thereof, has performed all of its obligations
hereunder, and that the Base Building and the Initial Mezzanine Area or the
Subsequent Mezzanine Area, as the case may be, is in satisfactory condition as
of the date of such delivery, subject solely to latent defects and minor items
to be set forth on a "punch list" and such other items as Tenant shall specify
in a notice to Landlord, which punch list and notice shall be submitted to
Landlord within sixty (60) days following the Commencement Date of the Base
Building and the Initial Mezzanine Area or within sixty (60) days following the
Subsequent Mezzanine Area Commencement Date, as the case may be, and completed
by Landlord in each case within sixty (60) days thereafter. Nothing in this
subparagraph 3(k) shall affect, modify or lessen the guaranty of Landlord set
forth in subparagraph 10(b) of this lease. The foregoing provisions shall be
self-operative and no further instrument or other writing shall be required
unless any Permitted Mortgagee, as defined in Paragraph 26, shall deem the same
appropriate, in which event Tenant promptly shall execute any instrument or
other writing containing the foregoing and such other similar provisions in
regard to the condition of the Premises, the Rental and the Term, as shall be
reasonably requested by said Permitted Mortgagee.
(l) Intentionally deleted.
(m) At all times prior to the Commencement Date, Landlord shall
permit Tenant to enter the Premises for the purpose of performing Tenant's Work,
and any work necessary in order to prepare the Premises for its occupancy, at
its sole risk, cost and expense. From and after the date hereof, Landlord shall
provide Tenant access to the Building prior to the Commencement Date so that
Tenant may install Tenant's racks for the warehousing of its goods, all at
Tenant's sole risk, cost and expense. Tenant agrees that during the course of
any work which it performs, whether performed prior to or subsequent to the
Commencement Date, it will: (i) not damage, delay or interfere with any work
being performed by Landlord or any other persons in or about the Premises; (ii)
comply with all procedures and regulations reasonably prescribed by Landlord
from time to time for coordination of such work and activities with any other
work being performed in or about the Premises by Landlord, its designees or
contractors; (iii) not do or permit anything to be done which would interfere
with the construction or operation of any work or activities being conducted by
Landlord or any other persons in or about the Premises. Landlord shall
5
<PAGE>
immediately notify Tenant of any such circumstance when Landlord learned, or
reasonably shall have learned, of such delay. If Tenant fails or refuses to
comply with any of the foregoing obligations of this Paragraph, then in addition
to any other rights and remedies to which Landlord may be entitled, Landlord
shall have the right to require Tenant to immediately cease the performance of
such work and activities until the Commencement Date.
(n) Any access or possession by Tenant prior to the
Commencement Date shall be subject to all of the terms, provisions, covenants
and conditions of this lease except for the payment of Rental (as defined in
Paragraph 5 of this lease), provided, however, Tenant agrees to maintain such
insurance as is required pursuant to subparagraphs 7(a)(ii), (iii), (b) and (c)
hereof, together with an installation floater insurance policy or endorsement to
insure the improvements, work, furniture, fixtures and equipment performed,
installed or located on the Premises by Tenant.
(o) Tenant, at its sole cost and expense, shall be required to
procure any and all approvals from any governmental authorities having
jurisdiction thereover, relating to or arising out of, Tenant's Work, the
business of Tenant or its use or occupancy of the Premises; which approvals
shall include but shall not be limited to, applicable use permits, Certificates
of Continued Occupancy, any other permits and any environmental protection
approvals, other than the Certificate(s) of Occupancy to be obtained by Landlord
hereunder. Tenant agrees to make prompt application and to proceed diligently
and in good faith to procure all necessary approvals (collectively,
"approvals"), including all work in connection therewith, and within ten (10)
days following request therefor, to furnish Landlord with true copies of all
writings submitted or received in connection therewith and forthwith to notify
Landlord in writing of all determinations regarding such approvals.
(p) Landlord agrees that during the course of completing the
Subsequent Mezzanine Area, Landlord will not damage, delay or interfere with the
activities of Tenant on or at the Premises, will comply with all procedures and
regulations reasonably prescribed by Tenant from time to time for coordinating
of Landlord's work in completing the Subsequent Mezzanine Area with the
activities of Tenant on or at the Premises, and will comply with the provisions
of subparagraph 14(a) hereof.
4. (Intentionally Omitted)
5. Rental.
(a) Tenant covenants and agrees to pay to Landlord the Fixed
Rent, from and after the Commencement Date for the Base Building and the Initial
Mezzanine Area and from and after the Subsequent Mezzanine Area Commencement
Date for the Subsequent Mezzanine Area respectively, in advance, in equal
monthly installments on or before the first business day of each calendar month
during the Term, provided, however, notwithstanding anything to the contrary
contained in this lease, in no event shall Fixed Rent be due or payable prior to
March 1, 1998. If the Commencement Dates for the Base Building and the Initial
Mezzanine Area and/or the Subsequent Mezzanine Area shall be other than the
first day of a month, the Monthly Fixed Rent therefor shall be paid on the
applicable Commencement Date and on the first business day of the last month of
the Term on a pro rata basis for the fractional part of the month between the
date same is due and the last day of said month or the Termination Date, as the
case may be. Notwithstanding anything to the contrary contained in this lease,
Tenant shall have no obligation to pay Fixed Rent until such time as Landlord
causes the Delivery of Possession of the Base Building and the Initial Mezzanine
6
<PAGE>
Area or the Subsequent Mezzanine Area in accordance with subparagraphs 3(a),
3(b), 3(c), 3(g) and 3(m) hereof.
(b) (Intentionally Omitted)
(c) All charges, including Taxes as defined in Paragraph 19,
other than Fixed Rent payable pursuant to this lease herein are called
"Additional Rental." All payments of Additional Rental, except as otherwise
provided herein, shall be due and payable to Landlord in the same manner as is
set forth in subparagraph 5(a) on the first business day of the calendar month
or thirty (30) days following demand therefor, whichever shall later occur.
(d) The Fixed Rent and Additional Rental herein are referred
to collectively as "Rental". All Rental payments shall be paid to Landlord at
the address above designated or to such other place as Landlord may designate,
without any prior notice or demand therefor and without any deduction, abatement
or setoff, except as otherwise provided in this lease.
(e) If any payment of Rental due hereunder shall be overdue for
at least five (5) days, a "late charge" may be charged at the rate of one and
one-half percent (1-1/2%) per month on any Rental which is overdue, computed
from the due date until payment thereof, provided however, that such late charge
may not be imposed for the first three (3) times during any twelve (12) month
period in which any payment of Rental is late, unless Landlord shall not have
received such Rental payment within forty-eight (48) hours following delivery of
notice to Tenant of such non-payment. This charge shall be in addition to and
not in lieu of any other remedy Landlord may have under the circumstances and is
in addition to any charge by Landlord to Tenant for reasonable fees and charges
of any agents or attorneys Landlord may employ as a result of any default in the
payment of Rental hereunder whether authorized herein or by law. Any such "late
charge", if not previously paid, at the option of Landlord, shall be added to
and shall become part of the succeeding Rental payment to be made hereunder and
shall be deemed to constitute Additional Rental.
(f) It is the intention of the parties hereto that the Fixed
Rent payable hereunder shall be absolutely net to Landlord, so that this lease
shall yield to Landlord the annual Fixed Rent specified herein during the Term,
and that all costs, expenses and obligations of every kind and nature whatsoever
relating to the Premises shall be paid by Tenant, except as otherwise
specifically provided for herein.
6. Use.
(a) The Premises are to be used by Tenant solely for the
Permitted Use in accordance with all applicable rules, regulations, laws,
ordinances and requirements of governmental authorities; and all applicable
terms and provisions of this lease, including but not limited to, the
prohibition against exceeding floor capacity and the prohibition against
committing waste on or to all or any portion of the structure and/or any other
portion of the Building or to any other improvement on the Premises which
Landlord is obligated to repair, maintain and/or replace, and for no other
purposes.
(b) As long as Tenant shall use substantially all of the
Premises for the warehouse and distribution to supermarkets of a majority of the
Grocery and/or Frozen Food Products (as defined on Exhibits "L" and "L-1"
attached hereto, respectively), for its own account, Landlord agrees to the
following:
(i) If Site 6 (as set forth on the map of the
Industrial Park, as hereinafter defined) is improved as a public cold storage
facility:
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(A) It cannot be used to store products
for nor leased to (i) C&S Wholesale Grocers, Inc., (ii) Richfood Holdings, Inc.,
(iii) Super Valu, Inc., (iv) Bozzutos, Inc., (v) Twin County Grocers, Inc., or
(vi) any of their "Related Parties."
(B) "Related Parties" means any of the
designated entity's (i) successors or assigns, whether by merger, sale of
stock or assets or otherwise, or (ii) direct or indirect parent, subsidiaries
or affiliates (which for purposes hereof shall mean any entity which directly
or indirectly owns more than 50% in interest of the designated entity, or in
which the designated entity owns more than 50% in interest in such entity, or
as to which there is direct or indirect common ownership with the designated
entity to the extent of more than 50%).
(ii) Not more than an aggregate of seventy-five
thousand (75,000) square feet of rentable square footage of any presently
unimproved site subsequently improved at the Industrial Park ("Subsequent Site")
(including Site 6 except during such period that it is used as a public cold
storage facility) can be used (other than by Tenant or any of Tenant's
Affiliates) by an entity engaged at such Site in the business of warehousing and
distribution of a majority of the Grocery Products which are not produced or
manufactured by such entity and/or any of its Related Parties; and not more than
an aggregate of fifty (50,000) thousand square feet of rentable square footage
of a Subsequent Site can be used (other than by Tenant or any of Tenant's
Affiliates) by an entity engaged at such Site in the business of warehousing and
distribution of a majority of the Frozen Food Products which are not produced or
manufactured by such entity and/or any of its Related Parties, to any
supermarket owned or operated by (i) The Great Atlantic & Pacific Tea Company,
Inc., (ii) Kings Supermarkets, Inc., (iii) Giant Food, Inc., (iv) King Kullen,
(v) Red Apple Group, Inc., (vi) Foodtown, or (vii) any of their Related Parties.
(iii) During the first ten (10) Lease Years of this
lease, not more than an aggregate of fifty (50,000) thousand square feet of
rentable square footage of a Subsequent Site can be used (other than by Tenant
or any of Tenant's Affiliates) by an entity engaged at such Site in the business
of warehousing and distribution of a majority of the Dairy Products (as defined
on Exhibit L-2 attached hereto), which are not produced or manufactured by such
entity and/or any of its Related Parties, to any supermarket owned or operated
by (i) The Great Atlantic & Pacific Tea Company, Inc., (ii) Kings Supermarkets,
Inc., (iii) Giant Food, Inc., (iv) King Kullen, (v) Red Apple Group, Inc., (vi)
Foodtown, or (vii) any of their Related Parties; provided however that if Tenant
shall have leased additional premises within the Industrial Park for the
warehousing and distribution of a majority of the Dairy Products to
supermarkets, for its own account, within the first ten (10) Lease Years, and if
such lease shall deal with use restrictions of Dairy Products, and specifically
provide that it shall supersede the applicable use restriction provisions of
this lease, then the provisions of this subparagraph (b)(iii) shall become null
and void and of no further force and effect as of the commencement of such
subsequent lease and the provisions of such subsequent lease shall control the
matters set forth in this subparagraph (b)(iii).
(iv) It is specifically understood and agreed that
the restrictions set forth in subparagraph 6(b) hereof shall not apply to any
Permitted Mortgagee and/or any other subsequent owner of any such Subsequent
Site which shall acquire title through, by or as a result of foreclosure
proceedings or a deed in lieu of foreclosure of a mortgage held by a Permitted
Mortgagee, and/or their successors and assigns. For the purposes of this
Paragraph 6, Permitted Mortgagee shall mean the entities described in items
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(iv)-(ix) of subparagraph 26(f), and shall not include items (i)-(iii) of
subparagraph 26(f). It is further understood and agreed that the restrictions
set forth in subparagraph 6(b) shall become null and void and of no further
force or effect upon the termination of this lease for any reason other than a
permitted termination of this lease by Tenant, if any, due to the default of
Landlord hereunder, or as a result of the sale of the Premises to Tenant,
pursuant hereto.
(v) The foregoing restrictions shall be set forth
in the lease (or other document allowing such use), and in the Memorandum of
Lease referred to in Paragraph 54 hereof.
(vi) If Landlord does not include the aforesaid
appropriate restrictions in the lease or other document allowing such use and
the Memorandum of Lease, and if such user violates said restriction, then Tenant
shall be entitled to seek injunctive relief and/or damages against Landlord and
such user incurred as a result of such violation. If Tenant shall prevail in
such proceedings, then it shall be entitled to be reimbursed by Landlord for its
reasonable legal fees and costs incurred in maintaining such proceeding(s).
(vii) If Landlord includes the aforesaid
appropriate restrictions in the lease or other document allowing such use and
the Memorandum of Lease, and if such user violates said restriction, then
Tenant, as its sole and exclusive remedy against Landlord, shall have the right
to require that Landlord assign to Tenant all of its rights to enforce such
restrictions. Each lease (and other relevant document) shall provide
specifically that Tenant is a third party beneficiary of such restrictions, with
full rights to enforce such restrictions.
(viii) These leasing/use restrictions shall bind
Landlord and its successors and assigns with respect to Site 6 and every
Subsequent Site, and Landlord will advise all of its successors and assigns of
such restrictions.
7. Insurance.
(a) Tenant shall provide, on or before the Commencement Date,
and shall keep in force at all times during the Term, at its sole cost and
expense:
(i) Insurance against physical loss or damage to
the Building and improvements as provided by a standard "All Risk" property
policy including but not limited to, fire and extended coverage and earthquake
coverage, on a full replacement basis, without any co-insurance, with an agreed
amount endorsement initially in the sum of Sixteen Million Five Hundred Thousand
($16,500,000) Dollars, which endorsement amount shall be increased from time to
time, as Landlord reasonably may request, to amounts not less than the actual
replacement cost of the Building and improvements, including improvements,
alterations and additions installed by Tenant. Such policies shall contain an
endorsement to provide for additional coverage resulting from changes in
applicable law, such other endorsements as Landlord reasonably may request from
time to time, and shall contain deductibles of not more than Two Hundred
Thousand and 00/100 Dollars ($200,000.00) per occurrence, as such amount may be
adjusted from time to time in accordance with the percentage increase or
decrease in the Index, as defined in Paragraph 41, over that existing as of the
Commencement Date of this lease, or such other greater amount as the parties
mutually may agree upon;
(ii) Commercial General Liability Insurance
against claims for personal and bodily injury, death or property damage
occurring on, in or as a result of the ownership, occupancy, maintenance or use
of the Premises, in an amount not less than Five Million and 00/100 Dollars
($5,000,000.00) per occurrence/annual aggregate, including all coverage
extensions that are usual and customary for properties of the size and type of
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the Premises provided, however, that Landlord shall have the right to require
such higher limits as it reasonably may request from time to time;
(iii) Worker's Compensation Insurance in
compliance with applicable law covering all persons employed by Tenant in
connection with any work done on or about any of the Premises for which claims
for death, disease or bodily injury may be asserted against Landlord, Tenant or
the Premises, except to the extent to which Tenant is a qualified self-insured;
(iv) Comprehensive Boiler and Machinery Insurance,
including but not limited to Service Interruption, Expediting Expenses, Ammonia
Contamination, Hazardous Clean-Up and Comprehensive Object Definition, in an
amount not less than Five Hundred Thousand and 00/100 Dollars ($500,000.00) for
damage to property, bodily injury or death resulting from such covered perils as
found in a standard Comprehensive Boiler & Machinery Policy. Such policies shall
contain a deductible not to exceed Two Hundred Thousand and 00/100 Dollars
($200,000.00), as such amount may be adjusted from time to time in accordance
with the percentage increase or decrease in the Index over that existing as of
the Commencement Date of this lease;
(v) Rental insurance to provide for loss of all
or any portion of the Rental with such endorsement as may be necessary to
indemnify Landlord against the loss of any Rental as a result of an occurrence
for a period of not less than one (1) year from the time of loss;
(vi) During any period in which alterations (which
shall not include initial construction) at the Premises are being undertaken by
Tenant, Builder's Risk insurance covering the total completed value, without
co-insurance, including any "soft costs" with respect to the improvements being
altered or repaired (on a completed value, non-reporting basis), replacement
cost of work performed and equipment, supplies and materials furnished in
connection with such construction or repair of improvements, together with such
"soft cost" endorsements and such other endorsements as Landlord reasonably may
require with respect to the improvements being constructed, altered or repaired;
(vii) (Intentionally Omitted)
(viii) Such other insurance in connection with
any of the Premises as Landlord reasonably may require, which at the time is
usual and commonly obtained in connection with properties located in
north-central New Jersey similar in type of building and use to the Premises.
Landlord represents that the Premises presently are not located in a flood
hazard zone which requires the maintenance of flood hazard insurance pursuant to
Federal law.
(b) Except as otherwise provided in subparagraph 47(e), Tenant
agrees that its insurance policies to be obtained hereunder shall provide that
the insurance carriers shall waive all rights of subrogation against Landlord
and that such policies shall not be invalidated should the insured waive in
writing prior to a loss any or all right of recovery against any party for
losses covered by such policies. Tenant hereby waives and releases any and all
right of recovery which it otherwise might have against Landlord, its agents and
employees, and all liability or responsibility of Landlord, its agents and
employees, for all injury and for loss or damage to its contents, furniture,
furnishings, fixtures and other property of Tenant, notwithstanding that such
injury, loss or damage may result from the negligence or fault of Landlord or
any of its agents or employees. During the construction of the Building by
Landlord, Landlord agrees to maintain, at its sole cost and expense, Builder's
Risk insurance covering the total completed value, without co-insurance,
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including any "soft costs" with respect to the improvements being altered or
repaired (on a completed value, non-reporting basis), replacement cost of work
performed and equipment, supplies and materials furnished in connection with
such construction or repair of improvements, together with such "soft cost"
endorsements and such other endorsements as Tenant reasonably may require with
respect to the improvements being constructed, altered or repaired.
(c) Landlord agrees that any policies of insurance relating to
the Premises which it may maintain shall provide for a waiver of subrogation in
favor of Tenant in form and substance substantially the same as the waiver of
subrogation in favor of Landlord as required of Tenant pursuant to this
subparagraph 7(c). Landlord acknowledges and Tenant declares that Tenant shall
have and does not waive any claim against Landlord for any injury, loss and/or
damage to its business resulting from Landlord's default or breach of Landlord's
obligations contained in this lease. Except with respect to the provisions
contained in subparagraph 47(e), to the extent Tenant is insured, and to the
extent recovery is obtained by Tenant, which recovery Tenant agrees to
diligently pursue, Tenant waives its right to claim against Landlord for any
injury, loss and/or damage to Tenant's property resulting from Landlord's
default or breach of Landlord's obligations contained in this lease.
(d) Tenant agrees to deliver to Landlord, at or prior to the
Commencement Date, and thereafter at least thirty (30) days prior to the
expiration of any such policy, a certificate of insurance (Accord 27) of all
policies procured by Tenant in compliance with its obligations hereunder,
together with evidence of payment therefor. All of said policies of insurance
shall be for the mutual benefit of and shall name Landlord and its designees
(without any obligation to pay premium) as named insureds on all policies
obtained pursuant to subparagraphs 7(a)(i), (iv) and (v) hereof, as well as
additional insureds as to subparagraph 7(a)(ii) and as additional insureds as
their interests may appear, as to insurance policies obtained pursuant to
subparagraph 7(a)(vi) hereof. All insurance policies shall be in form, amounts,
including deductibles (except as otherwise herein provided), and with insurance
companies licensed to do business in the State of New Jersey and reasonably
satisfactory to Landlord and its mortgagee. All such policies shall contain
standard non-contributory mortgagee clauses in favor of Landlord's mortgagee, to
the extent applicable, and an endorsement stating that such insurance may not be
canceled and/or amended except upon not less than thirty (30) days' prior notice
to Landlord and any designee of Landlord for any reason other than non-payment
of premium, and upon not less than fifteen (15) days prior notice for
non-payment of premium, and shall provide that any loss otherwise payable
thereunder shall be payable notwithstanding: (i) any act or omission of
Landlord, Ground Lessor, any mortgagee or Tenant which might, absent such
provision, result in a forfeiture of all or part of such insurance payment; (ii)
the occupation or use of any of the Premises for purposes more hazardous than
those permitted by the provisions of such policy; (iii) any foreclosure or other
action or proceeding taken by a mortgagee pursuant to any provision of the
mortgage, note, assignment or other document evidencing or securing any loan
encumbering the Premises upon the happening of an event of default therein; or
(iv) any change in title to or ownership of any of the Premises.
(e) Anything in this Paragraph 7 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant
hereto may be carried pursuant to a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise shall comply with the provisions of
this Paragraph 7, and provided further that such policy or policies shall
provide for a reserved amount thereunder with respect to the Premises so as to
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assure that the amount of insurance required by this Paragraph 7 will be
available notwithstanding any losses with respect to other property covered by
such blanket policies. The amount of the total insurance allocated to the
Premises, which amount shall be not less than the amounts required pursuant to
this Paragraph 7, shall be specified either: (i) in each such "blanket" or
umbrella policy; or (ii) in a written statement, which Tenant shall deliver to
Landlord, from the insurer thereunder. Tenant shall deliver certificates (Accord
27) of any such "blanket" or umbrella policy to Landlord in accordance with the
provisions hereof.
(f) Tenant shall not carry separate insurance concurrent in
form or contributing in the event of a casualty, with that required in this
Paragraph 7 unless: (i) Landlord, Ground Lessor and any mortgagee are included
therein as named insureds, with loss payable as provided herein; and (ii) such
separate insurance complies with the other provisions of this Paragraph 7.
Tenant shall notify Landlord immediately of such separate insurance and shall
deliver to Landlord the original policies or certified copies thereof in
accordance with the provisions of this Paragraph 7.
8. (Intentionally Omitted)
9. Fire and Other Casualty.
(a) In case of fire or other casualty, Tenant shall give
immediate notice to Landlord. If the Premises shall be damaged by fire, the
elements or other casualty and the lease shall not terminate as hereinafter
provided in this paragraph 9, then Landlord shall repair the same in accordance
with the provisions of this Paragraph 9. Landlord shall proceed diligently to
repair or restore the Premises to a condition of like kind and quality as
delivered by Landlord at the Commencement Date, and Tenant's obligation to pay
Rental hereunder shall abate, in the same proportion which the square footage of
the portion of the Building rendered untenantable bears to the total square
footage of the Building, until such time as Landlord shall Substantially
Complete the repair or restoration of the Building. If any casualty should
result in all or any portion of the Building not being able to be refrigerated
in accordance with the provisions of Exhibit B, the Building or such portion
thereof shall be deemed to be untenantable for purposes of this Paragraph 9. So
long as Landlord is not in default of any of the terms, covenants or conditions
of this lease, a sum equal to the deductible amounts set forth in the casualty
and/or comprehensive boiler and machinery insurance policies, if applicable,
maintained by Tenant pursuant to the provisions of paragraph 7 of this lease,
and an amount equal to all insurance proceeds not received by Landlord as a
result of acts of commission and/or omission of Tenant, shall be paid over by
Tenant to Landlord, within thirty (30) days following demand therefor, whether
or not Landlord shall be required to rebuild which payment shall be deemed to
constitute Additional Rental. Landlord shall be required to repair, restore or
replace any work, non-trade fixtures, alterations, additions or improvements
installed by Tenant which became part of the Building, and which shall have been
included within the casualty insurance to be maintained by Tenant pursuant to
Paragraph 7. In no event shall Landlord be required to repair, restore or
replace any furniture, trade fixtures, equipment or contents (including without
limitation Tenant's racks) provided by Tenant or any Personal Property as
defined in Paragraph 27.
(b) In the event that the repairs or restoration are not
Substantially Complete within the earlier of (i) twelve (12) months from the
date of the issuance of a building permit with respect to such repairs or
restoration, or (ii) eighteen (18) months from the date of casualty, Tenant
shall have the right to terminate this lease and vacate the Premises within
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thirty (30) days thereafter by notice to Landlord which termination shall take
effect at any time within twenty-four (24) months following the expiration of
such time to rebuild as aforesaid. Until such termination and vacatur, each
party shall continue to perform its applicable obligations hereunder, and Tenant
shall pay the Rental herein reserved, except to the extent abated as provided in
subparagraph 9(a), which obligations shall terminate as of the date Tenant shall
vacate the Premises. To the extent Tenant reoccupies any space for which the
Rental was previously abated as provided in subparagraph 9(a), Tenant agrees to
resume the payment of Rental for such space until Tenant shall vacate such space
as provided herein. Each party shall perform its applicable obligations
hereunder upon the termination of the lease, and thereafter neither party shall
have any further obligation or liability to the other hereunder.
(c) Notwithstanding the foregoing provisions of this Paragraph
9, in the event that a portion of the Building is destroyed or damaged by fire
or other casualty during the last two (2) years of the then Term which portion
would require more than one hundred twenty (120) days to restore, in the
reasonable estimate of Landlord, then Landlord or Tenant, within thirty (30)
days after notice of Landlord's reasonable estimate that repairs will take more
than one hundred twenty (120) days to restore, which notice shall be given no
later than thirty (30) days after the casualty, shall have the right to
terminate this lease on thirty (30) days notice to the other, and the Term of
this lease shall end and expire at the end of such thirty (30) day period as the
same may be extended by Tenant (but not beyond expiration of the Term) to permit
it a reasonable time to relocate its on-going operation from the Premises as if
such date was the date set forth in this lease for the expiration of the Term
hereof. Until such termination and vacatur, each party shall continue to perform
its applicable obligations hereunder, and Tenant shall pay the Rental herein
reserved, except to the extent abated as provided in subparagraph 9(a), which
obligations shall terminate as of the date Tenant shall vacate the Premises. To
the extent Tenant reoccupies any space for which the Rental was previously
abated as provided in subparagraph 9(a), Tenant agrees to resume the payment of
Rental for such space until Tenant shall vacate such space as provided herein.
Each party shall perform its applicable obligations hereunder upon the
termination of the lease, and thereafter neither party shall have any further
obligation or liability to the other hereunder. If Landlord shall have exercised
the option to terminate, and if there then shall remain unexercised a right on
Tenant's part to extend the Term of this lease, Tenant shall have the right to
supersede Landlord's notice of termination within fifteen (15) days of the
receipt of Landlord's notice of termination, by exercising its option to extend
the Term of this lease, in which case Landlord and Tenant shall be obligated to
perform its obligations as set forth in subparagraphs 9(a) and 9(b).
(d) In the event this lease shall be terminated pursuant to
the provisions of subparagraphs 9(b) or (c), then all insurance proceeds
received from insurance policies maintained by Tenant insuring the Building and
improvements, as a result of such occurrence, shall be distributed in the
following order:
(i) To the then holder of any mortgage(s)
encumbering the Premises in such amount as shall be required to pay and satisfy
said mortgage(s) in accordance with its terms;
(ii) To Tenant on account of alterations or
additions to the Premises for which Tenant shall have paid, which have become
part of the Premises and which are included in the insurance policies maintained
by Tenant insuring the Building and improvements, in an amount equal to the then
Book Value of such alterations or additions as shown on the books and records of
Tenant. Book Value shall be determined in accordance with generally accepted
accounting principles and shall mean the undepreciated cost to Tenant of all
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such alterations or additions as of said casualty, based on the useful life of
such improvements pursuant to the Internal Revenue Code of 1986, as amended
("Code"), and employed by Tenant in filing its tax return(s). Tenant shall
provide Landlord with a statement setting forth the Book Value of such Tenant
property, together with supporting documentation, within ten (10) days following
request therefor. If the insurance proceeds shall not be sufficient to pay
Tenant the amount due pursuant to this subparagraph 9(d)(ii), then Landlord
agrees to pay to Tenant the balance of any amounts due Tenant pursuant to this
subparagraph upon receipt of the award from the insurance company.
(iii) To the Tenant on account of alterations or
additions to the Premises for which Tenant shall have paid, which have become
part of the Premises and which are included in the insurance policies maintained
by Tenant insuring the Building and improvements, in an amount equal to the then
replacement value of such alterations or additions less any payment received in
(ii) above.
(iv) The balance of any such proceeds shall be
payable to Landlord.
(e) No damages, compensation or claim shall be payable by
Landlord for inconvenience, loss of business or annoyance arising from any
repair or restoration of any portion of the Premises, except to the extent the
same are includable in any claim for damages that Tenant may have against
Landlord due to Landlord's breach of its obligations under this lease. Landlord
shall use its best efforts to effect such repair or restore promptly and in such
manner as not unreasonably to interfere with Tenant's use and occupancy, in
accordance with the provisions of subparagraph 14(a) hereof.
(f) The foregoing provisions relating to termination of lease
due to damage to or destruction of the Premises by any cause whatsoever shall be
binding on the parties and are in lieu of all additional or other termination
rights as Tenant otherwise might have pursuant to any law or statute.
10. Repairs and Maintenance.
(a) Tenant acknowledges that as of the Commencement Date, it
shall have inspected and examined the Premises and that it has entered into this
lease without any representations on the part of Landlord, its agents or
representatives, as to the condition thereof, including, but not limited to, its
environmental condition, except as otherwise provided in this lease. Tenant, at
its sole cost and expense, shall take good care of the Premises and shall keep,
repair, replace and maintain the Premises in good order, condition and repair,
and each and every part thereof (including, without limitation, the repair,
maintenance and replacement of any heating, ventilating, air-conditioning and
refrigeration systems, painting and decorating), except only such matters that
are expressly stated herein to be within Landlord's obligation to maintain and
repair. Tenant shall not cause nor permit any dirt, debris or rubbish to be put,
placed or maintained on the sidewalks, driveways, parking lots, yards, entrances
and curbs, in, on or adjacent to the Building and/or Land and shall remove same
at its sole cost and expense. Tenant further agrees to keep the Premises in a
clean and sightly condition and well lit during appropriate hours.
(b) Landlord shall guarantee that the initial construction of
the Building, including refrigeration equipment, shall be free from defect in
materials and workmanship for the First Lease Year, and Landlord shall, within
said First Lease Year, promptly repair any and all portions of the Building
which are in need of repair unless caused by the act, omission or negligence of
Tenant, any subtenant or concessionaire, or their respective employees, agents,
invitees, licensees or contractors. During the Term, Landlord, upon reasonable
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notice from Tenant, shall keep in good order and condition and make all
necessary repairs or replacements to the "Structure," which is deemed to mean
the steel, joists, footings and foundations, floors and exterior or load bearing
walls, roof supports, decking or roof membrane, excluding, however, all windows,
doors, plate glass, signs and all repairs or replacements required by any
casualty, except as otherwise provided in Paragraphs 9 and 13 hereof. Any
repairs or replacements to the Structure resulting from damage caused by any
act, omission or negligence of Tenant, any subtenant or concessionaire, or their
respective employees, agents, invitees, licensees or contractors shall be
performed by Landlord and the reasonable cost thereof paid by Tenant and shall
be deemed to constitute Additional Rental. Upon the expiration of the aforesaid
applicable guarantee period, Landlord shall assign to Tenant, without recourse,
all of its right, title and interest in and to all warranties and guarantees
from manufacturers or subcontractors, relating to the obligation of Tenant to
repair and maintain the Premises, including refrigeration equipment. Tenant, at
its sole cost and expense, shall have the right to obtain or request that
Landlord obtain and thereafter assign to Tenant, without recourse, extended
guarantees from manufacturers or contractors, if available, regarding the
Building, including refrigeration equipment. Tenant shall be entitled to a
credit against payments due pursuant to this subparagraph 10(b) in an amount
equal to insurance proceeds received by Landlord on account of the damage caused
by Tenant, from liability or casualty insurance policies maintained by Tenant or
Landlord, it being acknowledged that Tenant shall not be entitled to a credit
for the cost of the aforesaid repairs on account of Rental insurance proceeds
received by Landlord.
(c) Landlord shall guarantee that the Building envelope and
insulation will be constructed in such manner as to allow the freezer area of
the Building to be refrigerated to temperatures of 20(degree) below zero
fahrenheit as specified in Exhibit B, at all times during the first five (5)
Lease Years of the Term, and Landlord, during the first five (5) Lease Years, at
its sole cost, shall repair promptly any and all portions of the Building which
are in need of such repair so as to provide said temperatures, unless caused by
the act, omission or negligence of Tenant, any subtenant or concessionaire or
their respective employees, agents, invitees, licensees or contractors. Any
repairs or replacements to the Building pursuant to the provisions of this
subparagraph (c) resulting from damage caused by any act, omission or negligence
of Tenant, any subtenant or concessionaire, or their respective employees,
agents, invitees, licensees or contractors shall be performed by Landlord and
the reasonable cost thereof paid by Tenant and shall be deemed to constitute
Additional Rental. Upon the expiration of the aforesaid guarantee period,
Landlord shall assign to Tenant, without recourse, all of its right, title and
interest in and to all warranties and guarantees from manufacturers or
subcontractors, if available, relating to the envelope and insulation of the
Building. Tenant, at its sole cost and expense, shall have the right to obtain
or to request that Landlord obtain and thereafter assign to Tenant, without
recourse, extended guarantees from manufacturers or contractors, regarding the
envelope and insulation of the Building as set forth above.
11. Covenants Against Liens.
(a) Tenant shall not do any act, nor make any contract which
may create any lien or other encumbrance upon all or any part of the Premises,
nor permit nor suffer same, on account of work performed or materials supplied
or furnished for or to Tenant or the Premises. If, because of any act or
omission (or alleged act or omission) of Tenant, any mechanic's or other lien or
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encumbrance shall be filed against all or any part of the Premises, whether or
not such lien or encumbrance is valid or enforceable as such, Tenant, at its
sole cost and expense, shall cause same to be discharged of record or bonded
within thirty (30) days after notice to Tenant of the filing thereof; and Tenant
shall indemnify and save harmless Landlord against and from all damages, costs,
liabilities, suits, penalties, claims and demands, including reasonable counsel
fees resulting from the creation of such lien or encumbrance. If Tenant fails to
so comply, Landlord shall have the option, in addition to declaring a default
hereunder, of discharging or bonding any such lien or encumbrance, and Tenant
agrees to reimburse Landlord for all reasonable costs, legal fees and other
expenses incurred in connection therewith, together with interest thereon at the
lesser of: (i) the annual rate equal to two percent (2%) above the annual prime
interest rate extended by Chase Manhattan Bank, N.A. at its New York office as
of the date of payment by Landlord; or (ii) the highest rate permitted by law to
be charged to Tenant, (said rate of interest hereinafter being called the "Lease
Interest Rate"), which interest shall commence to run as of the date of payment
and which sums, including the said interest, shall be deemed to constitute
Additional Rental. All materialmen, contractors, artisans, mechanics, laborers
and any other persons now or hereafter contracted by Tenant for the furnishing
of any labor, services, materials, supplies or equipment, at any time from the
date hereof until the end of the Term; hereby are charged with notice that they
must look exclusively to Tenant to obtain payment for same. Tenant, following
notice to Landlord, shall have the right to contest by appropriate legal
proceedings, at its sole cost and expense, the validity of any mechanic's lien
filed against the Premises; provided, however, that: (i) any noncompliance or
contest shall not constitute a crime on the part of Landlord or otherwise
adversely affect, jeopardize or threaten the interest of Landlord; (ii) Tenant
diligently shall prosecute any such contest to a final determination by a court,
department or governmental authority having final jurisdiction and shall keep
Landlord advised in writing as to all changes in status and determinations in
connection with any such proceedings; (iii) Landlord's interest in the Premises
shall not be jeopardized by such contest; and (iv) Tenant shall indemnify and
save harmless Landlord against and from any and all losses, costs, expenses,
claims, penalties, actions, demands, liabilities, judgments or other damages
which Landlord may sustain by reason of such contest or as a result of Tenant's
failure or delay in compliance, including, without limitation, reasonable
attorneys' fees. Landlord agrees to cooperate reasonably with Tenant and to
execute any documents or pleadings reasonably required for the purpose of any
such contest; provided that the same shall be without cost, expense or
obligation to Landlord. Landlord shall have the right, but not the obligation,
to contest by appropriate legal proceedings, at Landlord's expense, any such
law, ordinance, rule, regulation or requirement.
(b) Nothing in this lease shall be deemed to be, or construed
in any way as constituting, the consent or request of Landlord, expressed or
implied, by inference or otherwise, to any person, firm or corporation for the
performance of any labor or the furnishing of any materials for any
construction, rebuilding, alteration, addition or repair of or to the Premises
or any part thereof, nor as giving Tenant any right, power or authority to
contract for or permit the rendering of any services or the furnishing of any
materials which might in any way give rise to the right to file any lien against
the Premises. Landlord shall have the right to post and keep posted on the
Premises any notices which Landlord shall deem necessary for the protection of
Landlord and/or the Premises from any such lien.
12. Alterations.
(a) Tenant shall not make or cause or permit the making of any
repairs, alterations, additions, or improvements in or to the Premises
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(including, without limitation, any racking or other work performed pursuant to
Paragraph 3) without obtaining Landlord's prior written consent thereto in each
instance, which consent shall not be unreasonably withheld or delayed. Such work
shall not be commenced until Tenant shall submit to Landlord plans and
specifications relating to any such repairs, alterations, additions or
improvements, and all such work shall be performed in accordance with the
provisions of this lease. Landlord shall not be deemed to have unreasonably
withheld its consent if it reasonably determines that such work proposed by
Tenant would reduce the value, size, cubical content or general utility of the
Premises or any portion thereof, impair the architectural harmony of the
Building or increase Landlord's obligation pursuant to this lease unless Tenant
provides Landlord with such assurances as Landlord may reasonably require to
restore the Premises to the extent of such decrease in size, cubical content or
change in architectural harmony, and/or assumes the increased costs to Landlord
of meeting its obligations to Tenant under this lease as a result of the
aforesaid. Any approval by Landlord as aforesaid may be upon condition that
Tenant furnish to Landlord such evidence of Tenant's financial ability as
Landlord reasonably may require, including the furnishing of adequate security,
to assure completion and payment of all work for which the reasonably estimated
cost of completion shall exceed One Hundred Thousand and 00/100 Dollars
($100,000.00), as such amount may be adjusted from time to time in accordance
with the percentage increase in the Index, as hereinafter defined, over that
existing as of the Commencement Date of this lease. All repairs, alterations,
additions or improvements and all Tenant Work, when installed or attached to the
Premises, subject to the provisions of Paragraph 27 of this lease, shall belong
to and become the property of Landlord at the expiration or sooner termination
of this lease and shall be surrendered with the Premises and as part thereof,
without compensation to Tenant. Nothing herein contained shall be construed to
restrict Tenant's right to make any alterations, additions or improvements to
Tenant's own movable trade fixtures.
(b) Any work performed by Tenant, irrespective of cost, shall
be subject to Landlord's inspection and approval after completion to determine
whether it complies with the requirements of this lease. Notwithstanding the
foregoing, Landlord shall not have any obligation to make any inspections or
provide any approval. The approval or consent of Landlord shall not relieve
Tenant of its obligation that all such repairs, alterations, improvements and/or
additions be constructed and performed in a good and workmanlike manner and in
accordance with all applicable governmental requirements, nor constitute a
waiver of any rights of Landlord if Tenant fails to perform its obligations.
Tenant, at its sole cost and expense, shall procure all necessary governmental
approvals, permits or certificates in connection with all work performed by
Tenant in, on or at the Premises and shall deliver the original of all such
approvals, permits or certificates to Landlord to be retained by Landlord.
13. Condemnation.
(a) If the whole or substantially all of the Premises shall be
taken for any public or quasi-public use under any statute or by right of
eminent domain, or by private purchase in lieu thereof, then this lease shall
automatically terminate as of the date that title shall be taken. If at least
thirty percent (30%) of the square footage of the Premises shall be so taken
whether or not said thirty percent (30%) shall be replaceable, then Tenant shall
have the right to terminate this lease on notice to Landlord, given within sixty
(60) days following the date of notice of such taking. If this lease shall
terminate or be terminated, the Rental hereunder shall be equitably adjusted as
of the date of the taking.
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(b) If less than thirty percent (30%) of the square footage of
the Premises shall be so taken, Landlord shall have the right, but not the
obligation, to replace such portion of the Premises so taken in a reasonable
manner within a reasonable period of time either: (i) within the lot lines of
the Premises, if available at such time; or (ii) on lands adjacent to the
Premises and reasonably satisfactory to Tenant. In the event Landlord elects not
to replace such portion of the Premises so taken, Landlord shall notify Tenant
of same within thirty (30) days of the date of the taking, and Tenant shall have
the right to terminate this lease on notice to Landlord, given within sixty (60)
days of Tenant's receipt of Landlord's notice. To the extent any part of the
aforesaid thirty percent (30%) of the square footage of the Premises consists of
unimproved land (i.e. parking spaces, vacant land, etc.), Landlord will be
obligated to replace such portions of the Premises as may have been so taken
with land contiguous to the Premises, only if such contiguous land is then owned
or leased by Landlord and available to be leased.
(c) For purposes of this Paragraph 13, any portion of the
Building which shall not be able to be refrigerated in accordance with the
provisions of Exhibit B, as a result of such taking, shall be deemed to have
been taken by such proceeding.
(d) If this lease shall not terminate pursuant to
subparagraphs 13(a) or 13(b) hereof, the Premises shall thereafter be reduced to
the extent and for so long as not replaced, and the Rental shall be abated
according to the square footage of the Premises so taken to the extent and for
so long as not replaced as provided in subparagraph 13(b) above or as Landlord
and Tenant may otherwise reasonably agree, and this lease, in all other
respects, shall remain in full force and effect. Landlord, at its own cost and
expense, shall restore the remaining portion of the Premises to the extent
necessary to render it reasonably suitable for the purposes for which the
Premises were used immediately prior to such taking, together with such
improvements installed by Tenant which shall have become part of the Building
and the value of which shall have been included in the compensation awarded to
Landlord. Tenant, at its sole cost and expense, shall have the right to
participate in such condemnation proceeding to the extent of its interest in the
proceeds thereof, to include a claim for moving expenses, inventory and/or
movable Tenant fixtures, furniture, and other Personal Property belonging to
Tenant.
(e) If this lease shall terminate pursuant to subparagraph
13(a) or 13(b) hereof, then the condemnation proceeds shall be distributed in
the same manner as insurance proceeds are to be distributed upon termination
pursuant to Paragraph 9 with the understanding that if the condemnation award is
not sufficient to pay Tenant the amount due under subparagraph 9(d)(ii),
Landlord shall be obligated to pay Tenant such monies as Tenant may be entitled
to pursuant to subparagraph 9(d)(ii) upon Landlord's receipt of the condemnation
award. Tenant, however, shall have the right to seek and prosecute any claim
directly against the condemning authority in such condemnation proceedings for
moving expenses, inventory and/or movable trade fixtures, furniture and other
Personal Property belonging to Tenant.
(f) Tenant agrees to execute and deliver such instruments as
may be deemed necessary or required to expedite any condemnation proceedings or
to effectuate a proper transfer of title to such governmental or other public
authority, agency, body or public utility seeking to take or acquire the
Premises or any portion thereof. If this lease shall terminate or a portion of
the Premises shall be taken, Tenant covenants and agrees to vacate the Premises
or potion thereof, as the case may be, and to remove all of its personal
property therefrom and to deliver up peaceable possession thereof to Landlord or
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to such other party designated by Landlord within a reasonable period of time
thereafter so as to permit Tenant to relocate its ongoing operation from the
Premises, subject to the requirements of the condemning authority. Failure by
Tenant to comply with any provision hereof shall subject Tenant to such
reasonable costs, expenses, damages and losses as Landlord may incur, including
attorneys' fees, by reason of Tenant's breach hereof.
14. Access and Right to Exhibit.
(a) Landlord and its designees shall have the right to place
and maintain all utility equipment of any kind in or on the Premises as may be
necessary or desirable to meet Landlord's obligations hereunder, or as may be
otherwise permitted hereunder. Landlord and its designees shall have the right
to enter upon the Premises at all reasonable hours and on reasonable notice (and
in emergencies at all times): (i) to complete the subsequent mezzanine area;
(ii) to inspect the same; (iii) to make repairs or alterations to the Premises
and/or the utility lines serving same; or (iv) to exhibit the Premises to any
prospective purchaser or mortgagee. This Paragraph shall not be deemed to be a
covenant by Landlord nor be construed to create an obligation or duty on the
part of Landlord to make such installation, maintenance, inspection, repairs,
additions or alterations except as otherwise specifically herein provided, nor
permit Tenant any Rental abatement or reduction except pursuant to the
provisions of this lease. Landlord agrees to exercise due care to cause the
least reasonably possible interference with Tenant's business in the exercise of
its rights hereunder and shall not stage its work nor store its material on any
portion of the Premises, other than on unimproved land, without the prior
consent of Tenant, which consent shall not be unreasonably withheld or delayed,
but Landlord shall not be required to employ labor on weekends or on an overtime
basis to avoid or reduce any such interference.
(b) For a period commencing one (l) year prior to the end of
the Term, Landlord and its designees shall have reasonable access to the
Premises for the purpose of exhibiting the same to prospective tenants and to
post any "To Let" or "To Lease" signs upon the Premises.
15. Assignment.
(a) Tenant shall not sublet any part of the Premises nor
assign this lease, nor mortgage any interest therein, without Landlord's prior
consent, which consent shall not be unreasonably withheld or delayed. Landlord
shall not be obligated to consider any request for approval unless the following
conditions are satisfied:
(i) Tenant shall request Landlord's consent in
writing, which writing shall set forth the name and address of the assignee or
sublessee, the rental to be paid by said assignee or sublessee, the proposed
effective date of such assignment or subletting, together with all other terms
and conditions of said assignment or subletting;
(ii) At the time of such assignment and/or
subletting, this lease must be in full force and effect without any breach or
default thereunder on the part of Tenant beyond any applicable grace or notice
period, and all payments of Rental, Taxes and insurance premiums shall be
current;
(iii) The assignee shall assume, by written
recordable instrument, in form and content reasonably satisfactory to Landlord,
the due performance of all of the applicable covenants, conditions and
obligations of Tenant hereunder, including any accrued obligations at the time
of the assignment;
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(iv) The delivery to Landlord of a copy of the
assignment or sublease and the original assumption agreement, fully executed and
acknowledged by the assignee and/or sublessee; a certified copy of a properly
executed corporate resolution, if applicable, authorizing and accepting such
assignment, subletting or assumption agreement, unaudited financial statements
of the proposed assignee or sublessee (or audited financial statements, if
available in the normal course of its business) for its three (3) most recently
completed fiscal years prior to the request for consent hereunder; provided
however, such financial statements shall not be a basis upon which Landlord may
withhold or delay its consent;
(v) Such assignment shall be upon and subject to
all of the provisions, terms, covenants and conditions of this lease, and Tenant
and any prior assignee shall continue to be and remain primarily, jointly and
severally liable hereunder for the due performance of all of the applicable
provisions, terms, covenants, conditions and obligations hereunder, including,
but not limited to, all payment of Rental; and
(vi) Tenant and said assignee shall comply with
all applicable governmental laws, ordinances, rules and regulations in
connection with said assignment, and Tenant or its assignee shall bear the sole
cost and expense of complying therewith, as well as all costs and expenses of
all structural changes which may be made to the Premises as a result of the use
or occupancy of such assignee or subtenant, pursuant to the provisions of
Paragraph 12 hereof; and
(vii) In connection with any subletting, Landlord
and Tenant acknowledge that any such subtenant shall take subject to the
applicable terms, covenants and conditions of this lease and Tenant and any
prior assignee shall continue to be and remain primarily, jointly and severally
liable hereunder for the due performance of all of the applicable provisions,
terms, covenants, conditions and obligations hereunder, including, but not
limited to, all payment of Rental.
(b) Notwithstanding anything herein contained in the
contrary and notwithstanding any prior consent by Landlord, no subtenant
referred to in subparagraph (a) or assignee shall assign or sublease further any
part of the Premises without Landlord's prior consent in each such instance,
which consent shall not be unreasonably withheld or delayed, and without
compliance with the provisions of this Paragraph.
(c) In the event Landlord consents to a sublease or
assignment, Tenant and any assignee shall promptly pay to Landlord, as and when
received by Tenant, one-half (1/2) of any net consideration received for any
assignment or one-half (1/2) of the net rent (Fixed and Additional), in excess
of the Fixed Rent and Additional Rent required to be paid by Tenant for the
period affected by said sublease for the area sublet. As used herein, net
consideration and/or net rent shall mean the gross rent (Fixed and Additional)
or gross consideration received after deducting therefrom (i) in the case of an
assignment, an amount equal to the then unamortized or undepreciated cost of
Tenant's leasehold improvements (determined on the basis of Tenant's federal
income tax returns), or (ii) in the case of a sublet, an amount equal to the
unamortized or undepreciated cost of Tenant's leasehold improvements included in
the space proposed to be sublet attributable to the proposed duration of the
sublease (determined on the basis of Tenant's federal income tax returns);
together with the reasonable expenses incurred by Tenant which are directly
related to the procural of the assignee or subtenant including, without
limitation, reasonable brokerage fees, tenant work or other tenant concessions.
Gross rent and gross consideration shall include any consideration paid to or
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received by Tenant from the sale or leasing of Tenant's Personal Property in
excess of the then fair market value or fair market rental value of such
Personal Property, as the case may be.
(d) In addition to the foregoing, if Tenant desires to assign
the lease or to sublet all or a part of the Premises, it shall so notify
Landlord and supply Landlord with the determination of Book Value of Tenant's
property pursuant to subparagraph 9(d)(ii) of this lease, and Landlord, within
fourteen (14) days after receipt of the aforesaid notice, shall have the right
to terminate this lease if Tenant shall have proposed an assignment, or to
recapture in the event of a sublease the portion thereof proposed to be sublet
for the duration of the proposed sublet, as set forth in said notice by giving
Tenant notice of its election to do so and such termination or recapture, shall
become effective thirty (30) days thereafter, and all Rental payable by Tenant
on account of the lease or the portion thereof to be recaptured, shall be so
adjusted and apportioned as of the date of termination or recapture, as the case
may be and Tenant shall be released of its obligations on account of this lease,
if an assignment, or if a sublet, released of said obligations for said portion
of the Premises sublet for the duration of the sublet.
(e) If Landlord shall not exercise its right to terminate the
lease or recapture the space as aforesaid, or shall fail to respond to Tenant's
notice within the aforesaid time period, Tenant may provide Landlord with the
information set forth in subparagraph 15(a) above. Landlord, within fourteen
(14) days after receipt of notice from Tenant pursuant to subparagraph 15(a),
shall have the right to terminate the lease if an assignment, or recapture the
space proposed to be sublet for the proposed duration of said sublet provided
Landlord agrees to recognize and enter into a direct lease with the proposed
assignee or subtenant on the same terms as proffered by Tenant to said assignee
or subtenant. If Landlord shall terminate the lease or recapture the space as
aforesaid upon the proposed commencement date or effective date as set forth in
the proposed assignment or sublease, the rights and obligations set forth herein
running to or from Tenant to Landlord shall thereafter cease for the remainder
of the term if an assignment or for the proposed duration of the sublet and to
the extent of the portion to be sublet. If Landlord shall fail to exercise its
right to terminate the lease or fail to recapture the space proposed to be
sublet as provided in this subparagraph 15(e), but shall grant its consent to
the proposed assignment or sublease, then Tenant shall have the right to
consummate such transaction only on the terms and conditions previously
presented to Landlord pursuant to the provisions hereof and to the extent any of
the terms are changed, Tenant shall provide Landlord with notice of such
change(s), and Landlord shall again be afforded the opportunity set forth in
this subparagraph 15(e). It is expressly agreed that the lapse of the aforesaid
fourteen (14) day period during which Landlord may exercise its right pursuant
to this subparagraph 15(e) shall not be deemed an unreasonable delay nor limit
the period during which Landlord may give or withhold its consent. If Landlord
shall pursuant to subparagraphs 15(d) or 15(e) terminate this lease or recapture
any portion of the Premises proposed to be sublet, then Landlord shall pay to
Tenant, on account of any racks or other improvements installed by Tenant and
which are to be utilized by the assignee or sublessee, an amount equal to the
then unamortized or undepreciated cost thereof as shown on the books and records
of Tenant if an assignment, or the unamortized or undepreciated cost thereof
included in the space to be sublet attributable to the proposed duration of the
sublet, if a sublet, as shown on the books and records of Tenant, and Landlord
shall be liable for the care and repair of said racks and their return to Tenant
at the expiration of the sublease in the condition existing at the date Landlord
recaptured the sublet space reasonable wear and tear excepted. Book value shall
be determined in accordance with the provisions of subparagraph 9(d)(ii) of this
lease.
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(f) Notwithstanding the foregoing provisions of this
Paragraph, Tenant shall have the right, without the necessity of obtaining
Landlord's consent, but subject to all other provisions of this Paragraph 15
except subparagraphs 15(c), (d) and (e) to:
(i) Sublet all or substantially all of the
Premises to any parent of Tenant or to Tenant's Affiliate, as hereinafter
defined; or
(ii) Assign this lease to any parent of Tenant or
Tenant's Affiliate; or
(iii) Assign this lease or any interest therein
as security for institutional loan(s) made to Tenant in the
ordinary course of its business; or
(iv) Assign this lease, or sublet the Premises to
any person or entity which acquires all or substantially all of the assets of
Tenant or its frozen food division (herein "Acquiring Entity"). Landlord agrees
that, in connection with such transfer the named Tenant hereunder shall be
released of any and all obligations arising from and after said transfer
provided if, at the time of the transfer, such Acquiring Entity with a net worth
less than Thirty Million and 00/100 ($30,000,000.00) Dollars provides Landlord
with additional security by means of a letter of credit or cash in an amount
which when added to the security required to be maintained by Paragraph 40 shall
equal two (2) year's Annual Fixed Rent. If, at the time of the transfer, such
Acquiring Entity has a net worth of Thirty Million and 00/100 ($30,000,000.00)
Dollars or greater, Landlord shall have the option, in its sole and absolute
discretion, to (i) elect to require that such Acquiring Entity provide Landlord
with the aforesaid additional security as the condition of releasing Tenant as
aforesaid, or (ii) may agree that said net worth is sufficient in its own right
and release the Tenant without any additional security. If, at the time of the
transfer, such Acquiring Entity has a tangible net worth of Fifty Million and
00/100 ($50,000,000.00) Dollars or greater (of which not more than Ten Million
and 00/100 ($10,000,000.00) Dollars shall consist of cash or marketable
securities), as set forth on its financial statements for its most recent fiscal
year, as prepared and certified by independent certified public accounts in
accordance with accounting practices customarily used in such Acquiring Entity's
business, Tenant shall be released of any and all obligations arising from and
after said transfer. For purposes of establishing a net worth of such Acquiring
Entity of Thirty Million and 00/100 ($30,000,000.00) Dollars or greater as
aforesaid, Tenant shall furnish Acquiring Entity financial statements to
Landlord for its most recent fiscal year, as prepared and certified by
independent certified public accountants in accordance with accounting practices
customarily used in such Acquiring Entity's business, and Landlord shall have
fifteen (15) days after receipt of said financial statements to elect (i) or
(ii) above. In the event Landlord fails to respond within such fifteen (15) day
period, Landlord shall be deemed to have elected (i) above.
(g) Except as otherwise provided in subparagraph 15(f)(iv),
and except where Landlord elects to terminate the lease or recapture the space
proposed to be sublet, as set forth in subparagraph 15(d), or where Landlord
elects for itself to accept such assignment or sublease as set forth in
subparagraph 15(e), Tenant, at all times, shall be and remain primarily, jointly
and severally liable under this lease despite any subletting or assignment.
(h) For so long as Port Carteret, Amax Realty Development,
Inc., Amax Copper, Inc., V. Paulius and Associates or its related entities owns
or leases the Premises or portions of the Industrial Park (as hereinafter
defined in Paragraph 43), Tenant, except to a Tenant's Affiliate, shall have no
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right to assign this lease or sublet the Premises, or any portion thereof to or
allow any of the Premises to be used and/or occupied by, any other tenant or
entity or related entity of any other tenant or entity occupying facilities
within the Industrial Park owned or leased by Port Carteret, Amax Realty
Development, Inc., Amax Cooper, Inc., V. Paulius and Associates or its related
entities or to any entity of which Tenant has knowledge that any of the
foregoing is negotiating to lease space or provide use or occupancy within the
Industrial Park, unless such tenant is renewing its then current space, or such
space previously occupied by said tenant has been leased or subleased to another
person or entity.
(i) In addition to the right of Landlord to declare this lease
to be in default, the failure of Tenant or its assignee or sublessee to comply
with any of the provisions and conditions of this Paragraph, at Landlord's
option, shall render any purported assignment or subletting null and void and of
no force and effect.
(j) It is acknowledged that the sale, transfer, conveyance or
other disposition of fifty (50%) percent or more of the outstanding capital
shares of Tenant in a single or related series of transfers, and/or any other
transaction or related series of transactions which result in the relinquishment
of the voting control by the present shareholders of Tenant, shall constitute an
assignment of lease pursuant to the provisions of this Paragraph 15, provided,
however, that the provisions regarding the sale or transfer of shares of Tenant
shall not apply to the sale or transfer of such shares in connection with the
transfer to the buyer or transferee of substantially all of the assets of Tenant
or of the frozen food division of Tenant, the initial offering of Tenant's
shares registered under the Securities Act of 1933, as amended, or any
subsequent offering or sale of Tenant's shares so registered, or to the sale or
transfer, whether by inheritance or otherwise, of all or any portion of the
shares of Tenant between and among the immediate family members (which shall
include, spouses, children, grandchildren, parents, grandparents, in-laws,
siblings, lineal descendants and trusts for the benefit of the foregoing); by or
among any of the shareholders of Tenant as of the date hereof; or, by or among
any of the shareholders of Tenant from time to time.
(k) For purposes of this Article, Tenant's Affiliate means (i)
a corporation controlled by, controlling or under common control with Tenant
(hereinafter an "Affiliated Corporation") or (ii) a partnership or joint venture
in which Tenant or an Affiliated Corporation owns a controlling interest.
16. Rules and Regulations, Compliance With Laws.
(a) Tenant, at all times during the Term hereof, and at its
sole cost and expense, agrees:
(i) not to take or permit any action which would
unreasonably delay or interfere with any work performed or to be performed by
Landlord or with respect to any action by Tenant prior to the Commencement Date
which would delay Landlord, thereby interfering with Delivery of Possession by
Landlord pursuant to Paragraph 3 of this lease;
(ii) not to commit, permit nor allow any waste,
defacement, damage or nuisance to the Premises or any portion(s) thereof, nor
use, permit nor allow the plumbing facilities to be used for any purpose
injurious to same or dispose of any garbage or any other foreign substance
therein, nor place a load on any floor in the Premises exceeding the floor load
per square foot specified by Landlord in Exhibit D, not attach in the Premises
any heavy equipment or apparatus without the consent of Landlord not to be
unreasonably withheld or delayed;
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(iii) to keep the Premises in a neat, clean, orderly
and sanitary condition, free of all insects, rodents, vermin or pests of every
type and kind;
(iv) not to use, permit or allow the Premises to
be used for any purpose or business which would be illegal or violates
applicable law because of the emission of noise, smoke, dust, vapors or odors or
otherwise; damage the Premises or any portion(s) thereof; or be a nuisance or
menace to or interfere with, the public; or require any plan and/or bond to be
furnished or require any work to be performed to cure and/or correct any
condition created by Tenant, pursuant to any applicable governmental law or
requirement.
(b) Except as otherwise provided in this subparagraph (b),
Tenant, at its sole cost and expense, agrees to comply promptly with all
ordinances, orders, rules, regulations and requirements of all federal, state,
county and municipal governments and appropriate departments, commissions,
boards and offices thereof, foreseen or unforeseen, ordinary as well as
extraordinary, and whether or not the same presently shall be within the
contemplation of the parties hereto or shall involve any change of governmental
policy or require extraordinary or structural repairs, alterations, equipment or
additions or any work of any kind, which may be due to the specific purposes to
which the Premises are put, or the specific manner of use of the Premises by
Tenant at the commencement of or during the Term, and/or the acts or omissions
of Tenant, as distinguished from any of the aforesaid requirements applicable to
facilities of this type without regard to Tenant's specific manner of use of the
Premises. The provisions of Paragraph 12 shall apply to all work to be performed
by Tenant pursuant to this Paragraph. If governmental requirements are imposed
without regard to and independent of Tenant's specific manner of use of the
Premises, but are applicable in general to property used for industrial,
manufacturing, distribution, office and/or warehouse purposes, then Landlord
shall cause compliance with such governmental requirements, and Tenant shall pay
to Landlord, within thirty (30) days following demand, a pro rate share of the
cost of compliance with such governmental requirements, which pro rate share
shall be determined by a fraction, the numerator of which shall be the number of
months remaining on the then Term of the lease and the denominator of which
shall be the number of months of the anticipated useful life of the work to be
performed, which useful life shall be determined pursuant to the Code; provided,
however, that if the cost to Tenant of compliance with such governmental
requirements (other than costs resulting from interference with the conduct of
operations at the Premises by Tenant), in good faith, shall be estimated to
exceed fifty (50%) percent of the Rental reserved under this lease for the
remainder of the Term at the time such governmental requirements are imposed,
Tenant, by notice to Landlord given within fifteen (15) days after receipt of
notice of such governmental requirements (time being of the essence) may
terminate this lease on the last day of the month next following the month in
which such notice shall have been given unless Landlord, within fifteen (15)
days after receipt of such notice from Tenant (time being of the essence), shall
assume responsibility for any costs of compliance with such governmental
requirements in excess of fifty (50%) percent of such Rental for the balance of
the Term. If Tenant shall remain in possession of the Premises following the
expiration of the then Term, whether by exercising its option to purchase, to
renew or otherwise, then Tenant shall pay to Landlord, within thirty (30) days
following demand, an additional pro rata cost of compliance hereunder based upon
the additional period of occupancy, and the then remaining useful life of the
work performed by Landlord or its agents pursuant to this Paragraph. All monies
payable by Tenant to Landlord shall be deemed to constitute Additional Rental.
Notwithstanding the foregoing, Landlord shall, at its sole cost and expense,
cure any violations arising from Landlord's failure to comply with laws,
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ordinances, orders, rules, regulations and requirements applicable to the
initial construction of the Building or any portion thereof as of the
Commencement Date, and shall comply with all of the aforesaid at its sole cost
and expense applicable to the Structure of the Building, as defined in Paragraph
10, except to the extent required as a result of Tenant's specific manner of use
of the Premises, or required as a result of any acts, omissions or negligence of
Tenant, any subtenant or concessionaire, or their respective employees, agents,
invitees, licensees or contractors.
(c) No abatement, diminution or reduction of the Rental or
other charges required to be paid by Tenant pursuant to the terms of this lease
shall be claimed by or allowed to Tenant for any inconvenience, interruption,
cessation or loss of business or otherwise caused directly or indirectly by any
present or future laws, rules, requirements, orders, directions, ordinances or
regulations of any governmental or lawful authority whatsoever, or as a result
of any diminution of the amount of space used by Tenant caused by legally
required changes in the construction, equipment, operation or use of the
Premises, other than as shall result from any condemnation affecting the
Premises pursuant to the provisions of subparagraph 13(b) but nothing herein
contained shall limit any claim Tenant may have against Landlord pursuant to
this lease.
(d) Tenant, following notice to Landlord, shall have the right
to contest by appropriate legal proceedings, at its sole cost and expense, the
validity of any law, ordinance, order, rule, regulation or requirement of the
nature referred to in subparagraph 16(b); provided, however, that: (i) any
noncompliance shall not constitute a crime on the part of Landlord or otherwise
adversely affect, jeopardize or threaten the interest of Landlord; (ii) Tenant
shall prosecute diligently any such contest to a final determination by a court,
department or governmental authority having final jurisdiction and shall keep
Landlord advised in writing as to all changes in status and determinations in
connection with any such proceedings; and (iii) Tenant shall indemnify and save
harmless Landlord against any and all losses, reasonable costs, reasonable
expenses, claims, penalties, actions, demands, liabilities, judgments or other
damages which Landlord may sustain by reason of such contest or as a result of
Tenant's failure or delay in compliance, including, without limitation,
reasonable attorneys' fees. Landlord agrees to cooperate reasonably with Tenant,
and to execute any documents or pleadings reasonably required for the purpose of
any such contest, provided that the same shall be without cost, expense or
obligation to Landlord. Landlord shall have the right, but not the obligation,
to contest by appropriate legal proceedings, at Landlord's expense, any such
law, ordinance, rule, regulation or requirement.
(e) Tenant agrees that each and every provision of this
Paragraph 16 shall survive the expiration or earlier termination of the Term of
this lease, regardless of the reason for such termination, it being agreed and
acknowledged that Landlord would not have entered into this lease but for the
provisions of this Paragraph 16 and the survival thereof.
17. Utilities. Tenant agrees to pay as and when the same become due and
payable during the Term, all water rents, rates and charges, all sewer rents and
all similar charges assessed or charged to the Premises during the Term, all
charges for electricity, gas, heat, steam, hot water and all other utilities
supplied to the Premises during the Term, together with the cost of repair,
maintenance, replacement and reading of all meters measuring Tenant's use or
consumption thereof, whether supplied by Landlord or by a public or private
utility company. The costs for any usage of such utilities by Tenant prior to
the Commencement Date shall be pro rated based on estimated usages, in such
manner as the parties reasonably may agree upon. It is acknowledged that
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Landlord does not have any obligation to provide any of such utility services
and in no event shall Landlord be responsible or liable for the failure of
Tenant to receive or for fluctuations in the supply of any utility service, nor
shall Tenant be entitled to any cessation, abatement, reduction or other offset
of Rental in the event of any failure to receive any utility service unless due
to or caused by the act or omission of Landlord, in which case the Fixed Rent
and Additional Rental shall equitably abate to the extent and for the period
during which the Premises are rendered untenantable. If Landlord shall have
caused the failure to receive any utility service, to the extent Tenant receives
insurance proceeds on account of the Rental, as a result of the denial of any
such service, Tenant agrees to credit such proceeds against the abatement
provided for herein but this provision shall only be applicable to the acts or
omissions of Landlord and its agents, contractors or subcontractors.
18. Signs. Tenant, at its sole cost and expense, may provide, install
and maintain such exterior signs on the roof, windows, facade or walls of the
Building or on the Land, as Landlord, in its reasonable discretion, may approve
to be proper and appropriate, which approval shall not be unreasonably withheld
or delayed, provided: (i) such installation be made in such manner as will not
affect any roofing bond and/or other guarantee which then shall be in force and
effect; and (ii) all such signs, at all times, shall conform to all applicable
rules, regulations, codes and ordinances of any governmental agencies having
jurisdiction thereover. All such signs shall be provided, installed, maintained
in good condition and repair and removed at the termination of the lease, at
Tenant's sole cost and expense. Tenant further agrees that it will not place any
advertisements or other type of structure or obstruction on the roof, facade or
walls of the Building, and that it shall not operate any loudspeaker or other
device which can be heard outside of the Premises, in violation of applicable
law or as to create a nuisance, or without the consent of Landlord, which
consent shall not be unreasonably withheld or delayed. If Landlord deems it
necessary to remove any such signs in order to paint or make any repairs,
alterations or improvements in or upon the Building or any part thereof, they
may be so removed, but shall be replaced at Landlord's expense when the said
repairs, alterations or improvements shall have been completed. Nothing
contained in this Paragraph shall create any obligation on the part of Landlord
to make any repairs, alterations or improvements.
19. Taxes.
(a) Landlord represents that as of the Delivery of Possession
Date, the Land, together with the lands previously leased by Landlord to Tenant
by lease initially dated February 11, 1994 ("Lease I"), shall constitute
separate municipal tax lots, that Tenant shall be the only tenant of such Lands
and that there shall not be any other improvements thereon other than as
described herein or otherwise used by or for the benefit of Tenant. It is
acknowledged that a portion of the Land is within the tax lot of the lands
previously leased to Tenant pursuant to Lease I and that the balance of the Land
constitutes a separate municipal tax lot.
(b) Tenant covenants and agrees that commencing as of the
Commencement Date and continuing throughout the Term hereof, and any "Renewal
Terms," as defined in Paragraph 48, it shall pay to the taxing authority, prior
to the imposition of interest and/or penalty for non-payment, all real estate
taxes, assessments, added assessments and other governmental charges or
substitutes therefor (hereinafter collectively called "Taxes") levied, imposed,
assessed or fixed on or against the Land and improvements thereon or arising
from the use, occupancy or possession thereof. It is agreed that Tenant shall
have the right to pay any assessment(s) levied against the Premises over the
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longest time permitted by the Municipality and shall be responsible only for
such payments as shall be due and owing during the Term. Notwithstanding the
foregoing, Landlord shall pay all special assessments assessed against the
Premises to which Landlord agreed or which were included within the municipal
approvals obtained, in connection with the construction of the Building within
the first twenty-four (24) months of the Term, or which are assessed against the
Premises within the first twenty- four (24) months of the Term, and relate to
the initial construction of the Building and its imposition on municipal
services or infrastructure without regard to the actual use of the Premises by
Tenant.
(c) Tenant shall have the right to contest in good faith any
of said Taxes, at its own cost and expense, provided, however, that
notwithstanding such contest, Tenant, at all times, shall: when due, pay all of
the Taxes necessary to prosecute such contest; comply with all applicable laws,
rules and regulations regarding the payment of taxes; not take any action which
would adversely affect, threaten or jeopardize the interest of Landlord in the
Land, Building, or any part thereof; and promptly pay, indemnify and save
Landlord harmless from, all penalties and interest which may be charged or
imposed as a result of or during the pendency of, any such contest. In the event
of any such contest, Landlord agrees to reasonably cooperate and to execute any
necessary documents, provided, however, that the same shall be without any cost
or expense to Landlord. Upon request of Landlord, Tenant forthwith shall notify
Landlord of the filing of any tax appeal or contest.
(d) In the event that Tenant shall fail to contest all of such
Taxes or shall fail to notify Landlord of its filing of any such appeal or
contest, then and in either of such events, Landlord shall have the right, but
not the obligation, to contest, at its own cost and expense, any of such Taxes.
Landlord shall be obligated to pay any increase in Taxes resulting from such
appeal, and Tenant shall be entitled to all of the proceeds of any refund
received as a result of such contest, after payment of all reasonable costs and
expenses incurred in connection with prosecuting such contest.
(e) Subject to the provisions of subparagraph 17(b) above for
special assessments as opposed to added assessments, for the first and last
Lease Years of the Term hereof, the portion of all Taxes, other than such as
result from added assessments, shall be prorated, depending on the proportion
which each such Lease Year shall bear to the tax year in which it falls. The
portion of Taxes resulting from added assessments during the first and last
Lease Years of the Term shall be prorated depending on the proportion which such
Lease Year shall bear to the portion of the tax year for which the added
assessment is charged.
(f) If at any time during the Term hereof, a tax or excise on
rents or other tax, however described, is levied or assessed by the
Municipality, County, State or Country or any political subdivision thereof,
against Landlord or the Rental reserved hereunder, or any part thereof, as a
substitute or addition, in whole or in part, for any revenues derived from any
tax assessed or imposed by any such political entity on land and buildings,
Tenant covenants to pay to Landlord such sum as shall be necessary to pay and
discharge such tax or excise on rents or other tax, which sum shall be paid to
Landlord in the manner herein set forth for Taxes; provided, however, that the
parties shall have the right to contest said levy in the same manner as provided
herein for Taxes, and provided further that said tax is commonly paid by
industrial or commercial tenants in New Jersey.
(g) Except as otherwise provided herein, Tenant shall not be
obligated or required hereunder to pay any franchise, excise, corporate, estate,
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inheritance, succession, capital levy or transfer tax of Landlord, or any
income, profit or revenue tax upon the income or receipts of Landlord.
(h) Tenant shall be responsible for and shall pay prior to the
time when such payment shall be deemed delinquent, all taxes assessed during the
Term against any leasehold interest, or any improvements, alterations,
additions, fixtures or personal property of any nature placed in, on or about
the Premises by Tenant, whether such tax shall have been levied or assessed
against Landlord or Tenant.
20. Additional Charges.
(a) In addition to all other rental charges provided for in
this lease, the Tenant agrees to pay as Additional Rental, a sum equal to
Tenant's share of Landlord's costs and expenses ("Operating Costs") incurred by
Landlord in connection with Landlord's maintenance and repair of the detention
basin and detention basin area serving the Premises, if the same shall be
furnished by Landlord. The portion to be paid by Tenant shall be equal to the
percentage which the acreage of the Land bears to the total acreage of all lands
being served by such detention basin. The initial portion of the Operating Costs
to be borne by Tenant shall be thirty (30%) percent. In all events, the maximum
share to be paid by Tenant shall be Ten Thousand ($10,000.00) Dollars per annum.
(b) For the first and last Lease Years of the Term hereof, the
portion of Operating Costs to be paid by Tenant shall be pro rated depending on
the proportion which each such Lease Year shall bear to the aforesaid annual
period in which it falls.
21. Non-Liability of Landlord.
(a) Except as otherwise herein provided, neither Landlord,
Ground Lessor nor any of its agents, co-venturers, representatives, employees,
constituent members, successors or assigns shall be liable for any injury which
may be sustained by Tenant as a consequence of: any defect, latent or apparent;
any change of conditions in the Premises; the failure, breakage, leakage or
obstruction of the street or sub-surface; the water, plumbing, steam, sewer,
waste or soil pipes; the roof, walls, drains, leaders, gutters, valleys,
downspouts or the like; the electrical, gas, power, conveyor, refrigeration,
sprinkler, air conditioning or heating systems; the elevators or hoisting
equipment; any other structural failure; the elements; any theft or pilferage;
any fire, explosion or other casualty; the carelessness, negligence or improper
conduct on the part of Tenant, its agents, employees, guests, licensees,
invitees, subtenants, assignees or successors; any interference with,
interruption of or failure, beyond the control of Landlord, of any services to
be furnished to the Premises; or any other cause whatsoever. Notwithstanding the
provisions of this subparagraph (a), Landlord, except as otherwise herein
provided, shall be liable for the consequences of its negligence and Landlord
shall be liable for the consequences of its default(s) under this lease.
Landlord shall be entitled to receive a credit on account of any damage claim
pursuant to this subparagraph (a) of an amount equal to all proceeds of
insurance received by Tenant as a result of such act and/or omission of
Landlord. Except as otherwise provided in subparagraph 47(e), all property kept,
maintained or stored in, on or at the Premises shall be so kept, maintained or
stored at the sole risk of Tenant, it being acknowledged that Tenant is to
maintain insurance to cover any damage or loss to such property.
(b) Except as otherwise expressly set forth herein, in no
event shall any act or omission of Landlord and/or Ground Lessor and/or the
breach of any of their obligations hereunder permit Tenant to allege a
constructive eviction or otherwise to terminate this lease, or to receive an
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abatement, reduction, moratorium, offset or credit on account of Rental to be
paid hereunder.
22. Indemnity.
(a) Except as shall result from the negligence or breach of
any obligation pursuant to this lease by Landlord, Ground Lessor and/or its or
their agents, representatives, employees, constituent members, contractors,
successors and assigns, Tenant, at its sole cost and expense, agrees to
indemnify and save Landlord, Ground Lessor and its agents, co-venturers,
representatives, employees, constituent members, contractors, successors and
assigns harmless from and against any and all third-party claims, actions,
demands and suits, for, in connection with, or resulting from, any accident,
injury or damage whatsoever (including, without limitation, reasonable
attorneys' fees) caused to any third person or third person's property arising,
directly or indirectly, in whole or in part, out of the business conducted in or
the use of the Premises, or occurring in, on or about the Premises or any part
thereof (including, without limitation, adjacent sidewalks), or arising,
directly or indirectly, in whole or in part, from any act or omission of Tenant
or any concessionaire or subtenant or their respective licensees, servants,
agents, employees or contractors, or arising out of the breach or default by
Tenant of any term, provision, covenant or condition herein contained, and from
and against any and all losses, costs, expenses, judgments and liabilities
incurred in connection with any claim, action, demand, suit or other proceeding
brought thereon. Said indemnity shall include defending or resisting any
proceeding by attorneys reasonably satisfactory to Landlord. It is agreed that
attorneys designated by Tenant's insurance carrier shall be deemed to be
satisfactory. The within indemnity shall be insured as a contractual obligation
under the policy of liability insurance Tenant is required to carry hereunder.
(b) Except as shall result from the negligence or breach of
any obligation pursuant to this lease by Tenant and/or its agents,
representatives, employees, constituent members, contractors, successors and
assigns, Landlord, at its sole cost and expense, agrees to indemnify and save
Tenant and its agents, representatives, employees, constituent members,
contractors, successors and assigns harmless from and against any and all
third-party claims, actions, demands and suits, for, in connection with, or
resulting from, any accident, injury or damage whatsoever (including, without
limitation, reasonable attorneys' fees) caused to any third person or third
person's property arising, directly or indirectly, in whole or in part, from any
act or omission of Landlord, the Ground Lessor, or its or their licensees,
servants, agents, employees or contractors, or arising out of the breach or
default by Landlord or Ground Lessor of any term, provision, covenant or
condition herein contained, and from and against any and all losses, costs,
expenses, judgments and liabilities incurred in connection with any claim,
action, demand, suit or other proceeding brought thereon. Said indemnity shall
include defending or resisting any proceeding by attorneys reasonably
satisfactory to Tenant. It is agreed that attorneys designated by Landlord's
insurance carrier shall be deemed to be satisfactory. The within indemnity shall
be insured as a contractual obligation under any policy of liability insurance
Landlord may carry regarding any such occurrence.
23. Right to Cure Default. If either party shall fail to comply fully
with any of its obligations hereunder, within the time and in the manner set
forth herein, then the other party shall have the right, at its option, to cure
such default, at the expense of the failing party, upon thirty (30) days' prior
notice to the failing party, except in cases of emergency (in which event no
notice need be given), and if the failing party shall fail to cure said default
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within such period (provided, however, that if said default cannot be cured
within said period, if the failing party shall not have commenced in good faith
to cure such default within said thirty (30) day period and shall not be
continuing the curing thereof diligently thereafter). Tenant agrees to reimburse
Landlord promptly (as Additional Rental) together with interest thereon at the
Lease Interest Rate from the date said costs and expenses were incurred by
Landlord in curing Tenant's defaults. Tenant shall be entitled to a credit
against the Fixed Rent next due and payable for all reasonable costs and
expenses incurred by Tenant as a result of Landlord's default together with
interest at the Lease Interest Rate from the date said costs and expenses were
incurred. Any action so taken pursuant to this lease shall not serve to waive or
release the failing party from its performance of any obligation hereunder.
24. Remedies Upon Default.
(a) If Tenant shall: (i) default in payment of the Rental
reserved herein or in making any payment herein provided for at least five (5)
days following notice of non-payment; or (ii) default in the observance of any
of the other terms, covenants and conditions of this lease, which default
continues for thirty (30) days following the delivery of notice thereof, as
hereinafter required; or (iii) assign, sublet or permit the Premises to be
occupied by someone other than Tenant, except as herein provided; or (iv) make
any assignment for the benefit of creditors, file a voluntary petition in
bankruptcy, be by any court adjudicated a bankrupt, take the benefit of any
insolvency act or be dissolved (other than a dissolution resulting solely
pursuant to the Internal Revenue Code of 1986, as amended, and without the
dissolution of Tenant pursuant to the substantive law of the State of its
incorporation) or liquidated, voluntarily or involuntarily, or if a receiver or
trustee of Tenant and/or its property shall be appointed in any proceedings and
if any such action shall be taken involuntarily against Tenant and shall not be
cured or stayed within sixty (60) days thereafter; or (v) record or attempt to
record this lease except as otherwise permitted herein; or (vii) fail to make
any Rental payment within ten (10) days following its due date on more than
eight (8) occasions during any twelve (12) month period; then, upon the
happening of any of the events set forth in this Paragraph, Landlord shall have
the right to terminate this lease and the Term hereof upon not less than five
(5) days' notice to Tenant, or as otherwise required by applicable law, with the
same force and effect as though the date so specified was the date hereinabove
first set forth as the date of the expiration of the Term (but Tenant shall
remain liable to Landlord as herein provided), and at the expiration of the
period provided in said notice, the Term hereof and all of the Tenant's right,
title and interest hereunder shall cease and terminate, and Landlord without
further notice, may reenter the Premises, remove the Tenant and its property
therefrom, and have possession and enjoyment of the same, and/or may recover
possession thereof as prescribed by law relating to summary proceedings or
otherwise, without any liability for damages or prosecution therefrom, it being
understood that no other demand for the Rental, no reentry for condition broken
and no other notice to quit other than as may be required by law shall be
necessary, to enable Landlord to recover such possession, to terminate this
lease and/or to exercise any other right(s) to which it may be entitled
hereunder or pursuant to law. All other rights to any such demand, reentry,
notice or other prerequisites are hereby expressly waived by Tenant.
(b) In the event of any such default, reentry, expiration
and/or dispossess: (i) the Rental shall become due and shall be paid up to the
time of such reentry, dispossess and/or expiration, together with such
reasonable costs and expenses as Landlord may incur in reacquiring possession of
the Premises, for legal expenses, attorneys' and brokerage fees, putting or
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restoring the Premises in or to good order and altering or preparing the same
for re-rental, and/or in enforcing its rights hereunder; (ii) Landlord shall
have the right, but shall not be obligated, except as required by law, to relet
the Premises or any part or parts thereof, either in the name of Landlord or
otherwise, for a term or terms which, at Landlord's option, may be less than or
exceed the period which otherwise would have constituted the balance of the
Term, for such rental and on such terms as Landlord shall deem reasonable; (iii)
Tenant, or the legal representatives of Tenant, shall pay Landlord any
deficiency between the Rental hereby covenanted to be paid and the net amount,
if any, of the rents collected on account of any reletting of the Premises for
each month of the period which otherwise would have constituted the balance of
the Term. In computing such sum, there shall be added to the Rental hereby
covenanted to be paid, such expenses of Landlord as are referred to in
subparagraph (b)(i) of this Paragraph. Any such deficiency shall be paid in
monthly installments by Tenant on the first day of each month, in advance, and
any suit brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Landlord to collect the deficiency for any
subsequent month by a similar proceeding or by joining, consolidating or
otherwise including in one action, any and all claims for subsequent periods;
(iv) notwithstanding any other provisions of this lease, Landlord shall be
entitled, at its option, in addition and without prejudice to any other rights
and remedies it may have hereunder or at law or in equity, to recover from
Tenant as damages, in addition to any Rental unpaid or accrued to the date of
such reentry, expiration and/or dispossess, together with all of the additional
costs and expenses incurred by Landlord, an amount equal to the difference
between the Rental covenanted to be paid hereunder for what otherwise would have
been the unexpired portion of the Term had such reentry, expiration and/or
dispossess not occurred, and the then fair and reasonable rental value of the
Premises for such unexpired portion of the Term, both discounted at an annual
rate equal to the discount rate published by the Wall Street Journal as of the
date of default by Tenant, to present worth. In determining the then fair and
reasonable rental value of the Premises, the rental realization upon any
arms-length, commercially reasonable reletting, if such reletting shall be
accomplished within a reasonable time after such reentry, expiration and/or
dispossess, shall be deemed prima facie to be such fair and reasonable rental
value. Landlord shall be entitled, in addition to the amount of such difference,
to also recover such expenses as are referred to in this subparagraph 24(b)(i).
(c) Any undertakings Landlord may perform on behalf of Tenant
hereunder, the making by Landlord of any alterations, repairs, replacements or
decorations and/or the exercise of any of Landlord's rights pursuant to this
lease or by law, shall not operate or be construed to relieve Tenant from its
liability hereunder, and except as required by law, Landlord, in no event, shall
be liable in any way whatsoever for any failure to relet and/or to attempt to
relet the Premises and/or any portion thereof, or in the event that the Premises
and/or any portion thereof, are relet, for the reasonableness of the rental or
for the failure to collect any rental under such reletting.
(d) In the event of a breach or violation or threatened breach
or violation by Tenant of any of the covenants, conditions, terms or provisions
of this lease, Landlord shall have the right to obtain an injunction or to
invoke any remedy allowed at law or in equity, without limitation, in addition
to any and all rights and remedies provided for herein.
(e) No receipt of Rental by Landlord after the termination in
any manner of this lease, or the performance by Tenant of any obligation
hereunder after the period stated in any notice given pursuant to this lease,
shall reinstate, continue or extend the lease or the Term thereof, affect any
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such notice or cure any default theretofore arising hereunder. No receipt of
Rental or the performance by Tenant of any obligation hereunder after final
judgment for possession of the Premises, shall reinstate, cure, continue or
extend the lease or the Term thereof or affect said suit or said judgment.
(f) The rights and remedies of Landlord specified in this
lease, as well as the rights and remedies to which Landlord is entitled by law
or in equity, are cumulative and are not intended to be exclusive of or preclude
the exercise of any other rights or remedies which may be available to Landlord
in the event of a breach by Tenant of any provision of this lease and shall
survive the expiration or termination of this lease.
(g) Landlord shall have the right to institute proceedings for
the recovery of damages, including the payment of Rental, at any time and from
time to time, and shall not be required to postpone the institution of any
proceeding until the date when the Term would have expired if it had not been so
terminated pursuant to the provisions hereof, or pursuant to any provision of
law, or had Landlord not re-entered the Premises. Nothing herein contained shall
be construed to limit or preclude any recovery by Landlord against Tenant of any
damages to which, in addition to the damages particularly set forth herein,
Landlord may be entitled by reason of any default hereunder on the part of
Tenant.
(h) Notwithstanding the foregoing, if the applicable law of
the State of New Jersey provides that the parties to a commercial lease cannot
waive the duty of Landlord to mitigate its damages or if Landlord elects to
attempt to mitigate its damages, then Landlord shall be obligated only to use
commercially reasonable efforts to mitigate damages. Landlord shall be deemed to
have used reasonable efforts to mitigate if:
(i) It uses leasing practices and seeks such
rent, period and other terms and conditions as then are being utilized by
Landlord or an affiliate for similar properties in the same geographic area; or
(ii) It uses leasing practices and seeks such
rent, period and other terms and conditions as then are reasonable or usual for
similar properties in the same geographic area.
Landlord, in no event, shall be required to relinquish or jeopardize
any economic benefit or opportunity, including, without limitation, the leasing
of other property owned or controlled by Landlord or an affiliate in order to
mitigate damages. The rental of any other property owned or controlled by
Landlord or an affiliate shall not reduce any damages which Landlord would be
entitled to receive from Tenant and any such damages shall include any late fees
chargeable pursuant to the terms of this lease.
(i) If Landlord shall be under a duty to or shall elect to
mitigate damages, then only the "net proceeds" of any reletting received by
Landlord in connection with any reletting shall be credited against Tenant's
existing or future outstanding obligations under this lease, in such manner and
in such order as Landlord, in its sole discretion, may determine. In no event
shall Tenant be entitled to a credit or receive all or any portion of any such
net proceeds received by Landlord in excess of the Rental due hereunder for the
corresponding period for which such net proceeds are received except that to the
extent such excess shall be available, any such excess shall be carried forward
to satisfy any obligations of Tenant thereafter accruing. As used herein, "net
proceeds" shall mean the full amount of rent and other similar charges paid to
Landlord, reduced by all Landlord's reasonable expenses incurred in connection
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with reletting, operating or maintaining the Premises (including, but not
limited to, expenses for work done to the Premises in connection with such
reletting, brokerage fees, attorneys' fees and disbursements and any costs or
expenses of Landlord paid or reimbursed by a tenant, whether as Additional
Rental or otherwise).
25. Waiver of Redemption. Upon the expiration or sooner termination of
this lease or in the event of entry of judgment for the recovery of the
possession of the Premises in any action or proceeding, or if Landlord shall
enter the Premises by process of law, Tenant, for itself and all persons
claiming through or under Tenant, including, but not limited to, its creditors,
hereby waives and surrenders any right or privileges of redemption provided or
permitted by any statute, law or decision now or hereafter in force, to the
extent legally authorized, and does hereby waive and surrender up all rights or
privileges which it may or might have under and by reason of any present or
future law or decision, to redeem the Premises or for a continuation of this
lease after having been dispossessed or ejected therefrom by process of law.
26. Mortgage Priority.
(a) To the extent applicable, all references to mortgages in
this lease shall be deemed to include ground leases. This lease shall be and
hereby is made subject and subordinate at all times to (i) all ground and
underlying leases and to any amendments thereof made from time to time
(including, without limitation, a ground lease herein called the "Ground Lease",
between Amax Cooper, Inc., as Ground Lessor, and Landlord herein, as ground
lessee dated June 1, 1988, as amended), and (ii) to all "Permitted Mortgage(s)",
as hereinafter defined in subparagraph 26(g), and all advances made thereon
which, now or hereafter, may affect the Premises, and to all increases,
renewals, modifications, consolidations, participations, replacements and
extensions thereof, irrespective of the time of recording thereof, without the
necessity of any further instrument of subordination; provided, that with
respect to any Permitted Mortgage the aggregate outstanding principal balance of
the Permitted Mortgage(s) encumbering the Premises shall not exceed the Purchase
Price to be paid by Tenant for the Premises pursuant to Paragraph 41 of this
lease, and provided further that as to any Permitted Mortgage or ground lease
Landlord obtains (i) a "non-disturbance" agreement reasonably acceptable to
Tenant to provide that the right and interest of Tenant hereunder may not be
terminated so long as Tenant is not in default of the performance of any
obligation hereunder, or (ii) a "non-disturbance" agreement identical in all
material respects to that set forth on Exhibit I. If Landlord or any Permitted
Mortgagee or ground lessor desires confirmation of such subordination, Tenant
shall promptly execute and deliver any certificate or instrument that may be
reasonably requested. Except as provided in Paragraph 15, Tenant shall not have
the right to place any lien or encumbrance of any kind against the Premises
except for chattel mortgages or pledges on any of its fixtures, furniture,
equipment, improvements, or inventory.
(b) Tenant agrees that in the event the interest of the
Landlord becomes vested in the holder of any Permitted Mortgage or in any ground
lessor, or in anyone claiming by, through or under any of them, then such holder
or ground lessor shall not be:
(i) liable for any act or omission of any prior
landlord (including Landlord herein) except to the extent such act or omission
is a continuing default and Tenant shall have given such holder or ground lessor
notice of such default following the interest of Landlord becoming vested in
such holder or ground lessor unless Tenant shall have provided such notice
pursuant to the non-disturbance agreement received by Tenant from such holder or
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ground lessor, and such holder or ground lessor shall have failed to commence
curing said default within sixty (60) days from the effective date of Tenant's
notice; or
(ii) except with respect to any rent abatement
specifically provided for in this lease, subject to any offsets or defenses
which Tenant may have against any prior landlord (including Landlord herein); or
(iii) bound by any Rental which Tenant may have
paid for more than the current month to any landlord (including
Landlord herein); or
(iv) bound by any alteration or modification of
any provision hereof, nor any cancellation or surrender of this lease unless the
same shall have been approved in writing by such holder, or unless specific
provision therefor is set forth in this lease; or
(v) bound by any obligation of Landlord to
construct and complete the Building as set forth in Paragraph 3 of this lease;
or
(vi) in the event of a taking as set forth in
Paragraph 13, bound to provide replacement of such portions of the Premises as
may have been so taken except as may be included or cross-collateralized in any
such Permitted Mortgage(s).
(c) Tenant agrees that, upon the request of Landlord, Tenant
will execute, acknowledge and deliver such document or instrument as may be
reasonably requested by the holder of any Permitted Mortgage and/or ground
lessor confirming or agreeing that this lease is assigned to such mortgagee
and/or ground lessor as collateral security for such mortgage and/or ground
lease and agreeing to abide by such assignment, provided that a copy of such
assignment has in fact been delivered to Tenant.
(d) Simultaneously herewith, Ground Lessor shall deliver to
Tenant an estoppel certificate stating that Landlord is not in default pursuant
to the Ground Lease and Ground Lessor, Landlord and Tenant shall enter into the
Non-Disturbance, Recognition and Attornment Agreement attached hereto as Exhibit
F.
(e) Landlord represents that as of the date hereof, the only
ground lease is the Ground Lease, and that the only mortgage on the Premises is
in favor of Fleet Bank, N.A. in the principal amount of $12,500,000. Landlord
further represents that it will only place Permitted Mortgages on the Premises.
(f) As used in this lease, "Permitted Mortgagee" shall mean
(i) Cyprus Amax Minerals Company ("Cyprus") and Amax Copper, Inc. ("ACI"), its
principals or Affiliates, as hereinafter defined in this subparagraph 26(f);
(ii) Amax Realty Development, Inc., ("Amax"), its principals or Affiliates;
(iii) V. Paulius and Associates ("VPA") its principals or Affiliates; (iv) a
state or federally chartered commercial bank or savings and loan association;
(v) a pension trust; (vi) a real estate investment trust; (vii) an insurance
company; (viii) any lender regulated by the state or federal government; or (ix)
any other lender approved by Tenant in its sole judgment. For purposes of this
Paragraph 26, "Affiliate" shall mean (x) a corporation controlled by,
controlling or under common control with Cyprus, ACI, Amax, VPA or its
principals, as the case may be, or (y) a partnership, limited liability company
or joint venture in which Cyprus, ACI, Amax or VPA or its principals, or any
entity referred to in (x) above owns a controlling interest.
(g) As used in this lease, Permitted Mortgage(s) shall mean
any mortgage(s) made by a Permitted Mortgagee(s) which provides for all of the
following (i) individually, or when added to all other Permitted Mortgages on
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the Premises, does not exceed the Purchase Price, as set forth in Paragraph 41;
and (ii) shall be pre-payable at any time provided, however such Permitted
Mortgage may contain a prohibition on prepayments provided such prohibition
shall not be in effect or applicable at the time Tenant may exercise its option
to purchase as set forth in Paragraph 41, and further provided any prepayment
penalties, fees and charges that Tenant shall be obligated to pay shall not
exceed those set forth on Exhibit H (unless Landlord agrees to pay such excess).
27. Surrender of Premises. On the expiration date or
sooner termination of the Term, Tenant shall deliver to Landlord all keys to the
Premises which are in its possession and/or control, shall quit and surrender
the Premises to Landlord in broom-clean, good condition and repair, reasonable
wear and tear and damage by any casualty occurrence or elements excepted, and in
compliance with Tenant's Environmental Law obligations as hereinafter defined in
Paragraph 47 of this lease, together with all alterations, additions and
improvements which may have been made in, on or to the Premises, by Landlord or
by Tenant ("Improvements") except for movable furniture and equipment, or
unattached movable trade fixtures, its racks ("Personal Property"), and those
Improvements made by Tenant that Tenant elects to remove; provided, however,
with respect to Improvements made by Tenant other than Tenant's racks, Tenant
shall ascertain from Landlord, at the time it obtains Landlord's consent for
each such Improvement, whether Landlord desires to have any such Improvement(s)
removed and to have the Premises or any part thereof restored to the condition
in which it was originally delivered to Tenant, ordinary wear and tear excepted.
If Landlord fails to so advise Tenant, Landlord shall be deemed to have not
elected to require the removal of such Improvement(s). If Landlord shall so
desire to have any Improvement(s) removed or if Tenant shall elect to remove any
such Improvement(s) (even if Landlord does not want them to be removed) by
notice delivered to Landlord not less than three (3) months prior to the
Termination Date, then Tenant, prior to the Termination Date, at its sole cost
and expense, shall remove therefrom all such Improvements as may be requested by
Landlord or desired by Tenant, together with its Personal Property, and fix and
repair any and all damage or defacement to the Premises caused by the
installation and/or removal of Improvements or Personal Property and to the
extent the installation of such Improvement or Personal Property replaced some
portion of the Premises as constructed by the Landlord, Tenant shall repair or
restore the Premises to its condition prior to the installation of such
Improvements or Personal Property, reasonable wear and tear excepted. Any or all
of such Personal Property or Improvements not so removed, at Landlord's option,
shall become the exclusive property of Landlord and/or may be disposed of by
Landlord, at Tenant's cost and expense, without further notice or demand.
Tenant's obligation under this Paragraph shall survive the expiration or sooner
termination of the Term.
28. Unavoidable Delays. If, as a result of strikes, lockouts, labor
disputes, inability to obtain labor, materials or reasonable substitutes
therefor, acts of God, governmental restrictions, regulations or controls, enemy
or hostile governmental action, civil commotion, insurrection, revolution,
sabotage, fire or other casualty, acts or failure to act by either party or
other conditions beyond the control of the obligated party, whether prior to or
during the Term, either party shall fail punctually to perform any lease
obligation, then and in any of such events, such obligation shall be punctually
performed as soon as practicable after such condition shall abate. If either
party, as a result of any such condition, shall be unable to exercise any right
or option within any time limit provided in this lease, such time limit shall be
deemed extended for a period equal to the duration of such condition. Except as
otherwise specifically provided in this lease, the failure of Landlord to
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perform any lease obligation for the reasons set forth herein shall not affect,
curtail, impair or excuse this lease or the obligations of Tenant hereunder,
including but not limited to, the obligations of Tenant to pay Rental. It is
expressly agreed that the provisions of this subparagraph shall not apply to the
obligation of Landlord to rebuild or restore pursuant to Paragraph 9 or 13 of
this lease to which Completion Force Majeure shall apply, or to the covenant of
Quiet Enjoyment as set forth in Paragraph 32 of this lease, or to the obligation
of Tenant to make Rental payments in accordance with the provisions hereof. For
purposes of this lease, Completion Force Majeure shall be deemed to mean delay
actually caused by damage or destruction of the Premises resulting from any act,
occurrence, event, disaster or happening, due to natural causes and/or due to
acts of man beyond the reasonable control, knowledge or expectation of Landlord
and its contractor.
29. Landlord Consent. Tenant, in no event, shall be entitled to make
any claim, and Tenant hereby waives any claim for money damages, whether by way
of setoff, counterclaim, defense or otherwise, based upon any claim or assertion
by Tenant that Landlord has unreasonably withheld or delayed any consent or
approval, notwithstanding Landlord has covenanted herein not to unreasonably
withhold its consent. Tenant's sole remedies shall be an action or proceeding to
enforce any such provision, or for an injunction or for a declaratory judgment.
All expenses reasonably incurred by Landlord in reviewing and acting upon any
request for additions or improvements to the Structure of the Building shall be
reimbursed by Tenant to Landlord and shall be deemed to constitute Additional
Rental and be paid over to Landlord thirty (30) days after demand thereof
accompanied by reasonable detail evidencing such expenses.
30. Certification.
(a) Each party, without charge and at any time, within twenty
(20) days after written request of the other, agrees to certify by a written
instrument duly executed, acknowledged and delivered to the requesting party or
any other person, firm or corporation specified in such request: (i) as to
whether this lease has been modified or amended, and if so, the date, substance
and manner of such modification or amendment; (ii) as to the validity and force
and effect of this lease; (iii) as to the existence of any default thereunder,
and if so, the nature, scope and extent thereof; (iv) as to the existence of any
offsets, counterclaims or defenses thereto on the part of Tenant, and if so, the
nature, scope and extent thereof; (v) as to the commencement and expiration
dates of the Term; (vi) as to the dates to which Rental payments have been made;
(vii) as to the existence of any Hazardous Wastes or Substances as hereinafter
defined in Paragraph 47 of this lease, or as to similar environmental matters;
(viii) as to whether or not Landlord delivered possession of the Premises in
accordance with the provisions of this lease, and if not, in reasonable detail,
the manner in which it was not so delivered; (ix) as to whether or not the size,
location, layout, dimensions or construction of the Premises was completed and
furnished in accordance with the provisions of this lease, and if not, in
reasonable detail, the manner in which it was not so completed and furnished;
(x) as to any other matters as reasonably may be so requested. Any such
certificate may be relied upon by the requesting party and any other person,
firm or corporation to whom the same may be exhibited or delivered, and the
certifying party shall be bound by the contents of such certificate.
(b) Tenant further agrees to furnish to Landlord at any time,
but not more frequently than once per calendar year, within ten (10) days after
request of Landlord, and solely in connection with the sale, lease or mortgaging
of the Premises, a copy of its annual unaudited financial statement for its last
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full fiscal year, prepared by independent Certified Public Accountants,
including, but not limited to, a profit and loss statement.
31. Waiver of Trial by Jury. The parties hereby waive trial by jury in
any action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any way
connected with this lease, the relationship of Landlord and Tenant, Tenant's use
or occupancy of the Premises, and/or any claim of injury or damage.
32. Quiet Enjoyment. Landlord covenants and agrees with Tenant that
upon Tenant's paying the Rental and observing and performing all of the terms,
provisions, covenants and conditions on its part to be observed and performed,
Tenant, peaceably and quietly, may enjoy the Premises during the Term hereof,
subject however, to all of the terms, conditions, covenants and provisions of
this lease and to any mortgage and/or ground lease to which this lease is or may
be subject for which a non-disturbance agreement has been obtained from the
holder of such mortgage or ground lease. In the event of any breach by Landlord
of this covenant, if the same would in law or equity give Tenant a right to
cancel this lease, Tenant's right of cancellation shall be subject to Paragraph
50. Upon such cancellation, all rights of either party against the other shall
cease and the Term shall expire with the same force and effect as if the date of
such cancellation were the date originally fixed herein for the expiration of
the Term, but in addition thereto Tenant shall have the right to seek damages in
accordance with the provisions of this lease as a result of the breach of this
covenant.
33. Landlord.
(a) The term "Landlord" as used in this lease means only the
holder of this lease, any ground lessor or the mortgagee in possession for the
time being of the Premises, so that in the event of any sale of or assignment of
this lease or any underlying lease, and except as otherwise specifically
provided in subparagraph 33(b) below, Landlord herein shall be and hereby is
entirely freed and relieved of all obligations of Landlord hereunder thereafter
occurring without the necessity of further agreement between the parties and
such purchaser, assignee or lessee provided that the purchaser, assignee or
lessee has assumed and agreed to observe and perform all of the obligations of
Landlord hereunder to be performed.
(b) Notwithstanding anything herein contained to the contrary,
it is specifically understood and agreed that except with respect to any
independent guaranty and to the provisions set forth below dealing with
transfers of property by the Landlord and/or Ground Lessor, there shall be no
personal liability on the part of, Ground Lessor or Landlord's or Ground
Lessor's agents, co-venturers, representatives, employees, successors, assigns
or any of its constituent members, with respect to any of the terms, provisions,
covenants and conditions of this lease or otherwise, and that Tenant shall look
solely to the assets of Port Carteret, a joint venture, or its successor in
interest, from time to time, subject, however, to the prior rights of any
Permitted Mortgagee, lease holder, or security holder, for the satisfaction of
each and every remedy of Tenant in the event of any breach of any of the terms,
provisions, covenants and conditions of this lease to be performed by Landlord,
or in the event of any other claim which Tenant may allege against Landlord,
Ground Lessor, their agents, co-venturers, representatives, employees,
constituent members, successors or assigns, which exculpation of personal
liability shall, subject to the next succeeding sentence, be absolute and
without exception. In consideration of Tenant agreeing to the aforesaid
exculpation, Landlord and Ground Lessor agree that if Landlord or Ground Lessor
shall transfer, mortgage or sell any interest in any real property now owned or
leased by Ground Lessor or Landlord, and if Tenant thereafter shall obtain a
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judgment against Landlord and/or Ground Lessor pursuant to this lease, Landlord
and Ground Lessor shall thereafter be jointly and severally personally liable to
the extent that their equity in the Premises does not equal or exceed Three
Million and 00/100 ($3,000,000.00) Dollars for a sum not to exceed the
difference between said equity and Three Million and 00/100 ($3,000,000.00)
Dollars to the extent of any judgment rendered in favor of Tenant as a result of
Landlord's default under this lease.
34. Notices. All notices, demands, requests, approvals or consents
required under the terms of this lease shall be given in writing by either party
or its attorney to the other and except as otherwise set forth herein, may be
made by personal delivery or by certified or registered mail, postage prepaid,
return receipt requested, by postal or private expedited delivery service,
addressed to the party at the address set forth hereinabove, or to such other
address as either party may designate in writing, which notice of change of
address shall be given in the same manner, such notices to be deemed complete
upon receipt or non-acceptance of receipt as evidenced by a bill of lading or
such other similar receipt. A copy of any notice given to Landlord shall be
forwarded to Cole, Schotz, Meisel, Forman & Leonard, P.A., 25 Main Street, P.O.
Box 800, Hackensack, New Jersey 07602, Attention: Stanley Stern, Esq. and to
McCarter & English, 4 Gateway Center, 100 Mulberry Street, Newark, New Jersey
07102, Attention: Martin Dowd, Esq., and a copy of any notice given to Tenant
shall be forwarded to Orloff, Lowenbach, Stifelman & Siegel, P.A., 101
Eisenhower Parkway, Roseland, New Jersey 07068, Attention: Stanley Schwartz,
Esq.
35. Covenants, Effect of Waiver.
(a) Every term, condition, agreement or provision set forth in
this lease shall be deemed also to constitute a covenant.
(b) The waiver of any term, provision, covenant or condition
by Landlord or Tenant shall not be construed as a waiver of a subsequent breach
of the same or any other term, provision, covenant or condition, and the consent
or approval by Landlord to or of any act by Tenant, whether or not requiring
Landlord's consent or approval, shall not be construed to waive or render
unnecessary Landlord's consent or approval to or of any subsequent similar act
by Tenant. The failure of Landlord or Tenant to insist in any one or more
instances upon the strict performance of any term, condition, provision,
covenant or agreement or to exercise any option or any right hereunder, shall
not be construed as a waiver or relinquishment of the same for the future. The
receipt by Landlord of any Rental payment or the acceptance by Landlord or
Tenant of the performance of anything required to be performed by this lease,
with knowledge of a breach of any term, condition, provision or covenant of this
lease shall not be deemed a waiver of such breach. No payment by Tenant or
receipt and/or acceptance by Landlord of a lesser sum than the agreed upon
Rental shall operate or be deemed or construed to be other than on account of
the earliest Rental then unpaid, nor shall any endorsement or statement on any
check or any letter or writing accompanying any check nor the acceptance of any
check or payment be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to its right to recover the balance of
any Rental or to pursue any other remedy to which it may be entitled.
36. Holding Over. Any holding over or continued occupancy by Tenant
after the expiration of the Term of this lease shall not operate to extend or
renew this lease or to imply or create a new lease, except, however, that Tenant
shall have a rolling option to hold over for periods of one (1) month each, not
to exceed six (6) months in the aggregate, upon all the terms, covenants and
conditions of this lease, except that Tenant shall pay Landlord monthly Rental
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at the monthly Rental payable during the last month of the Term of this lease
provided, however, that if said last month of the Term of this lease was subject
to a rent concession then the preceding month's rent shall be used, provided
that: Tenant shall exercise its right to hold over by notice(s) delivered to
Landlord not less than twelve (12) months prior to the Termination Date, as may
be extended herein; and Tenant shall not have received any notice of default
which remains uncured at the time it exercises its right and/or as of the
Termination Date. If Tenant shall hold over beyond the period provided for
herein or continue in occupancy without having exercised its right to hold over
in accordance with the provisions of this Paragraph 36, Landlord shall have the
right to immediately terminate Tenant's occupancy or to treat Tenant's occupancy
as a month-to-month tenancy, in which event Tenant shall continue to perform all
obligations, including the payment of Fixed Rent at a rate equal to the lesser
of: two hundred (200%) percent of the Fixed Rent as shall be in effect
immediately prior to the termination of the Term hereof; or the maximum rental
otherwise permitted by applicable law. In no event however, shall Tenant be
relieved of any liability to Landlord for damages resulting from such holding
over.
37. References. Wherever herein the singular or plural number is used,
the same shall include the other, and the use of masculine, feminine or neuter
genders shall include or shall be deemed to mean such other genders as the sense
and circumstances dictate. The paragraph headings, index and captions used
herein are for reference and convenience only. The words "reenter" and "reentry"
as used herein are not restricted to their technical legal meaning.
38. Entire Agreement. This lease contains the entire agreement between
the parties. No oral statement or prior written matter shall have any force or
effect nor shall the waiver of any provision of this lease be effective unless
in writing, signed by the waiving party. Tenant agrees that it is not relying on
any representations or agreements other than those contained in this lease. This
lease shall not be modified except by a writing executed by both parties. The
covenants, provisions, terms, conditions and agreements contained in this lease
shall bind Landlord and Tenant and their respective successors and assigns and
shall inure to the benefit of Landlord and Tenant, the successors and assigns of
Landlord, and the successors and assigns of Tenant who shall have succeeded or
shall have obtained an assignment of lease in accordance with the provisions of
this lease.
39. Attornment. At the option of Landlord, a purchaser of the Premises
or the holder of any Permitted Mortgage or ground lease affecting the Premises,
Tenant agrees that neither the cancellation nor the termination of any ground or
other underlying lease to which this lease is now or hereafter may become
subject or subordinate, nor the sale of the Premises, nor the foreclosure of any
mortgage affecting the Premises, nor the institution of any suit, action,
summary or other proceeding by Landlord or any Permitted Mortgagee, by operation
of law or otherwise, shall result in the cancellation or termination of this
lease or the obligations of Tenant hereunder, and Tenant covenants and agrees in
such event and upon request of Landlord or any such holder of a Permitted
Mortgage or ground lease (as the case may be) to attorn to Landlord or to the
holder or such Permitted Mortgage or ground or underlying lease or to the
purchaser of the Premises whether by foreclosure or otherwise.
40. Security.
(a) Tenant, on the Commencement Date, shall deposit with
Landlord, the Security. If Tenant defaults with respect to any of the terms,
covenants, provisions or conditions of this lease, including, but not limited
to, the payment of Rental, then in addition to any other remedies to which
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Landlord may be entitled by virtue of the provisions of this lease, or pursuant
to law or equity, Landlord shall have the right to use, apply or retain the
whole or any part of the Security to the extent required for the payment of any
Rental, or any other sum as to which Tenant is in default or any sum which
Landlord may expend or may be required to expend by reason of Tenant's default,
including, but not limited to, damages or deficiencies resulting from the
reletting of the Premises, whether such damages or deficiencies accrued before
or after summary proceedings or other reentry by Landlord.
(b) If the entire Security or any portion thereof is
appropriated or applied by Landlord for the payment of Rental or any other sums
due and payable to Landlord by Tenant hereunder, other than as provided for
herein, or for the payment or reimbursement of any cost or expense incurred by
Landlord as a result of any default or failure of performance by Tenant
hereunder, then Tenant, upon the demand of Landlord, forthwith shall remit to
Landlord a sufficient Letter of Credit and/or sufficient good funds to restore
the Security to the sum required to be deposited hereunder, the delivery of such
Letter of Credit and/or good funds hereby deemed to be Additional Rental, and
Tenant's failure to do so within thirty (30) days after the forwarding of such
demand shall constitute a breach of this lease.
(c) Landlord shall maintain any cash portion of the Security
in an interest bearing account in one or more federally insured banking
institutions as Landlord may determine, from time to time, to insure that the
amount of the Security does not exceed the limits of any insurance covering bank
deposits. Tenant shall be entitled to all interest earned on the aforesaid
deposit of Security or the proceeds thereof, which interest shall be payable
annually to Tenant. Tenant further covenants that it will not assign or encumber
or attempt to assign or encumber the Security except as permitted pursuant to
the provisions of Paragraph 15 hereof, and that neither Landlord nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.
(d) It is expressly understood and agreed that the exercise of
any remedy by Landlord for any default on the part of Tenant shall not be deemed
such a termination of this lease as to entitle Tenant to the recovery of the
Security, and said Security shall be retained and remain in the possession of
Landlord as hereinbefore stated.
(e) In the event of a sale, leasing or assignment of
Landlord's interest in this lease by Landlord, Landlord shall be obligated to
transfer the Security or the remaining balance thereof, to the purchaser, lessee
or assignee, shall furnish Tenant with notice thereof and thereupon shall be
released by Tenant from all liability for the application of the Security, and
Tenant agrees to look solely to the transferee for the application of the
Security. It is agreed that the provisions hereof shall apply to every transfer
or assignment made of the Security to a new transferee.
(f) If Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, including the
delivery of the Premises to Landlord in accordance with the provisions hereof
and compliance with all Environmental Laws with which it is obligated to comply,
then such portion of the Security not required by Landlord to cure any Tenant
defaults shall be returned to Tenant within a reasonable time, not to exceed
thirty (30) days following the expiration or sooner termination of the Term
hereof.
(g) To the extent that the Security shall be in form of a
Letter of Credit, each Letter of Credit to be deposited hereunder shall be a
clean, irrevocable Letter of Credit, shall be the amount required hereunder,
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shall be issued by a bank located in New Jersey and shall be in form and
substance, satisfactory to Landlord, and shall provide, inter alia, the
following:
(i) It shall be renewed in the agreed upon
amount, not less than thirty (30) days prior to its expiration, failing which,
Landlord may draw upon the Letter of Credit and place the cash in an
interest-bearing account or accounts as set forth in subparagraph 40(c) above;
(ii) Landlord shall have the right to draw upon
all or any part(s) of the Letter of Credit, immediately upon delivering a
certification to the issuing bank setting forth that it is entitled to draw upon
the Letter of Credit pursuant to the provisions of this lease and setting forth
the amount of the money sought to be received, which Letter of Credit may be
drawn upon, to the extent necessary, to satisfy said request in full;
(h) Landlord shall retain the proceeds of the Letter of Credit
received pursuant to subparagraph 40(h)(iii) in accordance with the provisions
hereof and shall return such proceeds to Tenant upon receipt of a new Letter of
Credit in compliance herewith.
(i) Notwithstanding anything contained in this lease to the
contrary, and provided Tenant is not in default of the terms or provisions of
this lease beyond any applicable notice or grace period, Landlord agrees that
Tenant shall be entitled to occupy the Premises free of any obligation to pay
the Monthly Fixed Rent for that period of time at the end of the Term as the
same may have been extended, proportionate to the Security Deposit then required
to be deposited with Landlord pursuant to this Paragraph 40 and any additional
security deposited pursuant to subparagraph 15(f)(iv), provided that Tenant
shall post with Landlord's attorney, as the escrow agent, pursuant to an escrow
agreement agreed upon by Landlord, Tenant and the escrow agent, on or before the
time such Monthly Fixed Rent would otherwise be due, an amount equal to the
Monthly Fixed Rent as replacement security for the faithful performance of the
terms and conditions of this lease by Tenant, which replacement security shall
be held in escrow by said attorney to insure compliance by Landlord and Tenant
with the provisions of this lease. For example, in the event there has been an
assignment of this lease pursuant to subparagraph 15(f)(iv), and the assignee
has provided Landlord with additional security which when added to the Security
required in this Paragraph 40 shall equal two (2) years' Annual Fixed Rent,
Tenant shall not be obligated to pay the Monthly Fixed Rent for the last two (2)
years of the Term of this lease, as the same may have been extended, provided
Tenant deposits with Landlord's attorney as same becomes due and payable, a sum
equal to the Monthly Fixed Rent for each month during such two (2) year period.
In the event the Security held by Landlord pursuant to the provisions of this
Paragraph 40 and any additional security deposited pursuant to subparagraph
15(f)(iv) is in the form of a Letter of Credit, Landlord agrees to deliver same
in escrow to Landlord's attorney at such time as such Security and additional
security shall equal the Monthly Fixed Rent required to be paid by Tenant to
Landlord for the balance of the Term of this lease, and Tenant shall thereafter
continue to pay Landlord the Monthly Fixed Rent required to be paid by Tenant as
and when such Monthly Fixed Rent becomes due and payable to Landlord. The
aforesaid escrow agreement shall provide, inter alia, for the release of the
replacement security by the escrow agent (whether in cash, or by drawing upon
the Letter of Credit and delivering the proceeds therefrom) to Landlord upon the
same terms and conditions as the Security would otherwise be permitted to be
used, applied or retained by Landlord in accordance with this Paragraph 40.
(j) To the extent the Security or any portion thereof shall be
in the form of cash, and Tenant desires, any time during the Term hereof, to
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provide a Letter of Credit in substitution for such cash, Tenant agrees to
provide Landlord with at least (30) days' prior notice of such proposed
substitution, and Landlord, upon receipt of said Letter of Credit shall return
said cash to Tenant.
41. Option to Purchase.
(a) Provided Tenant shall not have received any notice of
default under the terms or provisions of this lease, which shall not have been
cured as permitted hereunder, at the time it shall exercise its option to
purchase or at any time thereafter, Tenant shall have the option to purchase the
Premises after the expiration of the fifth (5th) Lease Year, or at such earlier
time concurrent with the exercise of the option to purchase by Tenant pursuant
to Lease I, subject to the terms, conditions and provisions set forth in this
Paragraph 41.
(b) It is acknowledged that Tenant has the right to lease
Additional Lands pursuant to Paragraph 49 hereof and to cause the construction
of the Additional Building pursuant to Paragraph 50 hereof. If Tenant shall
lease the Additional Lands, then the option to purchase pursuant to this
Paragraph 41 shall apply to the Premises, together with the Additional Lands and
the Additional Building, if constructed on the Lands. If Tenant shall fail to
lease the Additional Lands, then Tenant's option to purchase the Premises shall
not include the Additional Lands.
(c) Tenant shall notify the Landlord of its election to
purchase the Premises not less than nine (9) months prior to the anticipated
Closing Date.
(d) The initial Purchase Price for the Premises (excluding the
Additional Lands) through the expiration of the fifth Lease Year shall be an
amount equal to the aggregate Annual Fixed Rent of the Premises, divided by nine
hundred seventy-five ten thousandths (.0975), plus an amount equal to the
brokerage commission which shall be due and payable in connection with the
purchase and sale ("Base Purchase Price"). For the purposes of determining the
Purchase Price pursuant to this subparagraph (d), the aggregate Annual Fixed
Rent shall be reduced by $.15 per square foot of the Building.
(e) If the purchase shall include the Additional Lands in its
present as-is condition, the Base Purchase Price shall be increased at the rate
of One Hundred Twelve Thousand Six Hundred ($112,600.00) Dollars per acre of
Additional Lands, plus an amount equal to the brokerage commission which shall
be due and payable in connection with the purchase and sale of such Additional
Lands.
(f) If the Additional Lands shall have been improved as a
parking facility in accordance with the provisions of Paragraph 49 hereof, then
in addition to the increase in the Base Purchase Price pursuant to subparagraph
(e) above, the Base Purchase Price shall be increased by an amount equal to the
Annual Fixed Rent to be paid for the improved Additional Lands, pursuant to the
provisions of subparagraph 49(k) hereof, whether or not Tenant shall have
exercised its option to lease and/or use the improved Additional Lands, divided
by nine hundred seventy-five ten thousandths (.0975), plus an amount equal to
the brokerage commission which shall be due and payable in connection with the
purchase and sale of such Additional Lands. For the purposes of this
subparagraph 41(f), in determining the Annual Fixed Rent to be paid for the
improved Additional Lands, there shall be excluded therefrom, the amount of One
Hundred Four Thousand ($104,000.00) Dollars on account of the Additional Lands
Fixed Rent.
(g) Commencing in the sixth Lease Year, the Purchase Price
shall be increased during any Lease Year in which closing of title shall occur
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over the Base Purchase Price, by a percentage equal to the percentage increase
in the Index (as hereinafter defined) between the Index for the tenth (10th)
month of the fifth (5th) Lease Year and the published Index for the second month
prior to the month in which the closing shall occur, provided, however, that in
no event shall the Purchase Price be less than the Base Purchase Price.
(h) If Landlord shall have constructed an Additional Building
on the Lands pursuant to the provisions of Paragraph 50 hereof, then the
Purchase Price shall be increased by an amount equal to the lesser of (a)
eighty-five and 00/00 ($85.00) Dollars multiplied by the gross square footage of
the Additional Building, determined by outside measurements, plus the demolition
costs referred to in Paragraph 50, increased but not decreased by a percentage
equal to the percentage of increase determined by the lesser of: (i) the
percentage of increase in the Index, as hereinafter defined in subparagraph
41(i), between the date hereof and the Index for the second month prior to the
month in which the closing shall occur; or (ii) the percentage of increase in
the McGraw Hill's Engineering Record Cost of Construction Index for the New
York/New Jersey area ("Construction Index") or comparable Construction Index if
said Construction Index is no longer published, between the date hereof and the
Construction Index for the second month prior to the month in which the closing
shall occur; or (b) the cost of constructing the Additional Building, if Tenant
shall elect to have the bid process employed as in Paragraph 50 provided.
(i) The term Index shall mean the Consumer Price Index for
Urban Wage Earners and Clerical Workers, All-Cities, All Items revised 1982-1984
equal 100, published by the Bureau of Labor Statistics, U.S. Department of Labor
(herein referred to as the "Index"). If the Index (or a successor or substitute
index) becomes unavailable, a reliable governmental or other nonpartisan
publication evaluating the information theretofore used in determining the Index
shall be used in lieu of such Index.
(j) The closing of title to Tenant pursuant hereto shall take
place on the Closing Date specified at 10:00 a.m. at the offices of Landlord's
attorneys or at such other time, date and place as the parties mutually may
agree upon, or at such other place as Tenant's lender reasonably may designate.
(k) At the closing, Tenant shall pay over the Purchase Price
in full and Landlord shall convey title in accordance with the following
provisions:
(i) Landlord, at its sole cost and expense, shall
proceed and exert reasonable efforts to cause the Premises, and thereafter
Additional Lands and Additional Building, if applicable, to be resubdivided, if
necessary, so as to constitute a separate lot and closing of title shall be
subject to Landlord obtaining final, unappealable approval of such subdivision,
if applicable. If Landlord shall not be able to obtain resubdivision and if
Tenant shall have exercised its option to purchase hereunder, then Landlord, at
its sole cost and expense, shall cause a ground lease, condominium or other
mutually acceptable method to be employed so as to enable Tenant to obtain
substantially the same interest in the Building, Additional Lands and Additional
Building, if applicable, in accordance with the provisions hereof.
(ii) Said Premises, Additional Lands and
Additional Building, if applicable, shall be sold and conveyed subject to zoning
regulations, ordinances, taxes, assessments, all easements, restrictions and
rights of way presently existing, such additional easements, restrictions and
rights of way as shall be permitted hereunder and such other liens or
encumbrances as Tenant may have placed, permitted, agreed or consented to be
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placed against the Premises and/or Additional Lands and Additional Building, if
applicable;
(iii) Landlord shall deliver a deed, affidavit of
title and FIRPTA affidavit in usual form. The deed shall be bargain and sale
with covenants against Grantors' acts and shall be duly executed and
acknowledged so as to convey to Tenant fee simple title to the Premises in
accordance with the provisions hereof;
(iv) Landlord shall have the right to utilize the
proceeds of sale to discharge or secure the release of any lien encumbering the
Premises and/or Additional Lands and Additional Building, if applicable, and to
which the title is not to be subject;
(v) The Premises and Additional Lands and
Additional Building, if applicable, shall be sold "as-is" and the delivery and
acceptance of the deed of conveyance at the time of closing of title shall be
deemed to constitute full compliance by Landlord of all of the terms, covenants
and conditions on its part to be performed in connection with the sale
hereunder;
(vi) If the Premises and/or Additional Lands and
Additional Building, if applicable, shall be subject to any liens, including
transfer, inheritance, estate, franchise, license or other similar taxes, which
Landlord is obligated to satisfy, the amount of which has not been finally
fixed, the same shall not be deemed an objection to title, provided that the
title company at the time of closing of title, will issue or bind itself to
issue its policy which will insure Tenant against collection of said liens and
taxes from said Premises and/or Additional Lands and Additional Building, if
applicable;
(vii) The Rental payments to be made hereunder,
including Rental on account of the Additional Lands and Additional Building, and
all other usual adjustments shall be adjusted as of the Closing Date, it being
agreed that Tenant shall not be entitled to a credit against the Purchase Price
on account of any payments of Rental, except as it relates to a period
subsequent to closing, or on account or any payments for Taxes and/or insurance
premiums;
(viii) Tenant, subject to and in accordance with
Paragraph 47 of this lease, shall comply with ISRA. Following closing, the
provisions of Paragraph 47 of this lease shall remain in full force and effect,
including any environmental claim relating to the Premises and Additional Lands
and Additional Building, if applicable;
(ix) In the event that the Closing Date
established pursuant hereto shall fall on a Saturday, Sunday or legal holiday,
then it is agreed that the Closing Date shall be the first business day
thereafter;
(x) In the event that Tenant shall fail to close
title in accordance with the provisions hereof following its exercise of its
option to purchase, then and in such event, said right shall cease and terminate
immediately and be of no further force and effect;
(xi) Tenant shall have the right to assume or
take subject to any mortgage then encumbering the Premises, subject only to and
in accordance with, the applicable provisions, if any, of the mortgage, provided
that the outstanding principal balance of the mortgage shall not exceed the then
Purchase Price, and provided further that Landlord, its constituent members and
all guarantors shall be relieved and released from all obligations thereunder.
Tenant shall pay any and all assumption fees and charges or any and all
prepayment penalties, fees and charges, if any, if Tenant does not take subject
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to or assume the mortgage, provided, however, that said prepayment penalties, or
prepayment fees and charges that Tenant shall be obliged to pay shall not exceed
those set forth on Exhibit H, and any such excess shall be a credit against the
Purchase Price, or, in the alternative, at Tenant's election, paid by Landlord;
and
(xii) The Ground Lessor shall execute this lease
to indicate its consent to and agreement to be bound by the provisions of this
Paragraph 41.
42. Real Estate Broker.
(a) Landlord and Tenant each represent to the other that it
has not dealt with any real estate broker in connection with this lease,
including the option by Tenant to purchase the Premises as set forth in
Paragraph 41, other than Broker to whom a commission shall be paid by Landlord
pursuant to a separate agreement with Broker which incorporates any commission
payable to Broker by Landlord with respect to Tenant's exercise of the option to
purchase as set forth in Paragraph 41. Each party agrees that if any claims
should be made for commissions by any other broker by reason of any acts or
conduct of such party or its representatives, such party will indemnify and save
harmless the other party from any and all claims, demands, losses, liabilities,
judgments, costs, expenses, attorneys' fees or other damages resulting from,
arising out of, or in connection with any such claim, relating to this lease or
the transaction contemplated hereunder. Such indemnification shall include, but
shall not be limited to, all commission claims, as well as all reasonable costs,
expenses, legal fees and expert fees incurred in defending any claim of any
third party and in enforcing the provisions of this Paragraph 42. If by
settlement or otherwise, any monies or other consideration is awarded to or
turned over to any third party as a result of such commission claim, the
indemnifying party shall be solely responsible therefor.
(b) In the event of a transfer of the Premises to a third
party, whether by sale, foreclosure or deed in lieu of foreclosure, or
otherwise, and such third party fails to make any commission payment to Broker
within five (5) days following receipt of notice of non-payment, pursuant to the
commission agreement entered into between Broker and Landlord, Tenant, upon
notice from Broker (with a copy to the new owner) of the new owner's failure to
make such payment and setting forth the amount of annual commission then due and
payable to Broker, hereby is authorized and directed by Landlord to make monthly
payments of Fixed Rent directly to Broker (at the address set forth in the
notice), until the commission then due and payable shall have been paid.
Landlord and Tenant agree that the payment of the brokerage commission by Tenant
to Broker pursuant to this subparagraph (b) shall be in lieu of Fixed Rent
payments required pursuant to this lease and Tenant shall not be in default
pursuant to this lease by virtue of said payment to Broker.
43. Future Easements. Tenant understands that the Premises are part of
a larger tract of land presently owned by Ground Lessor and developed or
hereafter to be developed by Landlord, known as Port Carteret, (herein referred
to as the "Industrial Park"). In connection therewith, Tenant hereby consents to
the granting by Landlord of easements (at any time) over the Premises to various
utility companies and municipalities, provided that said easements (except with
respect to those exclusively serving the Building and/or Additional Building)
shall lie in the set back areas (i.e., those areas provided by the current
zoning ordinance in which structures are precluded) within the Premises and
shall be relocatable at no expense to Tenant should Tenant seek to improve said
area and be impeded as a result of such easement. Tenant consents to the
continuation or extension of Port Carteret Drive as a public road. In addition,
Landlord reserves to itself, Ground Lessor and their licensees, invitees,
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contractors and employees, the right of ingress and egress over a twenty-five
(25) foot area on a portion of the Additional Lands adjacent to the existing
pier, as shown on Exhibit C hereof, for the purposes of use, maintenance,
repair, replacement, rebuilding, demolition and otherwise dealing with the pier.
Tenant consents to any future dedication of any of the roadways or driveways
abutting the Premises as public roadways.
44. Adjacent Excavation and Shoring. In the event that any excavation
shall be made upon land adjacent to the Building, or shall be authorized to be
made, whether or not same shall be on lands owned or controlled by Landlord,
then and in any of such events, Tenant agrees to permit the person(s) causing or
authorized to cause such excavation, the right to enter upon the Premises for
the purposes of doing such work as shall be necessary to preserve and/or protect
all or any portion of the Building and all persons in and around the Building
from injury or damage and/or to support the Building. Landlord agrees to use its
best efforts to cause the least reasonably possible interference with Tenant's
use of the Premises, and shall employ labor on weekends or on an overtime basis
to avoid or reduce any unreasonable interference. Except as provided in
Paragraph 50, Tenant hereby waives any and all rights to make any claim for
damages, indemnity, cost and/or other expense against Landlord, or to make any
claim for a diminution or abatement of Rental.
45. Validity of Lease. The terms, conditions, covenants and provisions
of this lease shall be deemed to be severable. If any clause or provision herein
contained shall be adjudged to be invalid or unenforceable by a court of
competent jurisdiction or by operation of any applicable law, the same shall be
deemed to be severable and shall not affect the validity of any other clause or
provision herein, but such other clauses or provisions shall remain in full
force and effect.
46. Representations. Tenant represents that it is a corporation in good
standing of the State of New Jersey, that there are no judgments or suits
pending against it other than in the ordinary course of business, that it is not
delinquent in the payment of taxes, that the persons executing this lease on
behalf of Tenant are empowered and authorized to enter into this lease for and
on behalf of Tenant. Each party agrees to deliver to the other simultaneously
with the execution hereof, a certified copy of a resolution of its Board of
Directors or certification authorizing the execution of this lease.
47. Environmental Provisions.
(a) For purposes of this lease, the following additional
definitions shall apply:
(i) "Hazardous Substances" shall include any
pollutants, petroleum products, dangerous substances, toxic substances,
hazardous wastes, hazardous materials, or hazardous substances as regulated
under, defined, listed or included in or pursuant to the Industrial Site
Recovery Act, N.J.S.A. 13:1K-6, et seq., and all rules, regulations, orders,
directives and opinions promulgated thereunder ("ISRA"); the Spill Compensation
and Control Act, N.J.S.A. 58:10-23.11 et seq. and all rules, regulations, orders
directives, and opinions promulgated thereunder ("Spill Act"); the Solid Waste
Management Act, N.J.S.A. 13:1E-1 et seq.; the Resource Conservation and Recovery
Act, 42 U.S.C. ss. 6901 et seq.; the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. ss.9601 et seq., and all
rules, regulations, orders, directives and opinions promulgated thereunder
("CERCLA"); or any other Federal, State or Local environmental law or ordinance
and all rules, regulations, orders, directives and opinions promulgated under
the foregoing (collectively "Environmental Laws").
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(ii) "Release" means releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping.
(iii) "Notice" means any summons, citation,
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other communication, written or oral, actual or threatened, from the New
Jersey Department of Environmental Protection ("DEP"), the United States
Environmental Protection Agency ("EPA"), any other Federal, State or Local
agency or authority or any other entity or any individual, concerning any act or
omission resulting in or which may result in the Release of Hazardous Substances
into the waters or onto the lands of the State of New Jersey or into waters
outside the jurisdiction of the State of New Jersey or into the "environment" as
such term is defined in CERCLA. "Notice" shall include the imposition of any
liens on any real or personal property or revenues of Tenant including, but not
limited to, Tenant's interest in the Premises, or any of Tenant's property
located thereon, pursuant to or resulting from the violation of, any
Environmental Law, or any other governmental actions, orders or permits, or any
knowledge after due inquiry and investigation of any facts which could give rise
to any of the above.
(b) To the extent that Tenant may be permitted pursuant to
this lease or by applicable law to use the Premises for the generating,
manufacturing, refining, transporting, treating, storing, handling, disposing,
transferring or processing of Hazardous Substances on site, above ground or
below ground (all herein referred to as the "Presence of Hazardous Substances"),
Tenant shall ensure that said use shall be conducted at all times strictly in
accordance with applicable Environmental Law. Tenant shall not cause nor permit
as a result of any intentional or unintentional act or omission, a Release of
Hazardous Substances. If any intentional or unintentional act or omission
results in any actual or alleged Release of Hazardous Substances, Tenant
promptly shall conduct necessary sampling and cleanup and remediate such Release
in accordance with applicable Environmental Laws.
(c) Simultaneously herewith, within twenty (20) days after
written request by Landlord, and on each anniversary of the Commencement Date
hereof, Tenant shall deliver to Landlord a duly executed and acknowledged
affidavit of Tenant's chief executive officer certifying:
(i) The proper SIC number relating to Tenant's
then current business and use(s) of the Premises; and
(ii) That, except in the ordinary course of its
business, Tenant's then current use(s) of the Premises does not involve the
"Presence of Hazardous Substances"; or
(iii) That, except in the ordinary course of its
business, Tenant's then current use(s) of the Premises does involve the Presence
of Hazardous Substances. If Tenant's use in other than the ordinary course of
its business does involve the Presence of Hazardous Substances, said affidavit
shall describe in reasonable detail that portion of Tenant's operations which
involve the Presence of Hazardous Substances. Said description, inter alia,
shall identify each Hazardous Substance and describe the manner in which it is
generated, handled, manufactured, refined, transported, treated, disposed of,
and/or stored. Tenant shall supply Landlord with such additional information
relating to said Presence of Hazardous Substances as Landlord reasonably may
request; and
(iv) If not in the ordinary course of business, a
detailed statement of all processes, functions, procedures and other methods of
operation used at the Premises and a description of all materials stored at the
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Premises except those materials stored and distributed in the ordinary course of
Tenant's business.
(d) Landlord represents that presently there are no
underground petroleum storage tanks at the Premises, either for the storage of
heating oil or motor fuel. Neither party shall have the right to install any
tank(s) and/or under the Premises without the prior written consent of the
other, except that Tenant shall have the right to install above-ground tanks on
the Premises subject to Landlord's prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed.
(e) Tenant acknowledges that the Premises is part of a larger
parcel that is the subject of an Administrative Consent Order dated January 22,
1988 (and amended on April 24, 1992 and January 28, 1993) (the "ACO") by and
between Amax, Inc. ("Amax") and the DEP; that Amax has conducted and will
continue to conduct investigation and cleanup pursuant to the ACO with respect
to Hazardous Substances that were released at the Premises prior to the term of
the Lease ("Prior Releases"); that the DEP has approved a Remedial Action Plan
("RAP") pursuant to the ACO under which Amax is proceeding to, among other
things, (i) conduct a surficial site cleanup and building decontamination and
demolition, (ii) construct a cap over the property, including the Land, and to
redevelop the property with buildings and other impermeable surfaces, and (iii)
conduct groundwater monitoring (collectively, the "Remedial Actions"); that Amax
may be required to employ and install Engineering Controls and/or Institutional
Controls (as such terms are defined under N.J.S.A. 58:10B-1 at the Premises in
connection with the implementation of the Remedial Actions; and that Amax has
recorded a Declaration of Environmental Restriction (a copy of which is attached
hereto as Exhibit "G" hereof) ("DER") and may be required to amend the DER or
record a new DER or a restatement thereof restricting the future use of the
property, including the Premises, or any portion thereof (including the
Additional Lands) to non-residential purposes or placing of record the existence
of Hazardous Substances in the surface or subsurface soil or groundwater on, at,
under or emanating from the property, including the Premises, or the existence
of an Institutional Control, Engineering Control or other non-permanent remedy,
or in order to establish any Classification Exception Area with respect to the
groundwater emanating from the property, with respect to the Prior Releases. In
the event that, after the date hereof Landlord intends to employ or install any
Engineering Controls or Institutional Controls at the Premises which will
adversely affect Tenant's operations of a cold storage warehouse at the Premises
or Tenant's access to the Premises to conduct such operations, Landlord shall be
required to obtain Tenant's prior consent thereto, which consent shall not be
unreasonably withheld, conditioned or delayed. Tenant shall use and/or permit
the use of the Premises solely for non-residential purposes. Tenant shall not
make any exterior alterations, additions or improvements, nor engage in any
construction or excavation activities on the Premises, that are inconsistent
with any Remedial Action implemented at the Premises by Ground Lessor and/or
Landlord pursuant to the ACO, including any Engineering Controls or
Institutional Controls imposed on the Premises, unless Tenant complies with all
requirements of the DEP for additional Remedial Actions, including cleanup of
soils and groundwater, in connection with such use or construction or excavation
activity and pays all incremental costs associated with such additional Remedial
Action; provided, however, that Ground Lessor and/or Landlord shall be
responsible for compliance with the requirements of DEP (including cleanup of
soils and groundwater) in connection with any construction or excavation
activity related to the construction of the parking facilities as provided in
Paragraph 49 and/or the Additional Building as provided in Paragraph 50 in the
event that such options are exercised within six (6) years of the Commencement
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Date. Except as otherwise provided herein, Ground Lessor and Landlord, and their
respective successors and assigns, shall indemnify and hold Tenant harmless from
and against all obligations, liabilities, damages, costs, fines, penalties,
losses and expenses under, in connection with, arising from or relating to
Landlord's failure to comply with ISRA as set forth herein, or as a result of
claims arising out of or related to the Prior Releases or other pre-existing
Hazardous Substance condition or off-site subsurface or surface migration on the
Premises including, without limitation, any attorneys' fees, expert fees or
other costs of defense incurred in response thereto. In connection with any
claim made by Tenant against Landlord or Ground Lessor hereunder, Tenant agrees
to credit Landlord and/or Ground Lessor with the amount of all insurance
proceeds received by Tenant in connection with such claim caused by or due to
damage caused by off-site Hazardous Substances not caused by Landlord or the
Ground Lessor which migrate either on or beneath the surface onto the Premises.
Neither Ground Lessor nor Landlord shall indemnify or hold Tenant harmless from
any damages or claims to the extent such damages or claims arise from Tenant's
activities, conduct or actions, including any construction or excavation at, on
or under the Premises. In exchange for this indemnity, Tenant hereby agrees that
neither Tenant nor its employees, agents, successors, assigns or contractors
will engage in any construction or excavation activity on the Premises which may
disturb the Building foundations, subsurface soils or any Engineering Controls
at the Premises without the prior written consent of Landlord, Ground Lessor or
their respective successors or assigns, which consent shall not be unreasonably
withheld, conditioned or delayed. Upon the request of Tenant, Landlord shall
provide Tenant with copies of any submissions by Ground Lessor or Landlord to,
or responses from, DEP in connection with the ACO and Landlord's and/or Ground
Lessor's Remedial Actions to the extent relating to the Premises and/or the
Additional Lands.
(f) Tenant, at its sole cost and expense, promptly shall apply
for ISRA approval prior to the occurrence of any event that would trigger ISRA
applicability (specifically including Tenant's acquisition of the Property, the
termination of the lease or Tenant's cessation of operations at the Premises),
and pursue the matter to obtain an approved negative declaration or an approved
remedial action work plan completion, it being acknowledged that Tenant's
contemplated use presently does not trigger ISRA applicability. In the event
that the occurrence is the transfer of title or other action by Landlord, and/or
Ground Lessor, other than the sale of the Premises to Tenant, Landlord shall
give timely notice to Tenant of said contemplated transfer so as to give Tenant
adequate time to meet its obligations hereunder. Notwithstanding the foregoing,
subject to Tenant's obligations pursuant to subparagraph (g) below, Landlord
shall be responsible for ISRA submissions including the costs thereof, in the
event that the actions or conduct of Landlord or any pre-existing Hazardous
Substance condition or off-site surface or subsurface migration onto the
Premises (other than those initial submissions and those subsequent submissions
related to Tenant's operations, required in connection with the sale of the
Premises to Tenant): (i) causes the Premises to be subject to ISRA; or (ii)
triggers the applicability of ISRA; or (iii) requires any environmental response
or remediation; provided however, that Tenant shall cooperate in the preparation
of the required submissions pursuant to ISRA. Landlord represents that the
Premises presently are included within the ACO entered into by Ground Lessor and
DEP and that the use of the Premises as of the date immediately prior to the
Commencement Date shall not be subject otherwise to ISRA.
(g) Should DEP determine that pursuant to ISRA, a remedial
action workplan be prepared and a cleanup be undertaken because of a Release of
a Hazardous Substance at the Premises which occurred during the Term of the
lease, for which Tenant is responsible pursuant to this Paragraph 47, Tenant, at
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its sole cost and expense, promptly shall prepare and submit the required plan
and financial assurances and promptly shall carry out the approved plan. Should
Tenant's operations at the Premises be outside of those industrial operations
covered by ISRA, Tenant, at its own cost and expense, shall obtain a Letter of
Nonapplicability or de minimis quantity exemption from DEP prior to its purchase
of the Premises and/or termination of the Term and Tenant, at Landlord's option,
shall have a consultant satisfactory to Landlord prepare an environmental report
and/or undertake sampling at the Premises sufficient to determine whether or not
Tenant's operations have resulted in a Release of a Hazardous Substance at or
around the Premises. Tenant's sampling, at a minimum, shall establish the
integrity of any underground storage tanks at the Premises, which may be
installed at the Premises pursuant to subparagraph 47(d). Should the sampling
reveal any Release of a Hazardous Substance for which Tenant is responsible
pursuant to this Paragraph 47, then Tenant, at its sole cost and expense,
promptly shall pay the costs of such consultant and sampling and clean up the
Premises in accordance with Environmental Laws and DEP, unless such Release of
Hazardous Substance was caused by Landlord or Ground Lessor or is the Landlord's
or Ground Lessor's obligation to remediate pursuant to the provisions of this
Paragraph 47. Should the sampling not reveal any Release of Hazardous Substance
that Tenant is responsible for or that requires remediation, then Landlord, at
its sole cost and expense, promptly shall pay the costs of such consultant and
sampling.
(h) Should the submission of a remedial action workplan be
required pursuant to ISRA, then notwithstanding the minimum financial security
requirements pursuant to ISRA, Tenant, at its sole cost and expense, if Tenant
is obligated pursuant to this Paragraph 47 to remediate, shall furnish to DEP
financial assurance satisfactory to DEP in form and content to DEP, in the
amount of at least 150% of the highest cleanup cost estimate obtained,
guaranteeing the performance and completion of Tenant's obligations pursuant to
ISRA. The security furnished by Tenant shall be renewed and kept in force by
Tenant, at Tenant's sole cost and expense, until such time as Tenant shall have
received final approval of the cleanup and a release of the financial assurances
from DEP. Notwithstanding the foregoing, Tenant shall not be required to comply
with the provisions of this subparagraph if the actions or conduct or
responsibilities under this lease of Landlord or Ground Lessor: (i) causes the
Premises to be subject to ISRA; and (ii) triggers the applicability of ISRA to
the Premises (except for the sale of the Premises to Tenant pursuant to
Paragraph 41 to which ISRA applies as a result of Tenant's operations).
(i) Tenant hereby assumes and agrees to indemnify and hold
harmless Landlord and Ground Lessor from and against all obligations,
liabilities, damages, costs, fines, penalties, losses and expenses under, in
connection with, arising from or relating to, Tenant's compliance or failure to
comply with ISRA as set forth above, including but not limited to, reasonable
attorney, consultant and expert fees. Such obligation to comply with ISRA shall
be discharged when DEP issues a non-applicability letter, approves a negative
declaration or has issued written confirmation that a remedial action workplan
has been implemented and completed to the satisfaction of the DEP.
(j) In the event Tenant is responsible for compliance with
ISRA or to obtain a non-applicability letter as set forth in this Paragraph 47
and Tenant is unable to obtain either (a) a non-applicability letter; (b) an
approval of a negative declaration; or (c) an approval of a remedial action
workplan, prior to the occurrence of the event triggering applicability of ISRA,
then Tenant, at its sole cost and expense, shall do everything necessary in
order to obtain agreement with DEP authorizing the occurrence of the event
triggering ISRA and obligating Tenant to comply, at its sole cost and expense,
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with all requirements of ISRA on terms and conditions satisfactory to Landlord
and without imposing any restrictions or prohibitions against the Premises.
Notwithstanding the foregoing, Tenant shall not be required to comply with the
foregoing provisions of this subparagraph if the actions or conduct or
responsibilities under this lease of Landlord or Ground Lessor: (i) cause the
Premises to be subject to ISRA; and (ii) trigger the applicability of ISRA to
the Premises (except for the sale of the Premises to Tenant pursuant to
Paragraph 41 to which ISRA applies as a result of Tenant's operations). Upon the
request of Landlord, Tenant shall provide Landlord with copies of all
submissions by Tenant to or responses from, DEP relating to the Premises and/or
the Additional Lands.
(k) Without limiting any other provisions of this Paragraph
47, Tenant, at its sole cost and expense, shall observe, comply and fulfill all
of the terms and provisions of all applicable Environmental Laws, as the same
may be amended from time to time, as they relate to the Premises during the term
of this lease or to Tenant's use or occupancy of, or operations at, the
Premises, but subject to the provisions of subparagraph (r) hereof.
Without limiting the generality of the foregoing, Tenant agrees:
(i) That it shall not do or omit to do nor suffer
the commission or omission of any act, the commission or omission of which is
prohibited by or which is in violation of any Environmental Law, including
without limitation, the Release of Hazardous Substances; and
(ii) Whenever the provision of any Environmental
Law requires the "owner or operator" to do any act, Tenant on behalf of Tenant,
Landlord and/or Ground Lessor, as the case may be, subject to the obligations of
Landlord pursuant to the provisions of this Paragraph 47, shall do such act at
its sole cost and expense, including the making of all submissions and the
providing of all information, it being the intention of the parties hereto that
Landlord shall be free of all expenses and obligations arising from or in
connection with compliance with Environmental Laws, and the Tenant shall fulfill
all such obligations and pay all such expenses, except as shall result from the
acts or omissions of Landlord and/or Ground Lessor or the breach of their
obligations pursuant to the provisions of this Paragraph 47.
(l) In the event there shall be filed a lien against the
Premises arising out of claim(s) by DEP pursuant to the provisions of the Spill
Act or by EPA pursuant to the provisions of CERCLA as a result of a Release of
Hazardous Substances which Tenant is obligated to remediate, Tenant shall
immediately either: (i) pay the claim and remove the lien from the Premises; or
(ii) furnish a bond, cash receipt or other security satisfactory to Landlord
sufficient to discharge the claim out of which the lien arises.
(m) Tenant hereby covenants and agrees to indemnify and hold
Landlord and Ground Lessor harmless from and against any and all losses of
whatever nature, including lost rentals, claims, costs, fines, penalties, losses
and expenses, including but not limited to, reasonable attorney, consultant and
expert fees that Landlord and/or Ground Lessor may sustain as a result of
Tenant's non-compliance or failure to comply in a timely fashion with the
provisions of this Paragraph 47 or any Environmental Law applicable pursuant to
this lease to Tenant or caused by Tenant's Release of Hazardous Substances at or
on or adjacent to the Premises. Landlord and Ground Lessor hereby covenant and
agree to indemnify and hold Tenant harmless from and against any and all losses
of whatever nature, including claims, costs, fines, penalties, losses and
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expenses, including but not limited to, reasonable attorney, consultant and
expert fees that Tenant may sustain as a result of Landlord's or Ground Lessor's
non-compliance or failure to comply in a timely fashion with the provisions of
this Paragraph 47 applicable pursuant to this lease to Landlord or Ground Lessor
or by Landlord's or Ground Lessor's Release of Hazardous Substances at or on or
adjacent to the Premises.
(n) (i) Tenant and Landlord promptly shall provide the other
party with all documentation and correspondence provided to DEP pursuant to the
Worker and Community Right to Know Act, N.J.S.A. 34:5A-1 et seq., and all rules,
regulations, orders, directives and opinions promulgated thereunder.
(ii) Tenant promptly shall supply Landlord all
reports and notices made by Tenant pursuant to the Hazardous Substance Discharge
Reports and Notices Act, N.J.S.A. 13:1K-15, et seq., and all rules, regulations,
orders, directives and opinions promulgated thereunder.
(iii) Tenant promptly shall provide Landlord with
a copy of all permits obtained pursuant to any Environmental Law.
(o) Tenant acknowledges that for Landlord and/or Ground Lessor
to comply with the requirements of Environmental Laws, and/or their obligations
pursuant to this Paragraph 47, Landlord and/or Ground Lessor from time to time
may have to enter the Premises. Landlord, Ground Lessor and/or their agents
shall have an irrevocable license and right to enter the Premises for such
purposes, as well as for sampling and removing soil, installing and utilizing
test wells and/or monitoring wells and such other equipment for the
investigation or remediation of groundwater, and undertaking such other Remedial
Actions as may be required by DEP pursuant to the ACO or otherwise. All such
entry by Landlord, Ground Lessor and/or their agents shall be upon reasonable
notice to Tenant and shall be subject to the provisions of Paragraph 14 hereof.
Landlord agrees to use reasonable efforts to cause the least reasonably possible
interference with Tenant's use of the Premises.
(p) Tenant shall cooperate fully in allowing, from time to
time, such examinations, tests, inspections and reviews of the Premises as
Landlord or Ground Lessor, in their sole and absolute discretion, shall
determine to be advisable in order to evaluate any potential environmental
problems. Landlord and/or Ground Lessor expressly reserve the right, but without
any obligation, to conduct examinations, tests (including but not limited to a
geohydrological survey of soil and subsurface conditions), inspections and
reviews of the Premises as Landlord and/or Ground Lessor, in their sole and
absolute discretion, may determine to be necessary. Landlord agrees to use
reasonable efforts to cause the least reasonably possible interference with
Tenant's use of the Premises.
(q) Landlord, Ground Lessor and Tenant agree to
cooperate with each other to provide any information necessary to the other in
order to effect compliance with any Environmental Law.
(r) Notwithstanding anything to the contrary contained in this
lease, Tenant shall not be responsible for performing any investigation or
remediation or taking any other action under any Environmental Law in connection
with any spill or Release of Hazardous Substances (i) which occurred prior to
the Commencement Date of this lease, which originated off the Premises and
thereafter migrated on to the Premises, which was caused by Landlord and/or
Ground Lessor, or for which Landlord and/or Ground Lessor are obligated to cure
pursuant hereto (including any such spill or Release that Ground Lessor is
obligated to remediate under the ACO), nor shall Tenant be responsible for
performing any investigation or remediation or taking any other action required
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under any Environmental Law with respect to any subsurface environmental
condition, except to the extent Tenant shall have caused such environmental
condition.
(s) In the event Tenant shall fail to comply in full with this
Paragraph, Landlord and/or Ground Lessor, at their option, may perform any and
all of Tenant's obligations as aforesaid, and all costs and expenses incurred by
Landlord and/or Ground Lessor, in the exercise of their rights shall be deemed a
claim against Tenant as Additional Rent payable on demand. In the event that
Landlord and/or Ground Lessor shall fail to comply in full with this Paragraph
47, and, as a result thereof:
(i) less than thirty (30%) percent of the square
footage of the Premises shall be rendered unusable for the then use of such
portion of the Premises by Tenant, as shall have been finally determined by a
court or governmental authority having jurisdiction thereover, Tenant shall
notify Landlord, and in the event Landlord shall have failed to commence and
prosecute with due diligence the remediation of such environmental conditions
within thirty (30) days from the date of Tenant's notice, then (a) commencing as
of Tenant's notice and continuing until such environmental condition is
remediated, the Rental shall be abated in proportion to the portion of the
Premises rendered unusable as aforesaid, and (b) at any time after said thirty
(30) days, Tenant shall have the immediate right to seek damages and to exercise
any and all legal rights and remedies excluding the right to claim a
constructive and/or actual eviction, cure said default and remediate such
environmental condition, or terminate the lease; or
(ii) thirty (30%) percent or more of the square
footage of the Premises shall be rendered unusable for the then use of such
portion of the Premises by Tenant, as shall have been finally determined by a
court or governmental authority having jurisdiction thereover, Tenant shall
notify Landlord, the Rental shall be abated as set forth above, and Landlord
shall then have fifteen (15) days from receipt of Tenant's notice to advise
Tenant whether the environmental condition can be cured within three (3) months.
In the event the environmental condition can be cured within three (3) months,
Landlord shall immediately commence and prosecute with due diligence the
remediation of such environmental condition. If Landlord fails to commence and
cure such environmental condition within such three (3) month period, at any
time thereafter, but prior to Landlord's completion of the remediation of such
environmental condition, Tenant shall have the right in addition to all other
rights (except the right to remediate such environmental condition) to terminate
this lease upon notice to Landlord. In the event Landlord advises Tenant the
environmental condition cannot be cured within three (3) months or fails to
respond to Tenant within said fifteen (15) day period, Tenant shall have the
right to terminate this lease upon notice to Landlord, but prior to Landlord's
completion of the remediation of such environmental condition.
(t) The provisions of this Paragraph 47 shall survive the
expiration or earlier termination of this lease (including, without limitation,
Tenant's exercise of its purchase option hereunder), regardless of the reason
for such termination. Compliance with the provisions of this Paragraph 47 may
require Ground Lessor, Landlord or Tenant to expend funds or perform acts after
the expiration or termination of this lease. Ground Lessor, Landlord and Tenant
each agrees to expend such funds and/or perform such acts and shall not be
excused therefrom notwithstanding any expiration or termination of this lease,
it being agreed and acknowledged that neither party would have entered into this
lease but for the provisions of this Paragraph 47 and the survival thereof.
(u) During, at the end of, or after the Term of this lease,
each party agrees to execute any or all documents required by the other in
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connection with compliance with any Environmental Law. If any such document
shall be inaccurate, such party shall furnish such information as may be
necessary to correct such inaccuracy and thereafter, forthwith execute such
document.
(v) Landlord and/or Ground Lessor, at their cost and expense,
shall install and maintain a storm water management system ("System") in
compliance with all applicable Environmental Laws, including future upgrades and
testing as required by law.
(w) Landlord and/or Ground Lessor shall deliver to Tenant a
written maintenance plan for the storm water management system, which plan shall
include, but shall not be limited to, the method of capturing sediment, a
maintenance schedule, and the disposal of waste generated from maintenance.
(x) (i) Landlord and/or Ground Lessor shall have the
sole and exclusive right to prepare, propose to the DEP or other governmental
entity, negotiate and implement any assessment, investigation, sampling,
monitoring or remediation plan or other actions undertaken by Landlord and/or
Ground Lessor in accordance with this Paragraph 47, it being agreed that the
scope, extent and method of any such sampling, monitoring and remediation are
matters to be agreed upon by and between Landlord and/or Ground Lessor and the
DEP or other governmental entity exercising jurisdiction over the matter;
provided, however, if any assessment, investigation, sampling, monitoring or
remediation plan or other actions undertaken by Landlord and/or Ground Lessor at
the Premises which will adversely affect Tenant's operations at the Premises or
Tenant's access to the Premises to conduct such operations, Landlord shall be
required to obtain Tenant's prior consent thereto, which consent shall not be
unreasonably withheld, conditioned or delayed.
(ii) Tenant shall not interfere with any action
undertaken by Landlord and/or Ground Lessor in accordance with this Paragraph
47, provided however, that Tenant's compliance shall not adversely affect
Tenant's rights and benefits under this lease. Without limitation, Tenant shall
not interfere with or disturb any structure, installation or equipment and
associated infrastructure required as part of any remedial measure installed by
Landlord and/or Ground Lessor until such time as the DEP or other applicable
governmental entity authorizes in writing the removal or dismantling of such
structures, installation, equipment or infrastructure.
(iii) Landlord and/or Ground Lessor are and shall
continue to be responsible for compliance with the ACO and Tenant acknowledges
that Landlord and/or Ground Lessor has made no representations concerning the
length of time or the specific actions that will be necessary or required after
the Commencement Date in order to achieve compliance with the ACO. Tenant
understands that the remediation of the Premises may continue for an indefinite
number of years.
(iv) Tenant shall provide Landlord and/or Ground
Lessor with such cooperation (at no expense to Tenant) as Landlord and/or Ground
Lessor shall reasonably request in order for Landlord and/or Ground Lessor to
achieve compliance with the ACO or to implement any action otherwise undertaken
by Landlord and/or Ground Lessor in accordance with this Paragraph 47 (provided
however, that Tenant's cooperation shall not adversely affect Tenant's rights
and benefits under this lease), including without limitation, providing Landlord
and/or Ground Lessor upon written request with copies of any relevant records,
drawings, or other information which may be in its possession. Tenant shall at
the request of Landlord and/or Ground Lessor execute (in recordable form if
required) any documents required to implement any action which Landlord and/or
Ground Lessor is entitled to take in accordance with the provisions of this
Paragraph 47 (provided however, that Tenant's execution of same shall not
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adversely affect Tenant's rights and benefits under this lease), including
without limitation, permits required for the operation of any remedial system or
any notices or corrective deeds concerning the Premises, restrictions on the use
of the Premises or the maintenance of structures, or Institutional or
Engineering Controls (as such terms are defined under N.J.S.A. 58:10B-1)
required by the DEP in connection with the application to the Premises of
cleanup standards for industrial or non-residential properties.
48. Renewal Option.
(a) Subject to the provisions set forth below, Tenant shall
have the option to renew this lease for two (2) additional terms of five (5)
years each (the "Renewal Terms"), which Renewal Terms shall commence upon the
expiration of the original term of this lease (the "Initial Term"), or upon the
expiration of the prior Renewal Term, whichever shall be applicable. All of the
terms, covenants and conditions of this lease shall govern the Renewal Terms,
except as otherwise specifically set forth hereinafter or if inapplicable
thereto.
(b) The Fixed Rent during each Renewal Term shall be greater
of: (i) Market Rent (as defined in subparagraph (c)); or (ii) the Fixed Rent as
of the last day of the Initial Term or the prior Renewal Term, as the case may
be.
(c) "Market Rent" shall mean the fair market rent for the
Premises (inclusive of the Additional Lands and/or Additional Building, if
applicable) for such Renewal Term, determined as of the date which shall be
eighteen (18) months prior to the expiration of the Initial Term or the prior
Renewal Term, as the case may be (the "Determination Date"), for commencement as
of the applicable Renewal Term, based upon the rents generally in effect for
comparable space, in comparable condition and area, including space in the
Industrial Park.
(d) Landlord shall notify Tenant ("Landlord's Determination
Notice") of Landlord's determination of the Market Rent within thirty (30) days
following the Notice Date (defined in subparagraph 48(e)(i). If Tenant disagrees
with Landlord's determination, Tenant shall notify Landlord ("Tenant's Notice of
Disagreement") within thirty (30) days of receipt of Landlord's Determination
Notice ("Tenant's Notice Period"). Time shall be of the essence with respect to
Tenant's Notice of Disagreement, and the failure of Tenant to give such notice
within the time period set forth above shall be deemed conclusively to be a
rejection by Tenant of the Market Rent as determined by Landlord and an election
by Tenant of its right to dispute such Market Rent. If Tenant timely gives its
Tenant's Notice of Disagreement, or fails to respond, then the Market Rent shall
be determined as follows: Landlord and Tenant, within fifteen (15) days of the
later of (i) the expiration of Tenant's Notice Period, or (ii) the date on which
Tenant's Notice of Disagreement was given (provided said notice be given on or
before the expiration of Tenant's Notice Period), each shall appoint an
Appraiser for the purpose of determining the Market Rent. An "Appraiser" shall
mean a duly qualified real estate appraiser who is a member of the American
Institute of Real Estate Appraisers and who has at least ten (10) years'
experience in appraising the rental value of properties comparable to the
Premises, including the Additional Lands and/or Additional Building, if
applicable, with an office located in or around Middlesex County. In the event
that the two (2) Appraisers so appointed shall fail to agree as to the Market
Rent within a period of thirty (30) days after the appointment of the second
Appraiser, such two (2) Appraisers shall each deliver to Landlord their
respective Market Rent determination, and shall appoint a third Appraiser within
fifteen (15) days thereafter. If such two (2) Appraisers fail to agree upon such
third Appraiser, such third Appraiser shall be appointed by the Middlesex County
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Assignment Judge of the New Jersey Superior Court within thirty (30) days of the
date of the application to the New Jersey Superior Court. The three (3)
Appraisers shall proceed with all reasonable dispatch to determine the Market
Rent. Within fifteen (15) days following the appointment of the third Appraiser,
the three (3) Appraisers shall render their decision of the Market Rent of the
Premises, including the Additional Lands and/or Additional Building, if
applicable, for the applicable Renewal Term. The decision of such Appraisers
shall be final and binding; such decision shall be in writing and a copy shall
be delivered simultaneously to Landlord and to Tenant. In the event the three
(3) Appraisers fail to render a decision within such fifteen (15) day period,
Landlord and Tenant agree that the Market Rent shall be the average Market Rent
as determined by the two (2) Appraisers initially selected by Landlord and
Tenant, which average Market Rent determination shall be final and binding upon
Landlord and Tenant upon delivery of such average Market Rent determination by
either party to the other. Tenant thereafter shall have until the later of (i)
twelve (12) months prior to the termination of the then Term, or (ii) fifteen
(15) days after the receipt of the decision of such Appraisers, or (iii) fifteen
(15) days after the establishment of the Market Rent as the average of Landlord
and Tenant Appraisers' determination, in which to notify Landlord of its final
election to exercise its option to renew. If Tenant shall fail to provide such
notice to Landlord, it shall be deemed conclusively to mean that Tenant has
elected not to exercise its option to renew. Landlord and Tenant each shall be
responsible for and shall pay the fee of the Appraiser appointed by it
respectively, and Landlord and Tenant shall share equally the fee of the third
Appraiser.
(e) Tenant's option to renew, as provided in this Paragraph
48, shall be conditional upon and subject to each of the following:
(i) Tenant shall notify Landlord in writing of
its desire to exercise the option to renew at least eighteen (18) months prior
the expiration of the then current Term ("Notice Date");
(ii) At the time Landlord receives Tenant's notice
as provided in (i) above, and at all times thereafter, Tenant shall not have
received notice that it is in default under the terms or provisions of this
lease which shall not have been cured as permitted by this lease;
(iii) Tenant shall have no further renewal
options other than the options to extend for the two (2) Renewal Terms as set
forth in subparagraph (a) above;
(iv) The option to renew as well as the options to
purchase shall be deemed personal to Tenant and may not be assigned, except to
an assignee pursuant to an assignment made pursuant to the provisions of this
lease; and
(v) Landlord shall have no obligation to do any
work or perform any services for either Renewal Term with respect to the
Premises, which Tenant agrees to accept in its then "as is" condition.
49. Option to Lease Additional Lands.
(a) It is acknowledged that pursuant to the provisions of this
Paragraph 49, Tenant shall have the option to lease additional lands, solely for
parking and ancillary purposes, consisting of eight and eighty-eight hundredths
plus/minus (8.88+/-) acres, which lands are described on Exhibit K, attached
hereto and made a part hereof ("Additional Lands").
(b) Landlord, Ground Lessor and/or its designees, at any
time(s), shall have the right to improve all or any portion of the Additional
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Lands as a parking facility or otherwise to "cap" all or any portion of the
Additional Lands in connection with the performance of their obligations
pursuant to Paragraph 47 hereof and Tenant shall have the right to require that
Landlord improve all or any portion of the Additional Lands as a parking
facility, subject to the provisions hereof.
(c) If Landlord shall notify Tenant of its intention to
improve the Additional Lands as a parking facility, or if Tenant shall require
that Landlord improve the Additional Lands as a parking facility, subject to the
provisions hereof, then and in either event, Landlord shall submit to Tenant the
proposed plans and specifications for such work, the reasonably estimated hard
and soft costs of such work and an allocation between the hard and soft costs.
Tenant shall notify Landlord within thirty (30) days after receipt of such
submission if it does not consent to the plans, specifications and/or costs of
such work, which consent shall not be unreasonably withheld, and Tenant shall
set forth in reasonable detail, the basis for withholding its consent.
(d) If Tenant shall not consent to the plans, specifications
and/or costs, the parties shall proceed diligently and in good faith to agree on
the plans, specifications and/or costs. If the parties shall fail to agree on
the plans and specifications within sixty (60) days thereafter, Landlord shall
have the right to cause the work to be performed in substantial accordance with
the most recent plans and specifications delivered to Tenant and Tenant shall
reserve its rights to contest the reasonableness of the plans and
specifications.
(e) If the parties shall fail to agree on the costs of such
work, Tenant shall be free to obtain and submit to Landlord bids for hard costs
only from not more than three (3) mutually agreeable independent contractors
(which may not be an Affiliate of Tenant) (herein "Third Party Parking Lot
Bids") for the improvement of the Additional Lands in accordance with the agreed
upon plans and specifications or with the most recently submitted plans and
specifications, as the case may be. Tenant shall submit such Third Party Parking
Lot Bid(s), if at all, within sixty (60) days thereafter. Upon receipt of such
Bid(s), Landlord shall have the right to elect either to (a) match the lowest
Third Party Parking Lot Bid or (b) enter into a contract with the lowest Third
Party Parking Lot Bidder for said bid price plus a sum equal to the soft costs
and reduce its hard cost price per acre to the hard cost price charged it by
said contractor.
(f) Provided Tenant shall not have received notice that it is
in default under the terms or provisions of this lease, which shall not have
been cured as permitted by this lease, Tenant shall have the option to lease the
Additional Lands from Landlord and thereafter to use the Additional Lands solely
for parking and ancillary purposes. If the Additional Lands are improved as
described herein, then Tenant shall have the right to lease the Additional
Lands, and either use or not use the Additional Lands as so improved.
(g) Tenant shall notify Landlord of its election to lease the
Additional Lands ("Notice of Additional Lands") not less than sixty (60) days
prior to the commencement of the lease for the Additional Lands, which date
shall be set forth in the Notice of Additional Lands ("Additional Lands
Commencement Date"). The Additional Lands Commencement Date shall be not later
than the fourth (4th) anniversary of the Commencement Date. If the Additional
Lands Commencement Date shall not occur prior to the fourth (4th) anniversary of
the Commencement Date, Tenant's right to lease or purchase all or any portion of
the Additional Lands shall cease and terminate and be of no further force or
effect.
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(h) Commencing on the Commencement Date and continuing until
the Additional Lands Commencement Date or until the termination of Tenant's
option to lease the Additional Lands or Tenant's waiver of this option,
whichever shall be the first to occur, Tenant shall pay all Taxes, as defined in
Paragraph 19 hereof, affecting or charged to the Additional Lands, in the manner
and to the same extent as is set forth in Paragraph 19 hereof it being
acknowledged that the Premises and Additional Lands shall constitute one (1) or
more municipal tax lots. Tenant shall not be obligated to pay any Taxes on
account of improvements to the Additional Lands until such time as Tenant elects
to use such Lands. The failure of Tenant to comply with the provisions of this
subparagraph (h) shall be deemed to constitute a default in the same manner and
to the same extent as Tenant's failure to pay Taxes affecting the Premises
pursuant to Paragraph 19.
(i) Upon the Additional Lands Commencement Date, the
Additional Lands shall be deemed to be part of the Premises leased to Tenant
pursuant to this lease, in the same manner as if the Additional Lands were part
of the Premises leased to Tenant as of the Commencement Date, including without
limitation, the right of Tenant to purchase the Premises and/or to extend the
Term hereunder.
(j) The Fixed Rent to be paid for the Additional Lands until
Tenant elects to use the Additional Lands as an improved parking facility shall
be as follows:
Lease Year Annual Rent
1-4 $ 0.00
5-7 $ 52,000.00
8-20 $104,000.00
(k) At such time as the Additional Lands are improved as a
parking facility and used by Tenant, but in no event later than the Additional
Building Delivery of Possession Date, as defined in Paragraph 50 hereof
("Improved Additional Lands Commencement Date"), the Fixed Rent to be paid for
the Additional Lands ("Improved Additional Lands Fixed Rent") shall be
determined in the following manner:
The acreage of the Additional Lands, multiplied by the cost of
improvements per acre (as determined pursuant to the provisions of this
Paragraph 49); multiplied by a rate equal to the twenty (20) year United States
Treasury Bill interest rate, as of the Additional Lands Commencement Date, plus
four (4%) percentage points; plus an amount equal to the maximum Additional
Lands Fixed Rent (One Hundred Four Thousand ($104,000.00) Dollars) and the
Annual Improved Additional Lands Fixed Rent per acre shall be the Improved
Additional Lands Fixed Rent divided by the acreage of the Additional Lands. By
way of example, if the acreage of the Additional Lands is eight and eighty-eight
hundredths (8.88) acres; the cost per acre is One Hundred Thousand ($100,000.00)
Dollars; the Treasury Bill interest rate is six and one-half (6.5%) percent; and
the Additional Lands Fixed Rent is One Hundred Four Thousand ($104,000.00)
Dollars; then the Improved Additional Lands Fixed Rent shall be as follows: 8.88
x 100,000 x (6.5% + 4%) 10.5% = 93,240 + 104,000 = 197,240.00 and the Annual
Improved Additional Lands Fixed Rent per acre shall be $197,240.00 / 8.88 =
$22,211.71.
(l) It is acknowledged that pursuant to Lease I, Tenant has
the right to cause the construction of an additional building contiguous to the
initial building leased thereunder ("Lease I Additional Building"). It further
is acknowledged that in the construction of the Lease I Additional Building, a
portion of the Lands leased hereunder may be required to be utilized
("Transferred Lands"). In such event, Landlord and Tenant agree to modify this
lease so as to change the description of the Lands leased hereunder, effective
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as of the commencement of construction of the Lease I Additional Building, to
exclude the Transferred Lands from the Lands leased hereunder.
(m) If Tenant shall not have previously exercised its option
to lease the Additional Lands pursuant hereto, then concurrently with the
aforesaid modification of this lease, Tenant shall be deemed to have exercised
its option to lease the Additional Lands hereunder, and if not previously
improved as a parking facility, shall be so improved and used to provide an
additional parking area for Tenant's use.
(n) If this lease shall be modified in accordance with the
provisions of subparagraph (l) above, then, the Fixed Rent to be paid by Tenant
shall be reduced, based on the acreage of the Transferred Lands so excluded, at
the rate of $11,711.71 per acre per year until the termination of this lease. It
is acknowledged that the Fixed Rent to be paid by Tenant pursuant to Lease I
shall be increased, based on the acreage of the Transferred Lands so added, at
the rate of $11,711.71 per acre per year until terminated in accordance with
Lease I, it being the intention of the parties that the aggregate amount of the
Fixed Rent to be paid to Landlord by Tenant pursuant to Lease I and pursuant
hereto, as a result of the exercise of the exclusion of the Transferred Lands
from this lease and the inclusion of the Transferred Lands in Lease I shall
remain the same. Notwithstanding the foregoing, the Improved Additional Lands
Fixed Rent shall remain the same.
50. Additional Building.
(a) Tenant shall have the right to further develop the Land by
the construction of a building on all or a portion of the parking area set forth
on Exhibit C, in which event the option to lease the Additional Lands shall be
exercised, and if not previously improved as a parking facility, shall be so
improved and used to provide an additional parking area for Tenant's use.
(b) At such time as Tenant desires to further develop the Land
as aforesaid, it shall notify Landlord, it being acknowledged that Tenant
contemplates the construction of an additional building of like kind
("Additional Building"), the square footage of which shall not be less than
fifty-five thousand (55,000) square feet and shall be attached to the existing
Building ("Notice of Additional Building"). Simultaneously therewith, Tenant
shall deliver to Landlord its Notice of Additional Lands, if it has not
previously delivered such Notice. Following the delivery of the Notice of
Additional Building, Landlord and Tenant shall proceed diligently and in good
faith to establish an estimated Additional Building Delivery of Possession Date
(as hereinafter defined in subparagraph 50(d)) and agree on the size, location,
design, plans, specifications, time frame and all other matters relevant to the
construction of the Additional Building, excluding the development of the
Additional Lands as a parking area ("Additional Building Plans"), together with
the plans, specifications and costs of the Additional Lands parking facility,
pursuant to Paragraph 49 hereof. If the estimated Additional Building Delivery
of Possession Date will occur after the commencement of the sixth (6th) Lease
Year, then Tenant shall be required to exercise the first and/or the second
Renewal Terms so that the Term of the Lease following such Additional Building
Delivery of Possession Date will equal at least fifteen (15) years. In the event
Tenant is required to exercise the first and/or the second Renewal Terms, then
concurrently with Landlord and Tenant establishing the Additional Building
Plans, Landlord and Tenant shall agree upon the Fixed Rent to be paid during the
first and/or the second Renewal Terms, as the case may be. To the extent the
estimated Additional Building Delivery of Possession Date will occur after the
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commencement of the sixteenth (16th) Lease Year, Landlord agrees to extend the
Term of the second Renewal Term so that the Term of the lease following such
Additional Building Delivery of Possession Date will equal fifteen (15) years.
The price per square foot of said Additional Building, exclusive of the cost of
developing the Additional Lands as a parking area and exclusive of land costs
but inclusive of all hard and soft costs in the aggregate shall equal
Eighty-Five ($85.00) Dollars per square foot, as such amount may be adjusted by
the percentage increase or decrease in the Construction Index as defined in
subparagraph 41(e) occurring between the date hereof and the Construction Index
for the month in which Tenant delivers to Landlord the Notice of Additional
Building, plus the costs to Landlord in the demolition of such portion of the
parking area as may be necessary in the construction of the Additional Building.
Landlord shall allocate the aggregate cost, determined as provided above,
between hard and soft costs, and shall so notify Tenant within thirty (30) days
of the date after which the parties shall have agreed on the Additional Building
Plans. Should Tenant disagree with the Landlord cost estimate, Tenant shall be
free to obtain and submit to Landlord bids for hard costs only from not more
than three (3) mutually agreeable independent contractors (which may not be an
Affiliate of Tenant) (herein "Third Party bids"). Tenant shall submit such
bid(s), if at all, within ninety (90) days of Tenant's receipt of Landlord's
cost determination. Upon receipt of the Third Party bid(s) for the Additional
Building Plans from Tenant, Landlord shall have the right to elect to either (a)
match the lowest Third Party bid, or (b) enter into a contract with the lowest
Third Party bidder for said bid price plus a sum equal to the soft costs as
hereinabove provided, and reduce its hard cost price per square foot to the hard
cost price charged it by said contractor. Upon Tenant's receipt of Landlord's
cost estimate, or upon notification of Landlord's election under (a) or (b)
above, whichever is later, Tenant shall have the right to rescind its Notice of
Additional Building within thirty (30) days thereafter upon notice to Landlord
and Tenant's agreement to reimburse Landlord for Landlord's actual costs
incurred in preparing the Additional Building Plans and the bid documents which
payment shall be made by Tenant to Landlord within thirty (30) days of
Landlord's demand therefor, accompanied by documentation in reasonable detail,
which payment shall be deemed to constitute Additional Rental hereunder. Any
delay or failure by the parties in reaching agreement on the Additional Building
Plans shall not affect Tenant's right to lease the Additional Lands pursuant to
this lease.
(c) If Tenant shall exercise its option to construct the
Additional Building at any time after the Sixth Lease Year, then Tenant shall
reimburse Landlord and/or Ground Lessor for all environmental compliance costs
required by DEP in connection with the soil treatment and removal in connection
with such construction.
(d) Upon delivery of possession by Landlord of the Additional
Building and Additional Lands, as determined pursuant to subparagraphs 3(a),
3(c), 3(g) and 3(m) ("Additional Building Delivery of Possession Date"), the
Annual Fixed Rent hereunder shall be increased ("Additional Building Fixed
Rent") as of the Additional Building Delivery of Possession Date by the Annual
Additional Building Fixed Rent determined in the following manner:
The square footage of the Additional Building, based upon outside
measurements; multiplied by the cost per square foot of the Additional Building
determined in subparagraph (b) above (exclusive of the Land); multiplied by a
rate equal to the 20-year United States Treasury Bill interest rate, as of the
Additional Building Delivery of Possession Date, plus four (4) percentage
points; plus an amount equal to the real estate commission to be paid in
connection with such leasing;and the annual Additional Building Fixed Rent per
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square foot shall be the annual Additional Building Fixed Rent divided by the
square footage of the Additional Building. By way of example, if the square
footage of the Building is fifty-five thousand (55,000) square feet; the cost
per square foot is Eighty-Five ($85.00) Dollars; the Treasury Bill interest rate
is six and one-half (6.5%) percent; and the real estate commission is $.25 per
square feet of Additional Building; then the Additional Building Fixed Rent
shall be as follows:
55,000 x 85 = 4,675,000 x (6.5% + 4%) 10.5% = 490,875 + (55,000 x
25(cent)) (13,750) = $504,625 and the annual Additional Building Fixed Rent per
square foot shall be 504,625 / 55,000 = $9.18. The Additional Building Fixed
Rent shall increase at the rate of twenty-five (25(cent)) cents per square foot
at the commencement of each fifth anniversary of the Additional Building
Delivery of Possession Date, including any Renewal Terms, if applicable.
(e) Upon the Additional Building Delivery of Possession Date,
the Additional Building and Additional Lands, to the extent applicable, shall be
deemed to be part of the Premises leased to Tenant pursuant to this lease, in
the same manner as if the Additional Building and Additional Lands were part of
the Premises leased to Tenant as of the Commencement Date, including without
limitation, the respective obligations of Landlord and Tenant for repair and
maintenance hereunder, the Tenant obligations of insurance and the rights of
Tenant to purchase the Premises and/or to extend the Term hereunder.
(f) If Tenant shall fail to exercise its option to lease the
Additional Lands, Tenant shall have no further rights or obligations with
respect to the Additional Lands or to the Additional Building and Landlord shall
have the right to proceed to subdivide or to modify its subdivision, so as to
cause the Premises to constitute one (1) subdivided lot, separate and apart from
the Additional Lands and to cause the Premises to constitute a separate
municipal tax lot. Until said subdivision occurs the Landlord shall be obligated
for all Taxes attributable to said Additional Lands and Paragraph 19 shall be
modified accordingly.
51. Tenant's Rights.
(a) Notwithstanding anything contained in this lease to the
contrary, Tenant shall have no rights with respect to any (i) offset resulting
from Landlord's defaults or breaches (herein "defaults"), (ii) damage claims
resulting from landlord's defaults (except with respect to Paragraph 47), or
(iii) exercise of any self-help remedies (except in the case of an emergency);
unless and until Tenant shall have given Landlord and Ground Lessor notice of
Landlord's default and Landlord shall have failed to commence curing said
default within sixty (60) days from the date of Tenant's notice and/or to have
diligently prosecuted said cure until its completion. If Landlord shall not have
commenced said cure as aforesaid and shall not have been diligent in its
prosecution, then, at any time thereafter, Tenant shall have the following
rights; (i) to cure said default and in connection therewith be immediately
reimbursed by Landlord for its costs and expenses in so curing said default
together with interest at the Lease Interest Rate and/or (ii) to exercise any
and all of its legal or equitable remedies, provided, however, Tenant may not
offset Rental or terminate this lease or make a claim for Tenant's actual
constructive eviction, except as provided in subparagraphs 51(b) and (c) below.
(b) Additionally, if Tenant shall have expended any sums in
excess of Fifty Thousand and 00/100 ($50,000.00) Dollars in curing the
Landlord's defaults and the Landlord shall not have reimbursed Tenant within
five (5) business days of Tenant's demand therefor, Tenant shall have the
further right to notify both the Landlord and Ground Lessor that thirty (30)
days after the date of said notice Tenant intends to deduct from the next
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current Rental payment or payments due, the sum of said expenditure, together
with interest at the Lease Interest Rate, until said total sum has been
recovered by way of a rent credit. Ground Lessor will be required and agrees to
pay to Landlord all such sums deducted from the rental obligation to the
Landlord if and when the same shall become due under this lease. Ground Lessor
may notify the Tenant within fifteen (15) days of the effective date of Tenant's
notice that Ground Lessor, in its sole discretion, does not intend to pay said
deducted sum to the Landlord as and when due, in which event Tenant will
continue to pay the full rental payment due Landlord under the lease on a timely
basis but shall have all legal remedies available to Tenant against Landlord
pursuant to this lease.
(c) Should Tenant not have exercised the self-help remedies
provided for above, and should Landlord not have commenced the cure and have
been diligent in completing said cure, or should Landlord not have under any
circumstances (without regard to delays caused by Completion Force Majeure or
Unavoidable Delay as in Paragraph 28 defined) completed said cure within twelve
(12) months from the date of Tenant's notice, Tenant, in addition to all of its
rights contained herein, shall have the right to cancel this lease at any time
prior to Landlord's completing said cure, by a cancellation notice given at any
time prior thereto, which cancellation notice shall fix the date upon which
Tenant shall vacate the Premises pursuant to said cancellation, and may also at
anytime thereafter make claim against Landlord for Tenant's damages as a result
thereof. The cure by Landlord subsequent to the date of Tenant's cancellation
notice shall not reinstate this lease unless Tenant shall so elect by notice in
writing to Landlord. Any notice referred to in this Paragraph 51 to be given to
Landlord prior to Tenant having a right to offset Rental, terminate this lease
or to seek damages, shall set forth, in reasonable detail, the nature, scope and
extent of the applicable breach, occurrence, or action or inaction giving rise
thereto.
52. Waiver of Distraint. Landlord waives all lien, right, interest and
claim it might otherwise have in and waives its right of distraint of, the
machinery, fixtures and other property of the Tenant, and in any other property
of any nature whether on or off the Premises, belonging to the Tenant. The
provisions of this Paragraph are intended to apply to the Landlord's common law
(if any) and statutory right of distraint because of failure to pay Fixed Rent
or Additional Rent.
53. No Option. The submission of this lease for examination and/or
signature does not constitute a reservation of, or option for, the Premises, and
Tenant hereunto has affixed its signature with the understanding that this lease
shall not become effective or in any way bind either party until such time as
the same has been approved and executed by each party and a copy thereof
delivered to the other party.
54. Memorandum of Lease. Tenant shall have the right to record a
Memorandum of Lease in the Middlesex County Clerk's Office, which Memorandum
shall not provide any of the economic agreements of the parties and which
Memorandum shall be subject to Landlord's consent, which shall not be
unreasonably withheld, provided, however, that prior to such filing, Tenant
shall deliver to Landlord's attorneys, in escrow a duly executed Discharge of
Memorandum of Lease, which Discharge may be released from escrow and filed of
record upon the Termination or expiration of this lease, as the lease may be
extended, regardless of the reason or cause of such termination or expiration in
accordance with the provisions of the escrow agreement to be entered into among
the parties and the escrowee. Notwithstanding the foregoing, in the event of a
sale of the Premises to Tenant pursuant hereto, the parties shall enter into a
new Memorandum solely for the purpose of maintaining the use restrictions set
forth in Paragraph 6 hereof.
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IN WITNESS WHEREOF, the parties hereto have hereunto caused these
presents to be signed and sealed by duly authorized persons, the day and year
first above written.
PORT CARTERET (Landlord)
By: V. Paulius & Associates, joint
venturer
By: /s/ Robert Paulius
Robert Paulius, Vice President
By: AMAX REALTY DEVELOPMENT INC.
By: /s/ Anthony Filiaci
Anthony Filiaci, Vice President
DI GIORGIO CORPORATION (Tenant)
By: /s/ George W. Conklin
George W. Conklin, Vice President
AMAX COPPER, INC. (Ground Lessor)
By: /s/ Anthony Filiaci
Anthony Filiaci, Vice President
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Exhibits to Lease Agreement
Exhibit A: Legal Description of the Property
Exhibit A-1: Title Matters
Exhibit B: Plans and Specifications
Exhibit C: Site Plan
Exhibit D: Intentionally Omitted
Exhibit E: Intentionally Omitted
Exhibit F: Ground Lessor Non-Disturbance,
Recognition and Attornment Agreement
Exhibit G: Declaration of Environmental Restrictions
Exhibit H: Prepayment Penalty Cap
Exhibit I: Lender Non-Disturbance, Subordination and Attornment Agreement
Exhibit J: (Intentionally Omitted)
Exhibit K: Additional Lands
Exhibit L: Grocery Products
Exhibit L-1: Frozen Food Products
Exhibit L-2: Dairy Products
Attachments to Lease Agreement
1. Memorandum of lease
2. Discharge of Memorandum of Lease
3. Escrow Agreement
4. Di Giorgio Corporation Secretary's Certificate
5. Certificate of Corporate Resolution of V. Paulius & Associates
6. Certificate of Assistant Secretary Amax Copper, Inc.
Certificate of Assistant Secretary Amax Realty Development, Inc.
7. Letter Agreement to Constitute an Amendment and Modification to the
Lease - Tax Abatement
8. Letter Agreement to Constitute an Amendment and Modification to the
Lease - Annual Fixed Rent
9. Non-Disturbance, Recognition and Attornment Agreement
10. Letter Agreement Di Giorgio to Port Carteret - Re: Hold Harmless for
Rack Installation
11. Commission Agreement between Port Carteret and JGT - Jacobson, Goldfarb
& Tanzman Associates, LLC
THIRD AMENDMENT OF LEASE
Between AMAX REALTY DEVELOPMENT, INC. a Delaware corporation, and V.
PAULIUS AND ASSOCIATES, a New Jersey corporation, collectively t/a PORT
CARTERET, a joint venture (hereinafter called "Landlord"), and DI GIORGIO
CORPORATION, a Delaware corporation (hereinafter called "Tenant"), dated this
26th day of November, 1997.
WHEREAS
A. Landlord and Tenant previously have entered into a
lease agreement, dated February 11, 1994 for the leasing of
premises in Carteret, New Jersey ("INITIAL LEASE"); and
B. The parties previously have entered into a First Amendment of
Lease, dated August 16, 1996 and a Second Amendment of Lease, dated October 30,
1996 (referred to collectively herein with the INITIAL LEASE as the "LEASE").
C. The parties hereto desire to further amend the LEASE in
certain respects;
NOW, THEREFORE, for and in consideration of the promises and covenants
contained herein, the parties hereto agree as follows:
1. The recitals set forth above are incorporated by reference herein as
though fully set forth at length.
2. All capitalized terms used in this Third Amendment of Lease and not
defined herein shall have the meanings set forth in the LEASE.
3. The provisions of this Third Amendment of Lease shall take effect as
of the Effective Date hereof (as hereinafter defined).
4. Paragraph 49 of the LEASE provides Tenant with the option to lease
Additional Lands, as defined and described therein.
5. The lands described on Exhibit "A" attached hereto and made a part
hereof are removed and omitted as constituting a portion of the Additional
Lands.
6. The lands described on Exhibit "B" attached hereto and made a part
hereof constitute the remaining Additional Lands ("Remaining Additional Lands").
7. Exhibits "A" and "B" are more particularly shown on a certain map
attached hereto and made a part hereof, as Exhibit "C".
8. Tenant hereby agrees to exercise its option to lease the Remaining
Additional Lands in accordance with the provisions hereof.
9. In all respects and matters, including but not limited to, the
payment of Taxes, the right to purchase, the right to extend the Term, the
Additional Building, the Additional Building Delivery of Possession Date, the
Additional Building Plans, the Notice of Additional Building and the Additional
Building Fixed Rent, the Remaining Additional Lands shall be deemed to be
Premises pursuant to the LEASE, in the same manner as if the Remaining
Additional Lands were included within the Premises in the INITIAL LEASE.
10. Following the execution hereof, Tenant shall not have the right to
terminate the leasing of the Remaining Additional
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Lands or cease to pay Rental on account thereof, except as provided in the LEASE
for all of the Premises.
11. Landlord, Ground Lessor and/or its designees, at any time(s), shall
have the right to improve all or any portion of the Remaining Additional Lands
as a parking facility or otherwise to "cap" all or any portion of the Remaining
Additional Lands in connection with the performance of their obligations
pursuant to Paragraph 47 of the LEASE and Tenant shall have the right to require
that Landlord improve all or any portion of the Remaining Additional Lands as a
parking facility, subject to the provisions hereof.
12. If Landlord shall notify Tenant of its intention to improve the
Remaining Additional Lands as a parking facility, or if Tenant shall require
that Landlord improve the Remaining Additional Lands as a parking facility,
subject to the provisions hereof, then and in either event, Landlord shall
submit to Tenant the proposed plans and specifications for such work, the
reasonably estimated hard and soft costs of such work and an allocation between
the hard and soft costs. Tenant shall notify Landlord within thirty (30) days
after receipt of such submission if it does not consent to the plans,
specifications and/or costs of such work, which consent shall not be
unreasonably withheld, and Tenant shall set forth in reasonable detail, the
basis for withholding its consent.
13. If Tenant shall not consent to the plans, specifications and/or
costs, the parties shall proceed diligently and in good faith to agree on the
plans, specifications and/or costs. If the parties shall fail to agree on the
plans and specifications within sixty (60) days thereafter, Landlord shall have
the right to cause the work to be performed in substantial accordance with the
most recent plans and specifications delivered to Tenant and Tenant shall
reserve its rights to contest the reasonableness of the plans and
specifications.
14. If the parties shall fail to agree on the costs of such work,
Tenant shall be free to obtain and submit to Landlord bids for hard costs only
from not more than three (3) mutually agreeable independent contractors (which
may not be an Affiliate of Tenant) (herein "Third Party Parking Lot Bids") for
the improvement of the Remaining Additional Lands in accordance with the agreed
upon plans and specifications or with the most recently submitted plans and
specifications, as the case may be. Tenant shall submit such Third Party Parking
Lot Bid(s), if at all, within sixty (60) days thereafter. Upon receipt of such
Bid(s), Landlord shall have the right to elect either to (a) match the lowest
Third Party Parking Lot Bid or (b) enter into a contract with the lowest Third
Party Parking Lot Bidder for said bid price plus a sum equal to the soft costs
and reduce its hard cost price per acre to the hard cost price charged it by
said contractor.
15. If the Remaining Additional Lands are improved as described herein,
then Tenant shall have the right to use the Remaining Additional Lands as so
improved, solely for parking and ancillary purposes.
16. Subparagraph 49(f) hereby is amended to read as follows:
"(f) Commencing on the Effective Date and continuing for the
balance of the Initial Term, or until Tenant elects to use the
Remaining Additional Lands as an improved parking facility,
the Fixed Rent to be paid pursuant to the LEASE shall be
increased by the sum of Fifty-Two Thousand and 00/100
($52,000.00) Dollars per annum, payable at the rate of Four
Thousand Three Hundred Thirty-Three and 33/100 ($4,333.33)
Dollars per month ('Remaining Additional Lands Fixed Rent')".
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17. At such time as the Remaining Additional Lands are improved as a
parking facility and used by Tenant, the Fixed Rent to be paid for the Remaining
Additional Lands ("Improved Remaining Additional Lands Fixed Rent") shall be
determined in the following manner:
The acreage of the Remaining Additional Lands, multiplied by
the cost of improvements per acre (as determined pursuant to
the provisions of this Amendment; multiplied by a rate equal
to the twenty (20) year United States Treasury Bill interest
rate, as of the Effective Date, plus four (4%) percentage
points; plus an amount equal to four (4%) percent of the
foregoing; plus an amount equal to the Remaining Additional
Lands Fixed Rent (Fifty-Two Thousand [$52,000] Dollars) and
the Annual Improved Remaining Additional Lands Fixed Rent per
acre shall be the Improved Remaining Additional Lands Fixed
Rent divided by the acreage of the Remaining Additional Lands.
By way of example, if the acreage of the Remaining Additional
Lands is four and thirty-four hundredths (4.34) acres; the
cost per acre is One Hundred Thousand ($100,000.00) Dollars;
the Treasury Bill interest rate is six and one-half (6.5%)
percent; and the Remaining Additional Lands Fixed Rent is
Fifty-Two Thousand ($52,000) Dollars; then the Improved
Remaining Additional Lands Fixed Rent shall be as follows:
4.34 x 100,000 x (6.5% + 4%) 10.5% = 45,570 + (45,570 x .04)
1,822,80 = 47,392.80 + 52,000 = 99,392.80 and the Annual
Improved Additional Lands Fixed Rent per acre shall be
$99,392.80 / 4.34 = $22,901.80.
18. Subparagraph 49(g) hereby is amended to read as follows:
"(g) At such time as Tenant desires to develop the Remaining
Additional Lands as hereinafter provided, it shall notify
Landlord, it being acknowledged that Tenant has the right to
require the construction of an additional building of like
kind ("Additional Building"), subject to the provisions
hereof, the square footage of which shall not be less than one
hundred fifty thousand (150,000) square feet and shall be
attached to the existing Building ("Notice of Additional
Building"). Following the delivery of the Notice of Additional
Building, Landlord and Tenant shall proceed diligently and in
good faith to establish an estimated Additional Building
Delivery of Possession Date (as hereinafter defined in
subparagraph 49[h]) and agree on the size, location, design,
plans, specifications, time frame and all other matters
relevant to the construction of the Additional Building
("Additional Building Plans"). If the estimated Additional
Building Delivery of Possession Date will occur after the
commencement of the sixth (6th) Lease Year, then Tenant shall
be required to exercise the first and/or the second Renewal
Terms so that the Term of the Lease following such Additional
Building Delivery of Possession Date will equal at least
fifteen (15) years. In the event Tenant is required to
exercise the first and/or the second Renewal Terms, then
concurrently with Landlord and Tenant establishing the
Additional Building Plans, Landlord and Tenant shall agree
upon the Fixed Rent to be paid during the first and/or the
second Renewal Terms, as the case may be. To the extent the
estimated Additional Building Delivery of Possession Date will
occur after the commencement of the sixteenth (16th) Lease
Year, Landlord agrees to extend the Term of the second Renewal
Term so that the Term of the lease following such Additional
Building Delivery of Possession Date
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will equal fifteen (15) years. The price per square foot of
said Additional Building, exclusive of land costs but
inclusive of all hard and soft costs in the aggregate shall
equal Thirty-Two ($32) Dollars per square foot, as such amount
may be adjusted by the percentage increase or decrease in the
Construction Index as defined in subparagraph 41(g) hereof
occurring between the date hereof and the Construction Index
for the month in which Tenant delivers to Landlord the Notice
of Additional Building, plus the costs to Landlord in the
demolition of such portion of the parking areas (including the
Frozen Foods Lands, as hereinafter defined), as may be
necessary in the construction of the Additional Building.
Landlord shall allocate the aggregate cost, determined as
provided above, between hard and soft costs, and shall so
notify Tenant within thirty (30) days of the date after which
the parties shall have agreed on the Additional Building
Plans. Should Tenant disagree with the Landlord cost estimate,
Tenant shall be free to obtain and submit to Landlord bids for
hard costs only from not more than three (3) mutually
agreeable independent contractors (which may not be an
Affiliate of Tenant) (herein "Third Party bids"). Tenant shall
submit such bid(s), if at all, within ninety (90) days of
Tenant's receipt of Landlord's cost determination. Upon
receipt of the Third Party bid(s) for the Additional Building
Plans from Tenant, Landlord shall have the right to elect to
either (a) match the lowest Third Party bid, or (b) enter into
a contract with the lowest Third Party bidder for said bid
price plus a sum equal to the soft costs as hereinabove
provided, and reduce its hard cost price per square foot to
the hard cost price charged it by said contractor. Upon
Tenant's receipt of Landlord's cost estimate, or upon
notification of Landlord's election under (a) or (b) above,
whichever is later, Tenant shall have the right to rescind its
Notice of Additional Building within thirty (30) days
thereafter upon notice to Landlord and Tenant's agreement to
reimburse Landlord for Landlord's actual costs incurred in
preparing the Additional Building Plans and the bid documents
which payment shall be made by Tenant to Landlord within
thirty (30) days of Landlord's demand therefor, accompanied by
documentation in reasonable detail, which payment shall be
deemed to constitute Additional Rental hereunder."
19. Subparagraph 49(h) hereby is added to read as follows:
"(h) It is acknowledged that if Tenant requires the
construction of an Additional Building pursuant to the
provisions of subparagraph 49(g), it may be required to lease
additional lands which presently constitute a portion of the
Lands leased by Landlord to Tenant pursuant to a lease
agreement being entered into concurrently herewith ("Frozen
Foods Lease"). It therefore is agreed that if such additional
lands are required ("Frozen Foods Lands"), then as of the
commencement of construction of the Additional Building and
concurrently with the parties amending the Frozen Foods Lease
so as to eliminate the Frozen Foods Lands from the description
of the Lands demised thereunder, the parties hereto shall
enter into an amendment of the LEASE to include the Frozen
Foods Lands within the description of the Lands demised
pursuant to the LEASE. At such time as the Frozen Foods Lands
are included within the Lands demised pursuant to the LEASE,
the Remaining Additional Lands Fixed Rent hereunder shall be
increased based on the acreage of the Frozen Foods Lands so
added, at the rate of $11,711.71 per acre per year. It is the
intention of the parties that the
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aggregate amount of the Fixed Rent to be paid to Landlord by
Tenant pursuant to the Frozen Foods Lease and pursuant hereto,
as a result of the exclusion of the Frozen Food Lands from the
Frozen Foods Lease and their inclusion in the Lease, shall
remain the same.
20. Subparagraph 49(h) of the INITIAL LEASE hereby is redesignated as
subparagraph 49(i) and is amended to read as follows:
(i) Upon delivery of possession by Landlord of the Additional
Building, as determined pursuant to subparagraphs 3(a), 3(c),
3(g) and 3(m) ("Additional Building Delivery of Possession
Date"), the Annual Fixed Rent hereunder shall be increased
("Additional Building Fixed Rent") as of the Additional
Building Delivery of Possession Date by the Annual Additional
Building Fixed Rent determined in the following manner:
The square footage of the Additional Building, based
upon outside measurements; multiplied by the cost per
square foot of the Additional Building as determined
in subparagraph 49(g) above (exclusive of the
Remaining Additional Lands); multiplied by a rate
equal to the 20-year United States Treasury Bill
interest rate, as of the Additional Building Delivery
of Possession Date, plus four (4) percentage points;
plus an amount equal to four (4%) percent of the
foregoing; plus an amount equal to the Remaining
Additional Lands Fixed Rent and the annual Additional
Building Fixed Rent per square foot shall be the
annual Additional Building Fixed Rent divided by the
square footage of the Additional Building. By way of
example, if the square footage of the Building is two
hundred fifty thousand (250,000) square feet; the
cost per square foot is Thirty-Two ($32) Dollars; the
Treasury Bill interest rate is six and one-half
(6.5%) percent; and the Remaining Additional Lands
Fixed Rent is One Hundred Four Thousand and 00/100
($104,000.00) Dollars; then the Additional Building
Fixed Rent shall be as follows:
250,000 x 32 = 8,000,000 x (6.5% + 4%) 10.5%
= 840,000 + (840,000 x .04) 33,600 =
$873,600 + $104,000 = 977,600 and the annual
Additional Building Fixed Rent per square
foot shall be 977,600 / 250,000 = 3.91.
The Additional Building Fixed Rent shall increase at
the rate of twenty-five (25(cent)) cents per square foot at
the commencement of each fifth anniversary of the Additional
Building Delivery of Possession Date, including any Renewal
Terms, if applicable.
As of the Additional Building Delivery of Possession Date,
Tenant's obligation to pay Remaining Additional Lands Fixed
Rent or Improved Remaining Additional Lands Fixed Rent, as the
case may be, shall cease and terminate."
21. It is agreed that the Commencement Date of the Frozen Foods Lease
shall constitute the Effective Date of this Third Amendment of Lease.
22. The Initial Term and the Renewal Terms of the LEASE hereby are
extended to be co-terminus with the stated terms of LEASE II.
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<PAGE>
23. The Annual Fixed Rent to be paid pursuant to the LEASE shall remain
the same during the period from the expiration of the Initial Term, as set forth
in the INITIAL LEASE, to the expiration of the Initial Term, as extended herein.
24. Subparagraph 7(a)(iv) hereby is amended by permitting Tenant to
obtain Comprehensive Boiler and Machinery Insurance with a deductible not to
exceed Two Hundred Thousand and 00/100
($200,000.00) Dollars.
25. Subparagraph 7(a)(vii) hereby is omitted.
26. Subparagraphs 7(d) and (e) are amended so as to require Tenant to
deliver to Landlord a certificate of insurance (Accord 27) of all policies
procured by Tenant in compliance with its insurance obligations pursuant to the
LEASE.
27. Subparagraph 9(a) hereby is amended to provide that Landlord shall
be required only to repair, restore or replace non-trade fixtures and shall not
be required to repair, restore or replace trade fixtures of Tenant.
28. Subparagraph 15(f) hereby is amended by including subparagraphs
15(d) and (e) following reference to subparagraph 15(c).
29. Subparagraph 15(h) hereby is amended to permit Tenant to assign the
LEASE or to sublease the Premises to a Tenant's Affiliate.
30. Subparagraph 33(b) hereby is amended to provide that the personal
liability of Landlord and/or Ground Lessor shall apply if Landlord or Ground
Lessor shall transfer, sell or mortgage any interest in any real property now
owned or leased by Ground Lessor or Landlord.
31. Subparagraph 41(d) hereby is amended by amending the first sentence
to read as follows:
"The initial Purchase Price for the Premises, including the
Upstairs Office Space, but excluding the Remaining Additional
Lands, as of the expiration of the Fifth Lease Year shall be
Twenty-Nine Million Four Hundred Thousand and 00/100
[$29,400,000] Dollars ("Base
Purchase Price")."
32. Subparagraph 41(e) and (h) hereby are omitted and replaced by
subparagraphs 41(g) and (h) below respectively, and subparagraphs 41(f) and (g)
hereby are redesignated as subparagraphs 41(i) and (j) respectively.
33. Subparagraphs 41(e), (f), (g) and (h) hereby are added to Paragraph
41 as follows:
"(e) If the purchase shall include the Remaining Additional
Lands in its present as-is condition, the Base Purchase Price
shall be increased at the rate of One Hundred Twelve Thousand
Six Hundred ($112,600.00) Dollars per acre of Remaining
Additional Lands, plus an amount equal to the brokerage
commission which shall be due and payable in connection with
the purchase and sale of such Remaining Additional Lands.
(f) If the Remaining Additional Lands shall have been
improved as a parking facility in accordance with the
provisions of this Amendment, then in addition to the
increase in the Base Purchase Price pursuant to subparagraph
(e) above, the Base Purchase Price shall be increased by an
amount equal to the Annual Fixed Rent to be paid for the
improved Remaining Additional Lands, pursuant to the
provisions of Paragraph 49 hereof, whether or not Tenant
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<PAGE>
shall have exercised its option to use the improved
Remaining Additional Lands, divided by nine hundred
seventy-five ten thousandths (.0975), plus an amount equal
to the brokerage commission which shall be due and payable
in connection with the purchase and sale of such Remaining
Additional Lands. For the purposes of this subparagraph
41(f), in determining the Annual Fixed Rent to be paid for
the improved Additional Lands, there shall be excluded
therefrom, the amount of Fifty-Two Thousand ($52,000)
Dollars on account of the Remaining Additional Lands Fixed
Rent.
(g) If Landlord shall have constructed an Additional Building
on the Remaining Additional Lands pursuant to the provisions
of Paragraph 49 hereof, then the Purchase Price shall be
increased by an amount equal to the lesser of (a) Thirty-Two
($32) Dollars multiplied by the gross square footage of the
Additional Building, determined by outside measurements, plus
the demolition costs referred to in Paragraph 49, increased
but not decreased by a percentage equal to the percentage of
increase determined by the lesser of: (i) the percentage of
increase in the Index, as hereinafter defined in subparagraph
41(i), between the date hereof and the Index for the second
month prior to the month in which the closing shall occur; or
(ii) the percentage of increase in the McGraw Hill's
Engineering Record Cost of Construction Index for the New
York/New Jersey area ("Construction Index") or comparable
Construction Index if said Construction Index is no longer
published, between the date hereof and the Construction Index
for the second month prior to the month in which the closing
shall occur; or (b) the cost of constructing the Additional
Building, if Tenant shall elect to have the bid process
employed as in Paragraph 49 provided.
(h) At the closing, Tenant shall pay over the Purchase Price
in full and Landlord shall convey title in accordance with the
following provisions:
(i) Landlord, at its sole cost and expense, shall
proceed and exert reasonable efforts to cause the
Premises, the Remaining Additional Lands, and
thereafter the Additional Building, if applicable, to
be resubdivided, if necessary, so as to constitute a
separate lot and closing of title shall be subject to
Landlord obtaining final, unappealable approval of
such subdivision, if applicable. If Landlord shall
not be able to obtain resubdivision and if Tenant
shall have exercised its option to purchase
hereunder, then Landlord, at its sole cost and
expense, shall cause a groundlease, condominium or
other mutually acceptable method to be employed so as
to enable Tenant to purchase the Building and
Additional Building, if applicable, in accordance
with the provisions hereof.
(ii) Said Premises, Remaining Additional Lands and
Additional Building, if applicable, shall be sold and
conveyed subject to zoning regulations, ordinances,
taxes, assessments, all easements, restrictions and
rights of way presently existing, such additional
easements, restrictions and rights of way as shall be
permitted hereunder and such other liens or
encumbrances as Tenant may have placed, permitted,
agreed or consented to be placed against the
Premises, Remaining Additional Lands and/or
Additional Building, if applicable;
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<PAGE>
(iii) Landlord shall deliver a deed, affidavit of
title and FIRPTA affidavit in usual form. The deed
shall be bargain and sale with covenants against
Grantors' acts and shall be duly executed and
acknowledged so as to convey to Tenant fee simple
title to the Premises in accordance with the
provisions hereof;
(iv) Landlord shall have the right to utilize the
proceeds of sale to discharge or secure the release
of any lien encumbering the Premises, Remaining
Additional Lands and Additional Building, if
applicable, and to which the title is not to be
subject;
(v) The Premises, Remaining Additional Lands and
Additional Building, if applicable, shall be sold
"as-is" and the delivery and acceptance of the deed
of conveyance at the time of closing of title shall
be deemed to constitute full compliance by Landlord
of all of the terms, covenants and conditions on its
part to be performed in connection with the sale
hereunder;
(vi) If the Premises, Remaining Additional Lands
and/or Additional Building, if applicable, shall be
subject to any liens, including transfer,
inheritance, estate, franchise, license or other
similar taxes, which Landlord is obligated to
satisfy, the amount of which has not been finally
fixed, the same shall not be deemed an objection to
title, provided that the title company at the time of
closing of title, will issue or bind itself to issue
its policy which will insure Tenant against
collection of said liens and taxes from said
Premises, Remaining Additional Lands and/or
Additional Building, if applicable;
(vii) The Rental payments to be made hereunder,
including Rental on account of the Remaining
Additional Lands and Additional Building, and all
other usual adjustments shall be adjusted as of the
Closing Date, it being agreed that Tenant shall not
be entitled to a credit against the Purchase Price on
account of any payments of Rental, except as it
relates to a period subsequent to closing, or on
account or any payments for Taxes and/or insurance
premiums;
(viii) Tenant, subject to and in accordance with
Paragraph 47 of this lease, shall comply with ISRA.
Following closing, the provisions of Paragraph 47 of
this lease shall remain in full force and effect,
including any environmental claim relating to the
Premises, Remaining Additional Lands and Additional
Building, if applicable;
(ix) In the event that the Closing Date established
pursuant hereto shall fall on a Saturday, Sunday or
legal holiday, then it is agreed that the Closing
Date shall be the first business day thereafter;
(x) In the event that Tenant shall fail to close
title in accordance with the provisions hereof
following its exercise of its option to purchase,
then and in such event, said right shall cease and
terminate immediately and be of no further force and
effect;
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<PAGE>
(xi) Tenant shall have the right to assume or take
subject to any mortgage then encumbering the
Premises, subject only to and in accordance with, the
applicable provisions, if any, of the mortgage,
provided that the outstanding principal balance of
the mortgage shall not exceed the then Purchase
Price, and provided further that Landlord, its
constituent members and all guarantors shall be
relieved and released from all obligations
thereunder. Tenant shall pay any and all assumption
fees and charges or any and all prepayment penalties,
fees and charges, if any, if Tenant does not take
subject to or assume the mortgage, provided, however,
that said prepayment penalties, or prepayment fees
and charges that Tenant shall be obliged to pay shall
not exceed those set forth on Exhibit H, and any such
excess shall be a credit against the Purchase Price,
or, in the alternative, at Tenant's election, paid by
Landlord; and
(xii) The Ground Lessor shall execute this lease to
indicate its consent to and agreement to be bound by
the provisions of this Paragraph 41."
34. Subparagraph 42(b) hereby is amended to read as follows:
"(b) In the event of a transfer of the Premises to a third
party, whether by sale, foreclosure or deed in lieu of
foreclosure, or otherwise, and such third party fails to make
any commission payment to Broker within five (5) days
following receipt of notice of non-payment, pursuant to the
commission agreement entered into between Broker and Landlord,
Tenant, upon notice from Broker (with a copy to the new owner)
of the new owner's failure to make such payment and setting
forth the amount of annual commission then due and payable to
Broker, hereby is authorized and directed by Landlord to make
monthly payments of Fixed Rent directly to Broker (at the
address set forth in the notice), until the commission then
due and payable shall have been paid. Landlord and Tenant
agree that the payment of the brokerage commission by Tenant
to Broker pursuant to this subparagraph (b) shall be in lieu
of Fixed Rent payments required pursuant to this lease and
Tenant shall not be in default pursuant to this lease by
virtue of said payment to Broker."
35. Paragraph 43 hereby is amended to read as follows:
"Tenant understands that the Premises are part of a larger
tract of land presently owned by Ground Lessor and developed
or hereafter to be developed by Landlord, known as Port
Carteret, (herein referred to as the "Industrial Park"). In
connection therewith, Tenant hereby consents to the granting
by Landlord of easements (at any time) over the Premises to
various utility companies and municipalities, provided that
said easements (except with respect to those exclusively
serving the Building and/or Additional Building) shall lie
in the set back areas (i.e., those areas provided by the
current zoning ordinance in which structures are precluded)
within the Premises and shall be relocatable at no expense
to Tenant should Tenant seek to improve said area and be
impeded as a result of such easement. Tenant consents both
to the continuation or extension of Middlesex Avenue as a
public road and to a future access road as such is shown
abutting the westerly portion of the Premises on Exhibit C,
which road may be dedicated as a public road."
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<PAGE>
36. Tenant shall have the right to record a Memorandum of Lease in the
Middlesex County Clerk's Office, which Memorandum shall not provide any of the
economic agreements of the parties and which Memorandum shall be subject to
Landlord's consent, which shall not be unreasonably withheld, provided, however,
that prior to such filing, Tenant shall deliver to Landlord's attorneys, in
escrow a duly executed Discharge of Memorandum of Lease, which Discharge may be
released from escrow and filed of record upon the Termination or expiration of
this LEASE, as the LEASE may be extended, regardless of the reason or cause of
such termination or expiration in accordance with the provisions of the escrow
agreement entered into among the parties and the escrowee.
37. In the event of any inconsistency between the provisions of this
Third Amendment of Lease and the LEASE, the provisions of this Amendment shall
control.
38. In all other respects and matters, the LEASE shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties have set their hands and seals as of
the date first above written.
PORT CARTERET (Landlord)
By: Amax Realty Development, Inc.
By: /s/ Anthony Filiaci
Anthony Filiaci, Vice
President
V. PAULIUS AND ASSOCIATES
By: /s/ Robert Paulius
Robert Paulius, Vice President
DI GIORGIO CORPORATION (Tenant)
By: /s/ George W. Conklin
George Conklin, Vice President
AMAX COPPER, INC., (Ground Lessor)
By: /s/ Anthony Filiaci
Anthony Filiaci, Vice President
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<PAGE>
Exhibits to Third Amendment of Lease
Exhibit A: Omitted Grocery Additional Lands (4.54 Acres)
Exhibit B (Grocery Lease): Remaining Additional Lands (4.34 Acres)
Exhibit C: Site Plan
WARNING:
NO REPRESENTATION IS MADE THAT THIS FORM OF CONTRACT FOR THE SALE AND PURCHASE
OF REAL ESTATE COMPLIES WITH SECTION 5-702 OF THE GENERAL OBLIGATIONS LAW
("PLAIN ENGLISH").
CONSULT YOUR LAWYER BEFORE SIGNING IT.
NOTE: FIRE AND CASUALTY LOSSES:
This contract form does not provide for what happens in the event of fire or
casualty loss before the title closing. Unless different provision is made in
this contract, Section 5-1311 of the General Obligations Law will apply. One
part of the law makes a PURCHASER responsible for fire and casualty loss upon
taking of title to or possession of the PREMISES.
DATE PARTIES
CONTRACT OF SALE made as of the 26th day of November, 1997 BETWEEN United States
Steel and Carnegie Pension Fund, Inc., as Trustee under Agreement dated as of
August 31, 1950 for United States Steel Corporation Non-Contributory Pension
Plan (the "Plan") as to a 9/10 interest, AND as trustee under Agreement dated as
of February 15, 1950 for the Plan as to a 1/10 interest.
Address: 767 Fifth Avenue, 9th Floor, New York, New York 10153
who agrees to sell, and Di Giorgio Corporation or its designee
Address: 380 Middlesex Avenue, Carteret, New Jersey 07008
hereinafter called "PURCHASER"
Premises
The property, including all right, title and interest, if any, of Seller in and
to all buildings and improvements thereon (the "PREMISES"), more fully described
on a separate page marked "Schedule A," and also know as:
Stress Address: 700 Dibblee Drive, Garden City, New York
Tax Map Designation: Lots 6 and 7 in Block 72, Section 44
Town of Hempstead, Nassau County, New York
Together with SELLER'S interest, if any, in streets and unpaid awards as set
forth in Paragraph 9.
Ground Lease
The sale also includes all right, title and interest of Seller as Landlord under
the Lease dated October 24, 1963 with Waldbaum, Inc. (as successor by assignment
recorded in Deed Book 9009 Page 367 to Waldbaum in Roosevelt Mall, Inc.)
recorded in Deed Book 7219 Page 231, as amended in Liber 7324 Page 409 (the
"Ground Lease").
Purchase Price
1. (a) The purchase price is $1,675,000.00
payable as follows:
On the signed of this contract, by check subject to collection: $ 1,000.00
BALANCE AT CLOSING: $1,674,000.00
Existing Ground Lease
2. The PREMISES will be conveyed subject to the continuing lien of the Ground
Lease, which will be assigned to and assumed by Purchaser (or its designee) at
Closing pursuant to a recordable form of assignment and Assumption Agreement
mutually acceptable to Seller and Purchaser.
<PAGE>
Acceptable Funds
3. All money payable under this contract unless otherwise specified, shall be by
wire transfer of immediately available funds.
"Subject to" provisions
4. The PREMISES are to be transferred subject to:
a. Laws and governmental regulations that affect the use and
maintenance of the PREMISES.
b. Consents for the erection of any structures on, under or
above any streets on which the PREMISES abut.
c. Encroachments of stoops, areas, cellar steps, trim and
cornices, if any, upon any street or highway.
d. The Ground Lease, all subleases affecting the Premises and
all matters indicated on Schedule B of the title insurance
commitment attached hereto (the "Commitment").
e. The existing physical condition (including environmental
condition) of the Premises and any and all notes or notices
of violation relating thereto.
Title company approval
5. SELLER shall give and PURCHASER shall accept such title as Chicago Title
Insurance Company (the "Title Company") will be willing to approve and insure in
accordance with their standard form of title policy, subject on to the matters
provided for in this contract and in the commitment.
Closing defined and form of deed
6. "CLOSING" means the settlement of the obligations of SELLER and PURCHASER to
each other under this contract, including the payment of the purchase price to
SELLER, and the delivery to purchaser of a Trustee's Deed in form required by
the Title Company, but without warranty or covenant by Seller in proper
statutory form for recording so as to transfer full ownership (fee simple title)
to the PREMISES, free of all encumbrances except as herein stated. The deed will
contain a covenant by the SELLER as required by Section 13 of the Lien Law,
provided, however, that Di Giorgio Corporation shall indemnify Seller with
respect to any claims under such Lien Law.
If SELLER is a corporation, it will delivery to PURCHASER at the time of CLOSING
(a) a resolution of its Board of Directors authorizing the sale and delivery of
the deed, and (b) a certificate by the Secretary or Assistant Secretary of the
corporation certifying such resolution and setting forth facts showing that the
transfer is in conformity with the requirements of Section 909 of the Business
Corporation Law. The deed in such case shall contain a recital sufficient to
establish compliance with that section. Seller will also satisfy the Title
Company's requirements in the Commitment pertaining to the Trusts administered
by Seller.
Closing date and Place
7. CLOSING will take place at the New York city office of Purchaser's attorneys,
Sills Cummis, at 712 Fifth Avenue, 20th Floor at o'clock on or before March 31,
1998 or earlier, at Purchaser's option, to accommodate a simultaneous conveyance
to First Industrial Realty Trust ("First Industrial").
No Broker
8. Intentionally deleted
Streets and assignment of unpaid awards
9. This sale includes all of SELLER's ownership and rights, if any, in any land
lying in the bed of any street or highway, opened or proposed, in front of or
adjoining the PREMISES to the center line thereof. It also includes any right of
SELLER to any unpaid award by reason of any taking by condemnation and/or for
any damage to the PREMISES by reason of change of grade of any street or
highway. SELLER will deliver at no additional cost to PURCHASER, at CLOSING, or
thereafter, on demand, any documents which PURCHASER may require to collect the
award and damages.
Mortgagee's certificate or letter as to existing mortgage(s)
10. Intentionally deleted
Compliance with state and municipal department violations and orders
11. Intentionally deleted
<PAGE>
Installment assessments
12. Intentionally deleted
Apportionments
13. The following are to be apportioned as of midnight of the day before the day
of CLOSING: (a) Rents as and when collected under the Ground Lease.
Any errors or omissions in computing apportionments at CLOSING shall be
corrected. This provision shall survive CLOSING.
Water meter readings
14. Intentionally deleted
Allowance for unpaid taxes, etc.
15. Intentionally deleted
Use of purchase price to pay encumbrances
16. If there is anything else affecting the sale which SELLER is obligated to
pay and discharge at CLOSING, SELLER may use any portion of the balance of the
purchase price to discharge it. As an alternative SELLER may deposit the money
with the title insurance company employed by PURCHASER and required by it to
assure its discharge; but only if the title insurance company will insure
PURCHASER'S title clear of the matter or insure against its enforcement out of
the PREMISES. Upon request, made within a reasonable time before CLOSING, the
PURCHASER agrees to provide separate-certified checks as requested to assist in
cleaning up these matters. In addition, one half of the transfer tax shall be
credited against the balance of the purchase price due at Closing and Purchaser
shall be responsible for payment of same.
Affidavit as to judgments, bankruptcies, etc.
17. If a title examination discloses judgments, bankruptcies or other returns
against persons having names the same as or similar to that of SELLER, SELLER
shall deliver a satisfactory detailed affidavit at CLOSING showing that they are
not against SELLER.
Deed transfer and recording taxes
18. The transfer tax shall be borne equally by the parties, as provided in
paragraph 16 above.
Purchaser's lien
19. Intentionally deleted
Seller's inability to convey limitation of liability
20. If SELLER is unable to transfer title to PURCHASER in accordance with this
contracts SELLER'S sole liability shall be to refund all money paid on account
of this contract. Upon such refund this contract shall be considered cancelled,
and neither SELLER nor PURCHASER shall have any further rights against the
other.
Condition of property
21. PURCHASER has inspected the buildings on the PREMISES and the personal
property included in this sale and is thoroughly acquainted with their
condition. PURCHASER agrees to purchase them "as is" and in their present
condition subject to reasonable use, wear, tear, and natural deterioration
between now and CLOSING.
Entire agreement
22. All prior understandings and agreements between SELLER and PURCHASER are
merged in this contract. It completely expresses their full agreement. It has
been entered into after full investigation, neither party relying upon any
statements made by anyone else that is not set forth in this Contract.
<PAGE>
Changes must be in writing
23. This Contract may not be changed or cancelled except in writing. The
contract shall also apply to and bind the distributees, heirs, executors,
administrators, successors and assigns of the respective parties. Each of the
parties hereby authorize their attorneys to agree in writing to any changes in
dates and time periods provided for in this contract.
Singular also means plural
24. any singular word or term herein shall also be read as in the plural
whenever the sense of this contract may require it.
25. Purchaser shall have the right to cancel this Agreement and receive back any
deposit hereunder if the transaction with First Industrial is not consummated by
March 31, 1998.
26. This Agreement may be signed in counterparts and delivered by telecopy.
In Presence Of: SELLER:
/s/ Louise Maloney UNITED STATES STEEL AND CARNEGIE PENSION
FUND, INC., AS Trustee as aforesaid
By: /s/ M. Sharon Cassidy
In Presence Of:
/s/ Marjorie Richman PURCHASER:
DI GIORGIO CORPORATION
By: /s/ Robert A. Zorn
Notary - Intentionally Deleted
Adjournment Closing of title under the within contract is hereby adjourned
to 19 at o'clock at
title to be closed and all adjustments to be made as of 19 .
Assignment For value received, the within contract and all the right,
title and interest of the purchaser thereunder are hereby assigned, transferred
and set over unto and said assignee
hereby assumes all obligations of the purchaser thereunder.
Dated 19
------------------------- -----------------------------------
Purchaser Assignee of Purchaser
Contract of Sale Premises
Title No. Section 44
Block 72
Lot 6 and 7
TO County or Town Hempstead, Nassau County
Street Numbered Address 700 Dibblee Drive
Garden City, New York
Tax Billed Address
<PAGE>
NORTH SHORE ABSTRACT, LTD.
as agent for:
CHICAGO TITLE INSURANCE COMPANY
Title No. N16175N
97-05-0155-000-495
SCHEDULE A
ALL that certain plot, piece or parcel of land, with the improvements thereon
situate, lying and being near Carle Place, Town of Hempstead, County of Nassau
and State of New York, bounded and described as follows:
BEGINNING at a point on the Westerly side of East Gate Boulevard South, distant
369.60 feet Southerly from the Southerly end of a curve having a radius of 40.00
feet and a length of 62.83 feet which curve connects the said Westerly side of
East Gate Boulevard South with the Southerly side of Zeckendorf Boulevard;
RUNNING THENCE along said Westerly side of East Gate Boulevard South the
following three courses and distances:
1. South 04 degrees 35 minutes 24 seconds East, 590.35 feet;
2. Southerly along the arc of a circle bearing to the right and having a radius
of 65.00 feet a distance along said arc of 63.06 feet;
3. Southerly along the arc of a circle bearing to the left having a radius of
50.00 feet a distance along said arc of 115.98 feet to land of The People of the
State of New York as Meadowbrook State Parkway;
THENCE along said last mentioned land the following two courses and distances:
1. Northwesterly along the arc of a circle bearing to the right and having a
radius of 2030.00 feet a distance along said arc of 945.89 feet;
2. Northerly along the arc of a circle bearing to the left and having a radius
of 700.00 feet a distance along said arc of 245.42 feet to the land of the Long
Island Railroad Company;
THENCE Northerly along said last mentioned land along the arc of a circle
bearing to the left having a radius of 500.00 feet a distance along said arc of
84.01 feet;
THENCE North 85 degrees 24 minutes 36 seconds East, 910.92 feet to the point or
place of BEGINNING.
East Gate Boulevard is now known as Dibblee Drive.
For conveyancing only, (Together with all right, title and interest of, in and
to any streets and if intended to be conveyed (roads abutting the above
described premises, to the center line thereof.
<PAGE>
NORTH SHORE ABSTRACT, LTD.
as agent for:
CHICAGO TITLE INSURANCE COMPANY
Title No. N16175N
97-05-0155-000-495
SCHEDULE B
Hereinafter set forth are additional matters which will appear in our policy as
exceptions from coverage unless disposed of to our satisfaction prior to the
closing or delivery of the policy.
- ------------------------------------------------------------------------------
DISPOSITION
1. Rights of tenants or persons in possession, if any.
2. Taxes, tax liens, tax sales, water rates, sewer rents, and
assessments set forth herein.
3. Mortgages returned herein ( 2 ). The mortgages set forth in
the detailed statement within must be considered and/or
disposed of.
4. Proof is required that all parties to this transaction have
been known by no other names for the past ten years. Any
other names are to be submitted to this Company prior to
closing.
5. Covenants, conditions, easements, leases, agreements of
record etc., more fully set forth herein:
a) Covenants and Restrictions in Liber 4457 cp 459 as
modified by Liber 5343 cp 257 and Liber 5738 cp
55, Liber 6161 cp 536, Liber 6303 cp 510, Liber
6319 cp 215 as modified by Liber 6368 cp 598,
Liber 7082 cp 447 (copies to follow)
b) Electric Agreement in Liber 6874 cp 9 (affects 10
foot wide strip along Northerly side of Lot 6 and
15 foot wide strip along Westerly side of Lots 6
and 7)
c) Electric Agreement in Liber 7319 cp 381 (affects
Northeasterly part of Lot 6)
d) Reservation in Liber 7050 cp 537 for storm water
and sanitary sewer drain (affects Westerly part of
premises)
e) Right of Long Island Railroad, if any, to use and
maintain the railroad tracks over the Westerly
part of the premises herein as shown on the survey
by Bohn & Bonacci dated 10/28/81
f) Telephone Easement in Liber 6031 page 137 (affects
streets)
g) Sewer Easement in Liber 5829 page 556 (affects
streets)
6. The certified owner United States Steel and Carnegie Pension
Fund, Inc., As Trustee has been run for Judgments and Federal
Tax Liens. Nothing has been found of record.
7. Deed to contain the following recital: "Being the same
premises conveyed to the Grantor(s) herein by deed dated
6/10/63, recorded 6/13/63 in Liber 7168, Page 160."
Title Certified in: United States Steel and Carnegie Pension Fund, Inc., as
Trustee
A duplicate copy of the exceptions is furnished to you with the thought you may
wish to transmit same to the attorney for the owner of the property, and thereby
facilitate the clearing of the objection prior to closing.
<PAGE>
NORTH SHORE ABSTRACT, LTD.
as agent for:
CHICAGO TITLE INSURANCE COMPANY
Title No. N16175N
97-05-0155-000-495
SCHEDULE B (Continued)
8. Meter reading must be obtained by seller. In the event said
reading is not obtained, then policy will except any
additional water and sewer charges from the date of the last
ACTUAL reading.
9. Company must be advised of purchaser's name prior to
closing. Additional title objections may be raised.
10. Closing deed to be a Trustee's deed from both Trustees
stating full consideration.
11. Proof is required that the Trusts are in full force and
effect and that Trustees are authorized to convey premises.
12. Agreement made between Waldbaum Inc. and The Town of
Hempstead recorded 8/10/81 in Liber 9358 cp 249 (see within)
13. Non-Disturbance and Attornment Agreement recorded in Liber
9009 cp 376 for the benefit of Sysco Corporation. (see
within)
14. Terms, Covenants, Conditions, Provisions and Agreements of
lease in favor of Sysco Corporation, as Tenant.
15. Assignment of Lessor's Interest in Lease in Liber 9784 cp
503. (assigns the interest of Waldbaum under the principal
lease, as further security under the mortgage now held by
New York Life Insurance Company)
16. Lease between United States Steel and Carnegie Pension Plan
Inc. (Fee Owner) and Waldbaum Inc. (Landlord) in Liber 7219
Page 231, amended in Liber 7324 Page 409, assigned by Liber
9009, Page 367, expires 5/31/2011, with an option to renew
for 37 years. (see within)
17. Sublease between Waldbaum Inc. (Landlord) and Sysco
Corporation (Tenant) dated 7/19/73, amended 12/16/76, a
memorandum of which was recorded in Liber 9009 Page 369
expires 1/31/2004, with an option to renew for 7 years, 4
months. (see within)
<PAGE>
NORTH SHORE ABSTRACT, LTD.
as agent for:
CHICAGO TITLE INSURANCE COMPANY
Title No. N16175N
97-05-0155-000-495
SCHEDULE B (Continued)
18. Sublease between Sysco Corporation (Sublandlord) and WRGFF
Associates, L.P. (Subtenant) in Liber 10265 Page 61 1. (see
within)
19. Certification and Agreement between United States Steel and
Carnegie Pension Plan Inc. as Fee Owner and WRGFF
Associates, L.P. (Subtenant) and White Rose Frozen Food,
Inc. (as Sub Sub-Tenant) in Liber 10265 Page 573. (see
within)
20. Agreement between New York Life Insurance Company
(Mortgagee), WRGFF Associates, L.P. (Second Subtenant),
White Rose Frozen Food, Inc. (Third Subtenant), Waldbaum,
Inc. (Prime Tenant), and Sysco Corporation (First Subtenant)
in Liber 14807 Page 873. (see within)
21. Sub-Sublease between WRGFF Associates, L.P. (Sublandlord)
and White Rose Frozen Food, Inc. (Subtenant) in Liber 10265
Page 597. (see within)
22. Certification and Agreement between Waldbaum, Inc.
(Landlord), Sysco Corporation (Tenant), WRGFF Associates,
L.P. (Subtenant) and White Rose Frozen Food, Inc.
(Sub-Subtenant) in Liber 10265 Page 625. (see within)
23. Survey made by Bohn and Bonacci P.C., dated 4/29/92 shows a
1 story brick building, a 1 story metal building (freezer),
a garage, a 1 story concrete block area, and a 1 story
concrete block truck dock. Railroad tracks and sewer
easement over Northwesterly area. Concrete and asphalt areas
throughout. Concrete area straddles Southwesterly lot line.
Fence and railroad tie curb vary with Southerly lot line.
Fence lies up to 42.2 feet Southwest of Southwesterly lot
line and 13.3 feet West of Westerly lot line. Fence and curb
lie South of Northerly lot line and East of Easterly lot
line. Fence area with gate varies with Southeasterly area.
Signs, fences and concrete curb vary with Easterly record
line. No other variations or encroachments with lot lines.
Policy will except any changes since date of survey.
NOTE: The survey reading and survey inspection are not intended to be and should
not be used for the purpose of determining compliance with local building and
zoning laws and regulations; they should only be relied upon for the purpose of
disclosing exceptions to title.
<PAGE>
Number Nl6175N
97050155000495
CERTIFICATE FOR TITLE INSURANCE
Issued by
CHICAGO TITLE INSURANCE COMPANY
Chicago Title Insurance Company, a Missouri Corporation, herein called
the Company, certifies to the Applicant named on the following page that an
examination of title to premises described in Schedule A has been made in
accordance with its usual procedure and agrees to issue the ALTA (10-17-92)
Owner's or Lender's form of insurance policy as modified by the New York
Coverage Endorsements in the amount and for the transaction set forth herein and
subject to the exclusions from coverage and the conditions and stipulations
therein contained.
After the closing of the transaction. in conformance with the
requirements and procedures of the Company, the Company will issue the policy
and except (i) all loss or damage by reason of the estates, interests, defects,
objections, liens, encumbrances and other matters set forth in Schedule B herein
that are not disposed of to the satisfaction of the Company prior to such
closing or issuance of the policy (ii) any questions or objection coming to the
attention of the Company before the date of closing, or if there be no closing,
before the issuance of the policy.
IN WITNESS WHEREOF, Chicago Title Insurance Company has caused its
corporate name and seal to be hereunto affixed by its duly authorized officers
on the date shown in Schedule A.
Questions concerning the within
Certificate should be directed to:
Issued by:
NORTH SHORE ABSTRACT LTD.
330 GREAT NECK ROAD
P.O. BOX 385
GREAT NECK, NY 11021
(516) 466-6050 CHICAGO TITLE INSURANCE COMPANY
FAX (516) 466-6011
By:
Dated:
Certified by: _______________________ ATTEST: President
Authorized Signature
Redated:
by:__________________________________ Secretary
Authorized Signature
This certificate is intended for lawyers only. Such exceptions as may be set
forth herein may effect marketability of title. Your lawyer should be consulted
before taking any action based upon the contents of this certificate. The
Company's representative at the closing hereunder may not act as legal advisor
to any of the parties or draw legal instruments for them. Such representative is
permitted to be of assistance only to an attorney. It is advisable to have your
attorney present at the closing.
Reorder Form No. 10881 (Rev. 10/92)
<PAGE>
NORTH SHORE ABSTRACT, LTD.
as agent for
CHICAGO TITLE INSURANCE COMPANY
Title No. N16175N Effective Date: 6/20/97 Redated:
97-05-0155-000-495
Proposed Insured:
Purchaser: TBD
Mortgagee:
Amount of Insurance
Fee $13,500,000.00
Mortgage $
Leasehold $
THIS COMPANY CERTIFIES that a good and marketable title to the premises
described in Schedule A, subject to the liens, encumbrances and other matters,
if any, set forth in this certificate may be conveyed and/or mortgaged by:
United States Steel and Carnegie Pension Fund, Inc., as Trustee under Agreement
dated as of August 31, 1950 for United States Steel Corporation Non-Contributory
Pension Plan, as to a 9/10 interest, AND United States Steel and Carnegie
Pension Fund, Inc., as Trustee under Agreement dated as of February 15, 1951 for
United States Steel Corporation Contributory Pension Plan, as to a 1/10 interest
As to Tax Lot 6: By deed from Roosevelt Nassau Buildings Corporation
Dated 10/24/63, Recorded 10/25/63 in Liber 7219 Page 219
As to Tax Lot 7: By deed from Johnus Inc.
Dated 10/24/63, Recorded 10/25/63 in Liber 7219 Page 89
Premises described in Schedule "A" are known as:
Address: 700 Dibblee Drive
Garden City, New York
County: Nassau City:
District: Town: Hempstead
Section: 44 Village:
Block: 72
Lot(s): 6 and 7
NOTE: This Certificate is intended for lawyers only. Such exceptions as may be
set forth herein may affect marketability of title. Your lawyer should be
consulted before taking any action based upon the contents hereof. The Company's
representative at closing here under may not act as legal advisor to any of the
parties or draw legal instruments for them. Such representative is permitted to
be of assistance only to an attorney. It is advisable to have your attorney
present at the closing.
For further information please call (516) 466-6050 or (718) 468-9200 or
1-800-420-6050
700 Dibblee Drive
Garden City, New York
AGREEMENT TO ASSIGN GROUND LEASE AND SUBLEASE
THIS AGREEMENT, made as of this 28th day of November 1997, by
and between WALDBAUM, INC., a New York corporation, with offices at 2 Paragon
Drive, Montvale, New Jersey 07645 (hereinafter called "Assignor"), and Di
GIORGIO CORPORATION, a Delaware corporation, having its principal office at 380
Middlesex Avenue, Carteret, New Jersey 07008 (hereinafter called "Assignee"),
W I T N E S S E T H
WHEREAS, United States Steel and Carnegie Pension Fund, Inc.,
as Trustee under Agreement dated as of August 31, 1950 for United States Steel
Corporation NonContributory Pension Plan and United States Steel and Carnegie
Pension Fund, Inc., as Trustee under Agreement dated as of February 15, 1951 for
United States Steel Corporation Contributory Pension Plan, as Landlord, and
Waldbaum in Roosevelt Field, Inc., as Tenant, entered into a certain ground
lease dated October 24, 1963 and recorded in the Office of the Clerk of Nassau
County, New York on October 25, 1963 in Deed Book 7219, at Page 231, as amended
by agreement dated December 18, 1963 and recorded in the Office of the Clerk of
Nassau County, New York on October 8, 1964 in Deed Book 7324, at Page 409
(hereinafter collectively called the "Ground Lease") covering certain Premises
(as defined in the Ground Lease) in Hempstead, Nassau County, New York
designated as Section 44, Block 72, Lot 6 and 7 on the Land Map of Nassau County
and commonly known as 700 Dibblee Drive, Garden City, New York, all as more
particularly described in the Ground Lease; and
WHEREAS, Assignor succeeded to the interest of Waldbaum in
Roosevelt Field, Inc. pursuant to a certain assignment dated December 17, 1976
recorded on December 23, 1976 in the Office of the Clerk of Nassau County, New
York in Deed Book 9009, at Page 367; and
WHEREAS, Assignor, as Landlord, and Sysco Corporation, as
Tenant, entered into a certain sublease dated July 19, 1973 covering the
Premises which sublease was amended and supplemented by Amendment No. 1 dated
December 16, 1976, a memorandum of which was recorded on December 23, 1976 in
Deed Book 9009, at Page 369, Agreement dated December 16, 1976 by and among
Sysco Corporation, Assignor and New York Life Insurance Company recorded on
December 23, 1976 in Deed Book 9009, at Page 376, Agreement dated August 3, 1992
by and among New York Life Insurance Company, WRGFF Associates, L.P., White Rose
Frozen Food, Inc., Assignor, and Sysco Corporation recorded in Liber 14807, Page
873 (the "1992 Agreement") and Certification And Agreement dated August 3, 1992
by and among Assignor, Sysco Corporation, WRGFF Associates, L.P., and White Rose
Frozen Food, Inc. recorded in Liber 10265, Page 625 (the "Certification")
(hereinafter collectively called the "Sublease" or "First Sublease"); and
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WHEREAS, Sysco Corporation, as Sublandlord, and WRGFF
Associates, L.P., as Subtenant, entered into a certain sublease dated August 3,
1992, a memorandum of which was recorded in Liber 10265, Page 611 (hereinafter
called the "Second Sublease") covering the Premises; and
WHEREAS, WRGFF Associates, L.P., as Sublandlord, and White
Rose Frozen Food, Inc. ("White Rose"), as Subtenant, entered into a Sub-Sublease
dated August 3, 1992, a memorandum of which was recorded in Liber 10265, Page
597 (hereinafter called the "Third Sublease") covering the Premises; and
WHEREAS, DIG Holding Corp. ("DIG"), Assignee and White Rose
("WRF") guaranteed the obligations of the Second Sublease and Third Sublease
pursuant to certain guaranties dated August 3, 1992; and
WHEREAS, DIG, WRF and White Rose have been merged into
Assignee, which is under common control with WRGFF Associates, L.P.; and
WHEREAS, New York Life Insurance Company, a New York
corporation, is the holder of a certain Consolidation, Modification and
Extension Agreement executed and delivered by Assignor dated December 17, 1976,
recorded on December 23, 1976 in the County Clerk's Office, Nassau County, New
York in Mortgage Book 9784, at Page 493 and the notes and mortgages described
therein together with Assignment dated December 17, 1976 with respect to the
First Sublease, Assignment dated August 3, 1992 with respect to the Second
Sublease and Third Sublease and certain other documents executed and delivered
in connection with the execution and delivery of the mortgage (being hereinafter
collectively referred to as the "Leasehold Mortgage"); and
WHEREAS, Assignor desires to assign the Ground Lease and First
Sublease and Assignee desires to take assignments of the Ground Lease and First
Sublease upon the terms and conditions provided for in this Agreement,
NOW, THEREFORE, the parties hereto in consideration of the
mutual promises and covenants herein contained and intending to be legally
bound, do hereby agree as follows:
1. Assignment of Ground Lease and First Sublease. The Ground
Lease shall be assigned to Assignee by execution of a Ground Lease Assignment
and Assumption Agreement in the form of Exhibit "A" attached hereto (hereinafter
called the "Ground Lease Assignment") to be executed by the parties effective as
of the Closing Date. Assignee shall accept the Premises on the Closing Date in
its then "AS IS" condition and Assignor shall have no obligation to make any
repairs or replacements to the Premises. The Ground Lease is being assigned to
Assignee subject to:
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(a) The lien of the Leasehold Mortgage which Assignor shall
continue to be responsible to pay pursuant to Article 2 below;
(b) Agreement dated September 18, 1980 recorded in the Office
of the Clerk of Nassau County, New York on August 10, 1981 in
Deed Book 9358, at Page 249 (hereinafter called the "Adjacent
Well Restrictions Agreement"); and
(c) the First Sublease, the Second Sublease and the Third
Sublease (collectively called the "Subleases").
The First Sublease shall be assigned to Assignee by execution of a Sublease
Assignment and Assumption Agreement in the form of Exhibit "B" attached hereto
(hereinafter called the "Sublease Assignment Agreement") to be executed by the
parties effective as of the Closing Date.
Assignee shall, at Closing, assume all of Assignor's obligations and liabilities
under the Ground Lease and under the First Sublease pursuant to the Ground Lease
Assignment and Sublease Assignment Agreement.
The provisions of this Article 1 shall survive Closing.
2. Leasehold Mortgage. Assignor will continue to pay the
interest and principal payments under the Leasehold Mortgage out of the interest
payments to be paid by Assignee to Assignor under the Promissory Note to be
delivered as part of the Purchase Price as provided for in Article 3 below.
Assignor shall have the right to pay off the Leasehold Mortgage before the
Maturity Date (as defined in the Promissory Note). Assignor may also, at its
option, take an assignment of the Leasehold Mortgage rather than a satisfaction
of the Leasehold Mortgage if it pays off the mortgage before the Maturity Date.
Assignee hereby acknowledges that the Leasehold Mortgage cannot be prepaid prior
to February 10, 1998. In the event that the Leasehold Mortgage is not paid and
discharged prior to the date which is the later of (a) the Maturity Date, or (b)
February 10, 1998, then Assignee may thereafter use a portion of the proceeds
from the Promissory Note to pay off and discharge the Leasehold Mortgage on the
Maturity Date.
3. Purchase Price.
A. As and for the purchase price (the "Purchase Price") of the
Assignor's leasehold interests in the Premises, Assignee shall pay to Assignor
the sum of Nine Million and 00/100 ($9,000,000.00) Dollars payable as follows:
(1) One Million Eight Hundred Thousand and 00/100
($1,800,000.00) Dollars to be paid by Assignee to Assignor at
Closing by check (or checks), subject to collection or other
transfer of funds as Assignor shall accept; and
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(2) Seven Million Two Hundred Thousand and 00/100
($7,200,000.00) Dollars payable under a certain promissory
note (the "Promissory Note") in the form of Exhibit "C"
attached hereto bearing interest at the rate of six and 2/3
percent (6 2/3%) per annum, with interest (only) in advance to
be paid in equal monthly installments of Forty Thousand Twenty
and 00/100 ($40,020.00) Dollars commencing on December 1, 1997
and on the first day of each and every month thereafter until
the Maturity Date with the unpaid balance of the principal and
interest to be due and payable on the Maturity Date.
4. Broker. Each party represents and warrants to the other
party that it has dealt with no broker or other person entitled to claim fees
for any services in connection with the negotiation, execution and delivery of
this Agreement. Each party agrees to defend, indemnify and hold the other party
harmless from and against any and all claims for finder's fees or brokerage or
other commission which may at any time be asserted against the indemnified party
founded upon a claim that the substance of the aforesaid representation of the
indemnifying party is untrue, together with any and all losses, damages, costs
and expenses (including reasonable attorneys' fees) relating to such claims or
arising therefrom or incurred by the indemnified party in connection with the
enforcement of this indemnification provision. The provisions of this Article 4
shall survive Closing.
5. Representations, Warranties and Agreements of Assignor. As
a material inducement to Assignee to enter into this Agreement and to proceed to
the Closing hereunder, Assignor makes to Assignee the following representations
and warranties which shall be true and correct on the Closing Date:
A. Assignor is a corporation duly incorporated and in good
standing under the laws of the State of New York, with the power and authority
to carry on the business in which it is engaged.
B. Assignor is duly authorized, in accordance with its
Certificate of Incorporation and By-Laws, to enter into and perform its
obligations under this Agreement and to carry out the transactions contemplated
hereby.
C. The Ground Lease is in full force, Assignor has received no
notice of default from the ground lessor under the Ground Lease, the rent and
all other charges accrued under the Ground Lease have been paid through November
30, 1997 (or will be paid by Assignor through November 30, 1997) and to the best
knowledge and belief of Assignor, no event has occurred which, with the passage
of time or the giving of notice, would constitute a default by Assignor as
tenant under the Ground Lease. The Ground Lease has not been modified or amended
except as set forth above. Assignor continues to be the tenant under the Ground
Lease and Assignor has made no prior assignments of such interest except to the
holder of the Leasehold Mortgage.
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D. The First Sublease is in full force, Assignor has received
no notice of default from the Subtenant under the First Sublease, and to the
best knowledge and belief of Assignor, no event has occurred which, with the
passage of time or the giving of notice, would constitute a default by Assignor
as sublandlord under the First Sublease and the First Sublease has not been
modified or amended except as set forth above and Assignor continues to be the
sublandlord under the First Sublease and Assignor has made no prior assignments
of its interests except to the holder of the Leasehold Mortgage.
6. Representations Warranties and Agreements of Assignee. As a
material inducement to Assignor to enter into this Agreement and to proceed to
Closing hereunder, Assignee makes the following representations and warranties
to and with Assignor which shall be true and correct on the Closing Date.
A. Assignee is a corporation duly incorporated and in good
standing under the laws of the State of Delaware, with the power and authority
to carry on the business in which it is engaged.
B. Assignee has all requisite corporate power and authority
and is fully authorized to enter into and perform its obligations under this
Agreement and to carry out the transaction contemplated hereby.
7. Closing. Closing of this transaction shall, subject to the
terms of this Agreement, take place at the office of Beattie Padovano, 50
Chestnut Ridge Road, Montvale, New Jersey 07645 on or as of November 28, 1997,
which is hereinabove or hereinafter referred to as the "Closing Date" or
"Closing."
8. Deliveries by Assignor at Closing. At Closing, Assignor
will deliver or cause to be delivered to Assignee the following:
A. Duly executed, witnessed and acknowledged Ground Lease
Assignment in the form of Exhibit A;
B. Duly executed, witnessed and acknowledged Sublease
Assignment Agreement in the form of Exhibit B;
C. Duly executed Closing Statement as set forth on Exhibit D
attached --------- hereto;
D. A copy of the resolution of the Board of Directors of
Assignor authorizing the approval, execution and delivery to Assignor of all
documents required hereunder and a certification by the Secretary or other
officer of Assignee certifying such resolution together with an incumbency
certificate;
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<PAGE>
E. Such other and further documents as may be reasonably
required by the terms of this Agreement or may be reasonably necessary or
incidental to consummating the transactions contemplated hereby.
9. Deliveries by Assignee at Closing. At Closing, Assignee
will deliver or cause to be delivered to Assignor the following:
A. Duly executed, witnessed and acknowledged Ground Lease
Assignment in the form of Exhibit A;
B. Duly executed, witnessed and acknowledged Sublease
Assignment Agreement in the form of Exhibit B;
C. An amount equal to One Million Eight Hundred Thousand and
00/100 ($1,800,000.00) Dollars representing the portion of the Purchase Price
due at Closing;
D. A copy of the resolution of the Board of Directors of
Assignee authorizing the approval, execution and delivery to Assignor of all
documents required hereunder and a certification by the Secretary or other
officer of Assignee certifying such resolution together with an incumbency
certificate;
E. A duly executed and witnessed Promissory Note in the form
of Exhibit C, as provided for in Section 3A(2) hereof;
F. Duly executed Closing Statement as set forth on Exhibit D
attached --------- hereto;
G. Such other and further documents as may be reasonably
required by the terms of this Agreement or may be reasonably necessary or
incidental to consummating the transactions contemplated hereby.
10. Assumption of Certain Liabilities of Assignor.
A. Assignee shall, at Closing, assume all of Assignor's
obligations and liabilities accruing under the Ground Lease from and after the
Closing pursuant to the Ground Lease Assignment. Assignee shall, at Closing,
assume all of Assignor's obligations and liabilities accruing under the Sublease
from and after the Closing pursuant to the Sublease Assignment Agreement.
B. Assignee shall pay all sales, transfer, use and similar
taxes if and to the extent the same may be applied to the assignment by Assignor
to Assignee of the Ground Lease and/or Sublease or otherwise to the transactions
evidenced hereby or any incident thereof to the appropriate taxing authority
including, without limitation, the New York Real Property Transfer
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Tax. Assignee agrees to defend, indemnify and hold harmless Assignor from and
against any and all losses, damages, costs and expenses, including reasonable
attorneys' fees, suffered by Assignor by reason of or arising from Assignee's
failure to comply with the provisions of this Section.
C. The provisions of this Article 10 shall survive Closing.
11. Apportionments. Assignor and Assignee agree that the
apportionments for this transaction shall be made as set forth on the Closing
Statement attached hereto as Exhibit D. In addition, the rent and additional
rent under the Ground Lease and Sublease shall be apportioned as of the Closing
Date. The additional rent payable under the Ground Lease is a pass through under
the Sublease. Assignee's affiliates are in occupancy under sub-subleases and
ultimately responsible for all additional rent. As a result, any additional rent
charges which become due and payable for the period up to the Closing will be
paid by Assignee or its affiliates upon demand by Assignor.
12. Further Assurances. Assignor and Assignee each agrees to
execute and deliver all other instruments and take all other action as the other
party may reasonably request from time to time, before or after Closing, in
order to effectuate the transactions provided for herein, including, without
limitation, the execution of any necessary transfer tax returns or other
necessary documents.
13. Notices.
A. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed by registered or certified mail with postage prepaid, return receipt
requested, or deposited, prepaid, with an overnight delivery service addressed
as follows:
(a) If to Assignor, to: The Great Atlantic & Pacific Tea Company, Inc.
2 Paragon Drive
Montvale, New Jersey 07645
Attn.: Robert G. Ulrich, Esq.
Sr. Vice President, General Counsel
The Great Atlantic & Pacific Tea Company, Inc.
90 Delaware Avenue
Paterson, New Jersey 07503-1804
Attn.: Richard J. Scola, Esq.
Corporate Vice President,
Assistant General Counsel
and Assistant Secretary
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with a copy to: Martin W. Kafafian, Esq.
Beattie Padovano
50 Chestnut Ridge Road
P.O. Box 244
Montvale, New Jersey 07645-0244
(b) If to Assignee, to: Di Giorgio Corporation
380 Middlesex Avenue
Carteret, New Jersey 07008
Attn.: Richard B. Neff
Executive Vice President/
Chief Financial Officer
with a copy to: Margaret F. Black, Esq.
Sills, Cummis, Zuckerman, Radin,
Tischman, Epstein & Gross, P.A.
1 Riverfront Plaza
Newark, New Jersey 07102
or to such other addresses as shall be furnished in writing by either party to
the other.
B. Any notice or other communication delivered or sent in
accordance with the provisions of this Article shall be deemed to have been
properly given or served on the day of delivery, if delivered by hand or courier
service, or, if mailed, on the date of receipt or rejection as evidenced by the
green receipt card, if deposited in the United States mail addressed to such
party by registered or certified mail, postage prepaid, return receipt
requested.
14. Miscellaneous.
A. This writing constitutes the entire agreement of the
parties with respect to the subject matter hereof and may not be modified,
amended or terminated except by a written agreement specifically referring to
this Agreement signed by Assignor and Assignee.
B. Except as otherwise expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, executors, administrators, legal representatives,
successors and permitted assigns.
C. The paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said paragraph.
D. The Exhibits referred to in this Agreement are deemed to be
annexed to this Agreement and made a part hereof as though set forth in the body
of this Agreement.
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E. This Agreement shall be governed by and construed in
accordance with the law of the State in which the Premises is located.
F. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be one and the same instrument.
G. Assignee hereby acknowledges receipt of a copy of the
Ground Lease, Sublease and Leasehold Mortgage.
15. Survival. Notwithstanding any presumption to the contrary,
all covenants, conditions and representations contained in this Agreement, which
by their nature, impliedly or expressly, involve performance, in any particular,
after Closing, or which cannot be ascertained to have been fully performed until
after Closing, shall survive Closing. This provision shall be effective as to
all such covenants, conditions and representations, notwithstanding that as to
some of them, it may be expressly stated that they survive.
16. Assignment. This Agreement may not be assigned,
transferred or conveyed by Assignee without the prior written consent of
Assignor.
17. No Warranties or Representations by Assignor. Assignee
acknowledges and agrees that, except as expressly set forth in this Agreement,
neither Assignor nor any agent or representative of Assignor has made, and
Assignor is not liable or responsible for or bound in any manner by any express
or implied representations, warranties, covenants, agreements, obligations,
guarantees, statements, information or inducements pertaining to the Premises,
the Ground Lease, Sublease or any part hereof, the title and physical condition
thereof, the quantity, character, fitness and quality thereof, merchantability,
fitness for particular purpose, the income, expenses or operation thereof, the
value and profitability thereof, the uses which can be made thereof or any other
matter or thing whatsoever with respect thereto. Assignee acknowledges, agrees,
represents and warrants that it has had the opportunity and has in fact
inspected the Premises, that its predecessors and/or affiliates have been in
possession of the Premises pursuant to the Second Sublease and Third Sublease
and that it has had access to information and data relating to all of same as
Assignee has considered necessary, prudent, appropriate or desirable for the
purposes of this transaction and, without limiting the foregoing, that Assignee
and/or Assignee's agents and representatives have independently inspected,
examined, analyzed and appraised all of same, including the condition, value and
profitability thereof. Without limiting the foregoing, Assignee acknowledges and
agrees that, except as expressly set forth in this Agreement, Assignor is not
liable or responsible for or bound in any manner by (and Assignee has no relief
upon) any verbal or written or supplied guarantees, statements, information or
inducements pertaining to the Premises or any part hereof, such condition and
such operation and any other information respecting same furnished by or
obtained from Assignor or any agent or representative of Assignor. Without
limiting the foregoing, Assignor acknowledges and agrees that Assignee is
accepting an assignment of the Ground Lease for the Premises in its "AS IS"
condition.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
WITNESS: WALDBAUM, INC.
By:
Vice President
WITNESS: Di GIORGIO CORPORATION
By:
Title:
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<PAGE>
700 Dibblee Drive
Garden City, New York
EXHIBIT "A"
GROUND LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
WALDBAUM, INC., a New York corporation, having an address at Two
Paragon Drive, Montvale, New Jersey 07645 (hereinafter called "Assignor"), for
good and valuable consideration to Assignor in hand paid by Di GIORGIO
CORPORATION, a Delaware corporation, having its principal office at 380
Middlesex Avenue, Carteret, New Jersey 07008 (hereinafter called "Assignee"),
the receipt and sufficiency of which are hereby acknowledged, and in
consideration of the agreements and undertakings of Assignee hereinafter set
forth, has granted, conveyed, transferred and assigned, and by these presents
does grant, convey, transfer and assign unto the said Assignee, all of
Assignor's leasehold estate and rights, title and interest under that certain
ground lease dated October 24, 1963 between United States Steel and Carnegie
Pension Fund, Inc., as Trustee under Agreement dated as of August 31, 1950 for
United States Steel Corporation Non-Contributory Pension Plan and United States
Steel and Carnegie Pension Fund, Inc., as Trustee under Agreement dated as of
February 15, 1951 for United States Steel Corporation Contributory Pension Plan,
as Landlord, and Assignor as successor in interest to Waldbaum in Roosevelt
Field, Inc., as Tenant, pursuant to a certain assignment dated December 17, 1976
recorded on December 23, 1976 in the Office of the Clerk of Nassau County, New
York in Deed Book 9009, at Page 367, which lease was recorded in the Office of
the Clerk of Nassau County, New York on October 25, 1963 in Deed Book 7219, at
Page 231, as amended by agreement dated December 18, 1963 and recorded in the
Office of the Clerk of Nassau County, New York on October 8, 1964 in Deed Book
7324, at Page 409 (hereinafter collectively called the "Ground Lease") covering
certain Premises (as defined in the Ground Lease) in Hempstead, Nassau County,
New York designated as Section 44, Block 72, Lot 6 and 7 on the Land Map of
Nassau County and commonly known as 700 Dibblee Drive, Garden City, New York,
all as more particularly described in the Ground Lease,
TOGETHER WITH all of Assignor's right, title and interest in and to the
Premises,
TO HAVE AND TO HOLD unto said Assignee said leasehold estate and all
the aforesaid rights, title and interests. Assignor warrants that it holds a
good leasehold estate in the Premises.
Assignee hereby assumes and agrees to perform and observe all the
undertakings, obligations and covenants to be performed or observed from and
after this date by the lessee or tenant under the Ground Lease, including,
without limiting the generality of the foregoing, the payment of all rent,
insurance, real estate taxes, impositions and additional rent, if any, to accrue
or become due from and after this date under the Ground Lease. Assignee accepts
the terms and conditions of the Ground Lease and further agrees to indemnify
Assignor and hold Assignor
11-21-97
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<PAGE>
harmless with respect to any expense or liability, including, without
limitation, court costs and reasonable attorneys' fees, which Assignor may incur
as a result of a breach or default by Assignee of its covenants herein and in
connection with the enforcement of this indemnity.
This instrument is subject to Section 13 of the Lien Law of the State
of New York.
Dated as of the 28th day of November, 1997.
WITNESS: WALDBAUM, INC.
BY:
Vice President
WITNESS: Di GIORGIO CORPORATION
By:
Title:
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- 2 -
<PAGE>
STATE OF )
) SS:
COUNTY OF )
ON THIS day of , 19 , before me, the subscriber, personally -------
- ----------------------------------- ----- came to me known, who, being by me
duly sworn, did depose ----------------------------------------------------- and
say that he resides at , ---------------------------------------------- , that
he is the President of WALDBAUM, INC., the corporation described in and which
executed the within instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation and that he
signed his name thereto by like order.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year aforesaid.
Notary Public
STATE OF )
) SS:
COUNTY OF )
ON THIS day of , 19 , before me, the subscriber, personally -------
- ----------------------------------- ----- came to me known, who, being by me
duly sworn, did depose ----------------------------------------------------- and
say that he resides at ,
- ----------------------------------------------------------------- , that he is
the President of Di GIORGIO CORPORATION, the corporation described in and which
executed the within instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation and that he
signed his name thereto by like order.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year aforesaid.
Notary Public
11-21-97
65215_3\097856
- 3 -
<PAGE>
700 Dibblee Drive
Garden City, New York
EXHIBIT "B"
SUBLEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
WALDBAUM, INC., a New York corporation, having an address at Two
Paragon Drive, Montvale, New Jersey 07645 (hereinafter called "Assignor"), for
good and valuable consideration to Assignor in hand paid by Di GIORGIO
CORPORATION, a Delaware corporation, having its principal office at 380
Middlesex Avenue, Carteret, New Jersey 07008 (hereinafter called "Assignee"),
the receipt and sufficiency of which are hereby acknowledged, and in
consideration of the agreements and undertakings of Assignee hereinafter set
forth, has granted, conveyed, transferred and assigned, and by these presents
does grant, convey, transfer and assign unto the said Assignee, all of
Assignor's subleasehold estate and rights, title and interest under that certain
sublease dated July 19, 1973 between Assignor, as Landlord, and Sysco
Corporation, as Tenant, which sublease was amended and supplemented by Amendment
No. 1 dated December 16, 1976, a memorandum of which was recorded on December
23, 1976 in Deed Book 9009, at Page 369, Agreement dated December 16, 1976 by
and among Sysco Corporation, Assignor and New York Life Insurance Company
recorded on December 23, 1976 in Deed Book 9009, at Page 376, Agreement dated
August 3, 1992 by and among New York Life Insurance Company, WRGFF Associates,
L.P., White Rose Frozen Food, Inc., Assignor, and Sysco Corporation recorded in
Liber 14807, Page 873 and Certification And Agreement dated August 3, 1992 by
and among Assignor, Sysco Corporation, WRGFF Associates, L.P., and White Rose
Frozen Food, Inc. recorded in Liber 10265, Page 625 (hereinafter collectively
called the "Sublease") covering certain premises in Hempstead, Nassau County,
New York designated as Section 44, Block 72, Lot 6 and 7 on the Land Map of
Nassau County and commonly known as 700 Dibblee Drive, Garden City, New York,
all as more particularly described in the Sublease (hereinafter called the
"Demised Premises"),
TO HAVE AND TO HOLD unto said Assignee all of the aforesaid rights,
title and interest.
Assignee hereby assumes and agrees to perform and observe all the
undertakings, obligations and covenants to be performed or observed from and
after this date by the landlord or sublandlord under the Sublease to accrue or
become due from and after this date under the Sublease. Assignee accepts the
terms and conditions of the Sublease and further agrees to indemnify Assignor
and hold Assignor harmless with respect to any expense or liability, including,
without limitation, court costs and reasonable attorneys' fees, which Assignor
may incur as a result of a breach or default by Assignee of its covenants herein
and in connection with the enforcement of this indemnity.
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65215_3\097856
- 1 -
<PAGE>
This instrument is subject to Section 13 of the Lien Law of the State
of New York.
Dated as of the 28th day of November, 1997.
WITNESS: WALDBAUM, INC.
BY:
Vice President
WITNESS: Di GIORGIO CORPORATION
By:
Title:
11-21-97
65215_3\097856
- 2 -
<PAGE>
STATE OF )
) SS:
COUNTY OF )
ON THIS day of , 19 , before me, the subscriber, personally -------
- ----------------------------------- ----- came to me known, who, being by me
duly sworn, did depose ----------------------------------------------------- and
say that he resides at ,
- ----------------------------------------------------------------- , that he is
the President of WALDBAUM, INC., the corporation described in and which executed
the within instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation and that he signed his name
thereto by like order.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year aforesaid.
Notary Public
STATE OF )
) SS:
COUNTY OF )
ON THIS day of , 19 , before me, the subscriber, personally -------
- ----------------------------------- ----- came to me known, who, being by me
duly sworn, did depose ---------------------------------------------- and say
that he resides at , -------------------------------------------------- , that
he is the President of Di GIORGIO CORPORATION, the corporation described in and
which executed the within instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation
and that he signed his name thereto by like order.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year aforesaid.
Notary Public
11-21-97
65215_3\097856
- 3 -
AGREEMENT OF PURCHASE AND SALE
between
FR ACQUISITIONS, INC., as Purchaser
and
Di GIORGIO CORP., as Seller
Relating to Premises known as
700 Dibblee Drive, Garden City, New York 11530
250140-8
<PAGE>
TABLE OF CONTENTS
Paragraph Heading Page No.
1. Sale................................................1
2. Purchase Price......................................1
3. Closing.............................................2
4. Earnest Money.......................................2
5. Seller's Deliveries.................................3
6. Inspection Period...................................3
7. Title and Survey Matters............................7
8. Seller's Representations and Warranties.............9
8A. Purchaser's Representations........................13
9. Covenants of Seller................................14
9A. Covenants of Purchaser.............................15
10. Environmental Warranties and Agreements............15
11. Additional Conditions Precedent to Closing.........20
12. Intentionally Deleted..............................21
13. Seller's Closing Deliveries........................21
14. Prorations and Adjustments.........................22
15. Closing Expenses...................................22
16. Destruction, Loss or Diminution of Project.........23
17. Default............................................23
18. Successors and Assigns.............................25
19. Litigation.........................................25
20. Notices............................................26
21. Benefit............................................27
22. Limitation of Liability............................27
23. Brokerage..........................................27
24. Reasonable Efforts.................................27
25. Exculpation of Affiliates..........................27
26. Miscellaneous......................................28
250140-8
<PAGE>
LOCATION OF DEFINITIONS
A definition for each of the following terms is set forth within the
body of this Agreement, respectively, on the page set forth next to such term.
Definition Term Section No.
Additional Assessment 6
Additional Period 6
Affiliate 18
Agreement Preamble
Approval Date 6
Approved Depository 4
Assessment 6
Basic Project Inspection 6
Building 1
CERCLA 10
Closing 3
Closing Date 3
Conditions Precedent 2
Contract 1
Contract Date 4
Damage 16
Deed 7
Defects 7(b)
Earnest Money 4
Eminent Domain 16
Environmental Laws 10
Environmental Permits 10
Escrow 4
Escrow Agreement 4
Escrowee 4
First Industrial 18
250140-8
<PAGE>
Definition Term Section No.
Governmental Authority 10
Hazardous Conditions 10
Hazardous Materials 10
Improvements 1
Inspection Period 6
Intermediary 18
Land 1
Leases 8(s)
Mandatory Cure Items 7
New Lease 11(h)
Owner 1
Permitted Exceptions 7
Project 1
Purchase Price 2
Purchaser Preamble
Qualified Consulting Firm 10
RCRA 10
Records 6
Release 10
Remedial Action 10
Remedial Costs 10
Representatives 6
Seller Preamble
Seller's Broker 23
Seller's Deliveries 5
Survey 7
Tanks 10
Termination Notice 6
Title Commitment 7
Title Company 7
250140-8
<PAGE>
Definition Term Section No.
Title Evidence 7
Title Policy 7
Violations 8(j)
250140-8
<PAGE>
THIS AGREEMENT (this "Agreement") is made and entered into this 19th
day of February, 1998, by and between Di Giorgio Corp., a Delaware corporation
("Seller"), and FR Acquisitions, Inc., a Maryland corporation ("Purchaser").
1. SALE.
Seller, in its capacity as contract vendee under that certain agreement (the
"Contract") dated November 26, 1997 for the sale and purchase of the Project (as
hereinafter defined) made with United States Steel and Carnegie Pension Fund,
Inc., as Trustee under Agreement dated as of August 31, 1950 for United States
Steel Corporation Non-Contributory Pension Plan, AND United States Steel and
Carnegie Pension Fund, Inc., as Trustee under Agreement dated as of February 15,
1951 for United States Steel Corporation Contributory Pension Plan
(collectively, the "Owner") agrees to sell and convey (or cause Owner to sell
and convey) to Purchaser, and Purchaser agrees to purchase from Seller, for the
purchase price set forth below, and on the terms and conditions set forth in
this Agreement, the Project. The term "Project" shall mean, on a collective
basis: (a) all those certain plots, pieces and the parcels of land located in
the Town of Hempstead, County of Nassau, State of New York, known by the street
address 700 Dibblee Drive, Garden City, New York 11530, as more particularly
described in Exhibit A attached hereto (the "Land"), together with and subject
to all rights of way, easements, reservations, privileges, appurtenances,
interests and other rights appurtenant or pertaining thereto including, but not
limited to, in (i) any right, title and interest of Owner or Seller in and to
any streets or other public ways adjacent to the Land together with all right,
title and interest, if any, of Owner or Seller in and to (A) any land lying in
the bed of any street, road or avenue opened or proposed, in front of or
adjoining the Land, to the center line thereof, and any award made or to be made
in lieu thereof and (B) any unpaid award for damages to the Land or the
Improvements (as hereinafter defined) by reason of change of grade of any
street, (ii) any water, oil, gas and mineral rights owned by, or leased to,
Seller or Owner, and (iii) any rights in alleys adjoining the Land; (b) all
buildings, structures and improvements located on the Land, including, but not
limited to, that certain building containing approximately 325,000 rentable
square feet used for warehouse and distribution purposes (collectively, the
"Building"), and all fixtures (other than trade fixtures including, without
limitation, racking and refrigerator freezer equipment), systems and utilities
attached or appurtenant to, or utilized by Seller and/or Owner in the ownership
and operation of the Building (the Building and all such fixtures, systems and
utilities being collectively referred to herein as the "Improvements"); and
Owner's and Seller's interest, if not terminated prior to Closing, in all other
Leases (as hereinafter defined) and other agreements to occupy all or any
portion of the Project that are in effect on the Contract Date (as hereinafter
defined) and as of the Closing (as hereinafter defined).
2. PURCHASE PRICE.
The total purchase price to be paid to Seller by Purchaser for the
Project shall be Fourteen Million Five Hundred Thousand and 00/100 Dollars
($14,500,000.00) (the "Purchase Price"). Provided that all conditions precedent
to Purchaser's obligations to close as set forth in this Agreement
(collectively, the "Conditions Precedent") have been satisfied and fulfilled, or
waived in writing
250140-8 2/23/98
<PAGE>
by Purchaser, the Purchase Price shall be paid to Seller (or as Seller may
direct) at Closing, plus or minus prorations and other adjustments hereunder
(including all Earnest Money (as hereinafter defined) credited against the
Purchase Price), by federal wire transfer of immediately available funds. Seller
shall provide Purchaser with such wire transfer instructions at least two (2)
business days prior to Closing.
3. CLOSING.
The purchase and sale contemplated herein shall be consummated at a
closing ("Closing") to take place at the offices of Purchaser's counsel, Parker
Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas, New York, New York
10036, or a location as otherwise agreed by the parties. The Closing shall occur
on or before the fifteenth (15th) day after the Approval Date (as hereinafter
defined), on or before the close of business, or at such other time as the
parties may agree upon in writing, provided that the Closing shall take place no
earlier than February 10, 1998 nor later than (i) March 31,1998 or (ii) such
later date to which Seller is able to extend the Closing Date under the Contract
with Owner (the "Closing Date"). The Closing shall be effective as of 12:01 A.M.
on the Closing Date. Notwithstanding the foregoing, the risk of loss of all or
any portion of the Project shall be borne by Seller up to and including the
actual time of the Closing and wire transfer of the Purchase Price to Seller,
and thereafter by Purchaser, subject to the terms and conditions of Paragraph 16
below.
4. EARNEST MONEY.
(a) Escrowee. On the date of the full execution and delivery of
this Agreement (which date is set forth on the signature page hereof
and is referred to herein as the "Contract Date"), the parties shall
enter into an escrow agreement in the form attached hereto as Exhibit C
(the "Escrow Agreement"; the escrow created thereby being referred to
herein as the "Escrow"), designating North Shore Abstract, Ltd., as
title agent of Chicago Title Insurance Company, as the escrowee
thereunder ("Escrowee"). The parties hereby authorize their respective
attorneys to execute the Escrow Agreement and to make such amendments
thereto as they shall deem necessary or convenient to close the
transaction contemplated hereby.
(b) Earnest Money Deposit. Not later than two (2) business days
following the Contract Date, Purchaser shall deposit into the Escrow,
in accordance with the terms of the Escrow Agreement, and as its
earnest money deposit (the "Earnest Money"), the sum of Five Hundred
Thousand and 00/100 Dollars ($500,000.00). The Earnest Money shall be
invested by the Escrowee in an interest-bearing account with an FDIC-
insured, national bank having gross assets in excess of $1,000,000,000
(an "Approved Depository").
(c) Application at Closing. At Closing, the Earnest Money shall
be delivered to Seller and credited against the Purchase Price. All
interest (if any) earned on the Earnest Money shall be paid in equal
shares to Seller and Purchaser except in the event of a default
hereunder in which case all interest shall be paid to the
non-defaulting party. All Earnest Money shall be appropriately dealt
with by the Escrowee so as to be
250140-8 2/23/98
2
<PAGE>
delivered to Seller or Purchaser, as the case may be, as
provided herein and as provided in the Escrow Agreement.
5. SELLER'S DELIVERIES.
Seller shall deliver to Purchaser, no later than five (5) business days
after the Contract Date, the documents listed as "Seller's Deliveries" on
Exhibit D attached hereto, except to the extent disclosure of same to Purchaser
is prohibited by written agreement (as to which items Seller shall deliver to
Purchaser a descriptive list of the undeliverable items). In the event that the
transactions contemplated by this Agreement are not consummated, Purchaser shall
return the delivered documents to Seller.
6. INSPECTION PERIOD.
(a) Basic Project Inspection. At all times prior to Closing,
including times following the Inspection Period (which "Inspection
Period" is defined to be the period that is thirty (30) days from and
after the Contract Date), Purchaser, its agents and representatives
shall be entitled to conduct a "Basic Project Inspection", which will
include the right to: (i) enter upon the Land and Improvements, on
reasonable notice to Seller and accompanied by a representative of
Seller, if Seller so requires, to perform industry standard inspections
and tests of the Project, including, but not limited to, inspection,
evaluation and testing of the heating, ventilation and air-conditioning
systems and all components thereof (collectively, the "HVAC System"),
all structural and mechanical systems within the Improvements,
including, but not limited to, sprinkler systems, power lines and
panels, air lines and compressors, automatic doors, tanks, pumps and
plumbing; (ii) examine and copy the records, Leases, and other
documents maintained by Seller or its agents, relating to expenditures
pertaining to the leasing, maintenance, repair and operation of the
Project (but not the business operations conducted by Seller at the
Project) only for the three (3) most recent full calendar years and the
current calendar year (the "Records"); (iii) make investigations with
regard to zoning, environmental (as provided in Subparagraph 6(b)
below), building, code and other legal requirements including, but not
limited to, an environmental Assessment and Additional Assessment (each
as defined and specified in Subparagraph 6(b) below) and (iv) make or
obtain market studies and real estate tax analyses.
If Purchaser, during the Inspection Period, in its sole and
absolute discretion, determines that the results of any inspection,
test or examination do not meet Purchaser's (or its underwriters',
investment bankers', lenders', ratings agency's or investors') criteria
for the purchase, financing or operation of the Project in the manner
contemplated by Purchaser (including, but not limited to, if same
reveal the presence of a Hazardous Condition (as hereinafter defined),
any Hazardous Material (as hereinafter defined), or toxic substance,
including, but not limited to, asbestos, chlordane or formaldehyde, in
or upon any of the Project, or any deficiency or code violation with
respect to any aspect of the Project), or if the information disclosed
does not otherwise meet Purchaser's investment criteria or underwriting
for any reason whatsoever, or if Purchaser, in its sole discretion,
250140-8 2/23/98
3
<PAGE>
otherwise determines that the Project is unsatisfactory to it, then
subject to Subparagraph 6(d) below, Purchaser may terminate this
Agreement by notice to Seller (the "Termination Notice"), with a copy
to Escrowee, given not later than two (2) business days after the last
day of the Inspection Period (the "Approval Date"). Upon such
termination, the Earnest Money, together with all interest thereon,
shall be returned immediately to Purchaser and neither party shall have
any further liability to the other hereunder, except as otherwise
provided herein.
The parties hereto acknowledge that Purchaser may expend
material sums of money in reliance on Seller's obligations under this
Agreement, in connection with negotiating and executing this Agreement,
furnishing the Earnest Money, con ducting the inspections contemplated
by this Paragraph 6 and preparing for Closing, and that Purchaser would
not have entered into this Agreement without the availability of an
Inspection Period. The parties therefore agree that adequate
consideration exists to support Seller's obligations hereunder, even
before expiration of the Inspection Period. Except as otherwise
provided herein, the effect of any representations, warranties or
undertakings made by Seller in this Agreement shall not be diminished,
abrogated, or compromised by the Basic Project Inspection, any
Assessment or Additional Assessment, or other inspections, tests or
investigations made by Purchaser.
(b) Environmental Assessment. During the Inspection Period,
Purchaser or Purchaser's agent(s) shall have the right to employ one or
more environmental consultants or other professional(s) to perform or
complete a so-called "Phase I" environmental inspection and assessment
(the "Assessment") of the Project, and Seller acknowledges and consents
to such Assessment, to the full extent contemplated under ASTM Document
E 1527, which describes the "Phase I Environmental Site Assessment
Process." Purchaser and its consultants shall also have the right to
undertake or complete a technical review of all documentation, reports,
plans, studies and information in possession or control of Seller, or
its past or present environmental consultants, concerning or in any way
related to the environmental condition of the Project. In order to
facilitate the Assessment, the technical review and any other tests and
studies, Seller shall extend its full cooperation (but without third
party expense to Seller) to Purchaser and its environmental
consultants, including, but not limited to, providing complete access
to all its files and fully, completely and truthfully answering, to its
knowledge, all questions relating to the environmental condition of the
Project. The Assessment shall evaluate the present and past uses of the
Project, and the presence on, in, at, about, near or under the Land
(including land sufficiently proximate to any portion of the Project as
to pose the risk of migration, or other adverse effect on any portion
of the Project) of any Hazardous Materials. In the event that (i) the
results of the Assessment or technical review are inconclusive, or (ii)
the results of the Assessment or technical review reveal material
environmental matters unacceptable to Purchaser, in its sole judgment,
then Purchaser, at its sole option, shall have an "Additional Period"
until March 20, 1998 to allow for and accommodate additional required
inspections and tests (the "Additional Assessment"), whether involving
an ASTM "Phase II"
250140-8 2/23/98
4
<PAGE>
evaluation or otherwise. Such Additional Period, if applicable, shall
automatically and concomitantly extend the original Inspection Period,
Approval Date and Closing Date [provided, however, that nothing in this
paragraph shall be deemed to authorize Purchaser to extend the Closing
Date beyond the parameters of Section 3 hereof], on a day-to-day basis,
for all relevant purposes hereunder, except that Purchaser's right to
cancel this Agreement during the Additional Period shall relate only to
the environmental condition of the Project and may only be exercised in
accordance with and subject to the provisions of Section 10(c) hereof.
If upon the recommendation of Purchaser's Qualified Consulting Firm
such Additional Assessment is performed, Purchaser and Seller shall
share equally all costs and expenses of such Additional Assessment, to
be performed by Qualified Consulting Firms (as hereafter defined) and
other contractors and consultants selected and approved by Purchaser,
provided that Seller's obligation for the cost of the Additional
Assessment shall not exceed $12,500.00. Prior to the performance of the
Additional Assessment, Purchaser shall cause its Qualified Consulting
Firm to provide to Seller: (i) a Scope of Work for Seller's review and
approval, such approval not to be unreasonably withheld and to be
provided or denied within three business days of Seller's receipt of
the Scope of Work; and (ii) a certificate of insurance evidencing the
following insurance coverages in favor of Seller, each with a combined
single limit of $1,000,000; comprehensive general liability insurance,
comprehensive automobile liability insurance, and professional errors
and omissions liability insurance.
(c) Purchaser's Undertaking. Purchaser hereby covenants and
agrees that it shall cause all studies, investigations and inspections
(including, but not limited to, the Assessment), performed at the
Project pursuant to this Paragraph 6 to be performed in a manner that
does not unreasonably disturb or disrupt the business operations of the
Seller. In the event that, as a result of Purchaser's exercise of its
rights under Subparagraphs 6(a) and 6(b), any damage occurs to the
Project, then Purchaser shall promptly repair such damage at
Purchaser's sole cost and expense. Purchaser hereby indemnifies,
protects, defends and holds Seller harmless from and against any and
all losses, damages, claims, causes of action, judgments, costs and
expenses that Seller actually suffers or incurs as a direct result of
(i) a breach of Purchaser's agreements set forth herein in connection
with its inspection of the Project or (ii) physical damage to the
Project or bodily injury caused by any negligent act of Purchaser or
its agents, employees or contractors in connection with the right of
inspection granted under this Paragraph 6.
(d) Confidentiality. Purchaser, First Industrial (as hereinafter
defined) and each Affiliate (as hereinafter defined) each agree to
maintain in confidence the fact that the Project is being sold and the
information contained in this Agreement or pertaining to the
transaction contemplated hereby and intend that no claim of privilege
or protection from disclosure be waived by reason of the disclosure or
transfer of information among the parties pursuant to the terms of this
Agreement; provided, however, that each party, its agents and
representatives may disclose such information and data (i) to such
party's accountants, attorneys, existing or prospective
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lenders, investment bankers, underwriters, rating agencies, partners,
consultants and other advisors in connection with the transactions
contemplated by this Agreement (collectively, "Representatives") to
the extent that such Representatives reasonably need to know (in the
disclosing party's reasonable discretion) such information and data in
order to assist, and perform services on behalf of, the disclosing
party; (ii) to the extent required by any applicable statute, law,
regulation or Governmental Authority (including, but not limited to,
Form 8-K and other reports and filings required by the SEC and other
regulatory entities, including the Internal Revenue Service, attached
hereto); (iii) in connection with any litigation that may arise
between the parties in connection with the transactions contemplated
by this Agreement; (iv) to the extent such disclosure is required or
appropriate in connection with any securities offering or other
capital markets or financing transaction undertaken by Purchaser; (v)
to the extent such information and data become generally available to
the public other than as a result of disclosure by such party or its
agents or Representatives; (vi) to the extent such information and
data become available to such party or its agents or Representatives
from a third party who, insofar as is known to such party, is not
subject to a confidentiality obligation to the other party hereunder;
(vii) to the extent necessary in order to comply with each party's
respective covenants, agreements and obligations under this Agreement;
and (viii) to the extent necessary to effectuate a transfer of the
Project in a 1031 exchange, including but not limited to the
disclosure of Purchaser's due diligence findings to potential 1031
exchange swap partners and their officers, accountants and agents.
Each party shall take all necessary and appropriate measures to ensure
that any person who is granted access to any confidential information
pursuant to the terms of this Subparagraph 6(d) is familiar with the
terms hereof and complies with such terms as they relate to the duties
of such person. In the event the transactions contemplated by this
Agreement shall not be consummated, such confidentiality shall be
maintained indefinitely and both parties shall promptly return all
documents or other confidential written information, together with all
copies thereof, to the party that generated such information. The
obligations of the parties under this Subparagraph 6(d) shall survive
Closing or any sooner termination of this Agreement and shall not be
merged into any conveyance documents delivered at Closing.
(e) Scope of Representations and Warranties. The Project is
being acquired by Purchaser pursuant to this Agreement and shall be
transferred and conveyed on an "AS-IS" and "WHERE-IS" basis, and WITH
ALL FAULTS, except as otherwise expressly set forth in this Agreement
or in any document delivered by Seller at Closing. Except as expressly
set forth in this Agreement or in any document delivered by Seller at
Closing, Seller has not made any representation or warranty as to the
present or future physical condition, value, presence/absence of
hazardous or toxic materials, financing status, leasing, operations,
use, tax status, income and expense or any other matter pertaining to
the Project.
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7. TITLE AND SURVEY MATTERS.
(a) Conveyance of Title. At Closing, Seller agrees to deliver or
to cause Owner to deliver to Purchaser a trustee's deed containing the
covenant required by subdivision 5 of Section 13 of the Lien Law (the
"Deed"), in recordable form, sufficient to convey good and marketable
fee simple absolute title to the Project to Purchaser, free and clear
of all liens, claims and encumbrances except for the Permitted
Exceptions (as hereinafter defined). The foregoing sentence
notwithstanding, Seller, at its option, may elect to assign to
Purchaser (in lieu of canceling and terminating same) certain
leaseholds affecting the Project, provided that in each such instance
Purchaser shall have no continuing obligations of any nature or
description under any of said leases and provided further that Seller
shall execute and deliver to Purchaser an indemnity with regard to any
and all transfer taxes which may be applicable to said assignments. In
such case only the documents evidencing such leaseholds shall
constitute Permitted Exceptions.
(b) Title Commitment. Purchaser has received a commitment (the
"Title Commitment"), dated June 20, 1997, issued by North Shore
Abstract Ltd., as agent for Chicago Title Insurance Company (the "Title
Company"), for an owner's title insurance policy (the "Title Policy"),
ALTA Owner's Policy Form 10-17-92, in the full amount of the Purchase
Price. Seller shall take all reasonably necessary actions within
Seller's reasonable control (subject to subparagraph 7(e) below) to
cause the Title Company to issue the Title Policy, subject only to the
Permitted Exceptions (as such term is defined herein). As a condition
precedent to Purchaser's obligation to close the transaction described
in this Agreement, the commitment shall be later-dated to cover the
Closing, and the Title Company shall deliver the Title Policy (or a
"marked-up" commitment therefor) to Purchaser concurrently with the
Closing. Should the Title Commitment, as the same may be later-dated,
indicate the presence of any matters other than the Permitted
Exceptions that render unmarketable or uninsurable the title to such
Project, such matters shall be considered "Defects," and the cure
provisions set forth in Subparagraph (e) below shall apply. For
purposes hereof, the term "Permitted Exceptions" shall mean (i) all
liens, claims, encumbrances, restrictions, covenants, conditions,
matters or exceptions to title that are set forth on Schedule E hereof,
and which are not marked "omit" on said Schedule E, (ii) all matters of
title disclosed on that certain survey dated April 29, 1992 prepared by
Bohn & Bonacci, P.C. as job number 920248, and (iii) that certain
restrictive covenant which shall be incorporated in the Deed and which
shall prohibit the use of the Building as a refrigerated or frozen food
facility by operators primarily engaged in the wholesale warehousing,
storing and/or distributing of refrigerated or frozen foods for a
period of ten (10) years commencing upon the expiration or sooner
termination of the term of the New Lease including the five year option
period, if Tenant's option is duly exercised. The covenant shall not
restrict or prohibit any use of the Building by an operator primarily
engaged in retail sales and sales to the general public; use of the
Building as a supermarket or wholesale club shall be deemed a retail
use, including without limitation, any such use by Waldbaum's, Grand
Union, A&P, B.J.'s, and Price Club. Additionally, any operator using no
more than five (5%)
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percent of the rentable square footage of the Building for refrigerated
or frozen food storage (excluding glass, retail refrigeration or
freezer cases, which shall be permitted without limitation) shall not
be deemed in violation of this covenant.
(c) Survey. Purchaser shall order, at its expense, an as-built,
spotted survey of the Project (the "Survey"), prepared by a surveyor
duly registered in the State of New York, and certified by said
surveyor as having been prepared in accordance with the minimum detail
and classification requirements of the land survey standards of the
American Land Title Association, and containing the certification
attached hereto as Exhibit G. The Survey shall be dated as of a date on
or after the Contract Date, and certified to Purchaser, Seller, Owner
and its assigns, Purchaser's designated lender(s), if any, and the
Title Company. Should the Survey indicate the presence of any matters
that render unmarketable or uninsurable title to such Project, such
matters shall be considered "Defects," and the cure provisions set
forth in Subparagraph (e) below shall apply.
(d) UCC Searches. Purchaser may cause the Title Company to
deliver to Purchaser and Seller after the Contract Date, and may update
prior to the Closing Date, current searches of all Uniform Commercial
Code financing statements filed with the Secretary of the State of New
York, and/or the appropriate county official, against Owner; Seller;
any tenant of the Project; the Project itself; Seller's affiliates
involved in the operation of the Project; and the management agents for
the Project. If such searches reveal claims or liens against any of
such parties encumbering all or any portion of the Project, such
matters shall be considered "Defects," and the cure provisions set
forth in Subparagraph (e) below shall apply.
(e) Defects and Cure. The items described in Subparagraphs 7 (a)
- (d) are collectively referred to as "Title Evidence". If the Title
Evidence discloses Defects, said Defects shall, as a Condition
Precedent to Closing, be cured and removed by Seller from the Title
Evidence prior to Closing, in accordance with this Subparagraph 7(e).
Seller's obligations to cure Defects shall be set forth below:
Mandatory Cure Items. Seller shall be unconditionally obligated
to take all steps; spend all necessary funds; institute and prosecute
any action or proceeding; and otherwise take any and all steps and
measures to cure or remove all Defects which are either marked "omit"
on Schedule E annexed hereto or which first arise or are first
disclosed by the Title Company or otherwise to Seller after the date of
the Title Commitment (the "Mandatory Cure Items"), provided that with
respect to Defects arising or first disclosed after the effective date
of the Title Commitment (i) as to those Defects which may be cured by
the payment of a liquidated sum, Seller shall not be required to expend
more than $125,000 in the aggregate to cure such liens, judgments or
encumbrances [except with regard to Defects arising due to Seller's
willful or intentional acts as to which no such limit shall apply], and
(ii) with regard to those Defects not subject to cure by the payment of
a liquidated sum up to $125,000 and which arise solely as the result of
the acts or omissions of persons other
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<PAGE>
than Seller, Seller may adjourn the Closing for up to sixty (60) days
during which period Seller shall use all commercially reasonable
efforts to cure same. Subject to the foregoing, such Mandatory Cure
Items shall be cured or removed (by endorsement or otherwise in form
and substance reasonably acceptable to Purchaser) by Seller from the
Title Evidence prior to Closing. If Seller fails to so cure or remove
all Mandatory Cure Items, then Purchaser may either (A) terminate this
Agreement by notice to Seller, with a copy to Escrowee, in which event
the Earnest Money, together with all interest earned thereon, shall be
returned to Purchaser, and Seller shall reimburse Purchaser for the
cost of the Title Evidence and all other out of pocket due diligence
costs up to $50,000 (which reimbursement obligation shall survive the
termination or cancellation of this Agreement), and neither party shall
have any further liability to the other hereunder, except as otherwise
provided herein; or (B) elect to proceed to close with title to the
Project as it then is, with the right to deduct from the Purchase Price
a sum equal to the total amount necessary to cure or remove (by
endorsement or otherwise) the Mandatory Cure Items which may be cured
by the payment of a liquidated sum [not to exceed an aggregate amount
of $125,000 for Defects arising or first disclosed after the effective
date of the Title Commitment, and not arising due to Seller's willful
or intentional acts], provided that if such items are cured or removed
by endorsements, such endorsements must be reasonably satisfactory to
Purchaser.
8. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller represents and warrants to Purchaser that the following matters
are true in all material respects as of the Contract Date and it shall be a
condition to Purchaser's obligation to close that the same shall be true in all
material respects as of the Closing Date:
(a) Descriptive Information. To Seller's knowledge, the
descriptive information concerning the Project set forth in Paragraph 1
hereof is complete, accurate, true and correct.
(b) Title. Owner owns (to Seller's knowledge), and pursuant to
the Contract and the Leases described in Schedule E, Seller holds an
absolute and unconditional right to acquire and convey, legal and
beneficial title to the Project, free and clear of all liens and
encumbrances other than the Permitted Exceptions.
(c) Seller's Deliveries. To Seller's knowledge, all of Seller's
Deliveries listed on Exhibit D attached hereto and all other items
delivered by Seller pursuant to this Agreement, including, but not
limited to, those required pursuant to Paragraphs 5 and 6 above, are
true, accurate, correct and complete in all respects, and fairly
present the information set forth in a manner that is not misleading.
The copies of all documents and other agreements delivered, furnished
or made available by Seller to Purchaser pursuant to this Agreement
constitute all of the Leases and other material agreements relating to
or affecting the Project, there being no "side" or other agreements,
written or oral, in force or effect, to which Seller is a party or to
which the Project is subject, which will be binding upon Purchaser
after the Closing.
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<PAGE>
(d) Defaults. To Seller's knowledge, neither Owner nor Seller is
in default under any of the documents, recorded or unrecorded, referred
to in the Title Evidence, or under any of the Major Repair Contracts,
Contracts or Governmental Approvals (as such terms are defined in
Exhibit D attached hereto).
(e) Contracts. There are no material contracts of any kind
relating to the management, leasing, operation, maintenance or repair
of the Project, except (i) those "Contracts" listed on Exhibit H
attached hereto, all of which will be terminated by Seller, prior to
the termination of the New Lease (as hereinafter defined) and (ii) such
other Contracts as may, by the express terms thereof, upon the
expiration or termination of the New Lease, be terminated without
penalty or other payment by Seller (or its assignee or successor) upon
no more than thirty (30) days' prior notice.
(f) Intentionally Deleted.
(g) Utilities. To Seller's knowledge, no fact or condition
exists that would or could result in the termination or impairment of
the furnishing of service to the Project of water, sewer, gas,
electric, telephone, drainage or other such utility services. Seller
has received no notice to the effect that the equipment of the utility
companies servicing the Project is in violation of any applicable
governmental laws, ordinances, rules and regulations.
(h) Improvements. To Seller's knowledge, the Improvements were
approved by all Governmental Authorities having jurisdiction thereover,
and Seller has received no notice of any violation of any governmental
laws, ordinances, rules or regulations.
(i) Employees. To Seller's knowledge, Owner has no employees at
the Project and Purchaser shall have no obligation either subsequent to
the Closing or subsequent to the termination of the New Lease to hire,
retain or pay wages to any of Owner's or Seller's employees.
(j) Compliance with Laws and Codes. To Seller's knowledge, the
Project, and the use and operation thereof, is not in violation of any
material, applicable municipal and other governmental laws, ordinances,
regulations, codes (including Environmental Laws (as hereinafter
defined)), licenses, permits and authorizations (including
Environmental Permits (as hereinafter defined) and specifically
including, but not limited to, life safety codes), and there are
presently and validly in effect all material licenses, permits and
other authorizations (including Environmental Permits) necessary for
the use, occupancy and operation of the Project as it is presently
being operated. If any written notices of any alleged violations at or
about the Project have been or are issued prior to the Closing (a
"Violation"), Seller shall cure (or escrow sufficient funds at Closing
with the Title Company to cure) such Violations; provided, however,
that the maximum, aggregate amount that Seller shall be required to
spend to cure any Violations shall not exceed $50,000. If, prior to
Closing, Seller fails to so cure all Violations, or if Seller fails to
cause all Violations to be insured over by the Title Company (in form
and substance reasonably satisfactory to Purchaser),
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<PAGE>
then Purchaser may (i) terminate this Agreement by notice to Seller, in
which event the Earnest Money, together with all interest earned
thereon, shall be returned to Purchaser, and Seller shall reimburse
Purchaser for the cost of the Title Evidence, not to exceed $10,000
(which reimbursement obligation shall survive the termination or
cancellation of this Agreement), and neither party shall have any
further liability to the other hereunder, except as otherwise provided
herein; or (ii) proceed to close by deducting from the cash otherwise
due at Closing and/or depositing in escrow with the Title Company the
amount necessary (up to $50,000, on a maximum, aggregate basis) to cure
or procure title insurance over each Violation (if such Violation is of
a liquidated nature and an ascertainable monetary amount or can be
endorsed over by the Title Company by the payment or deposit in escrow
of an ascertainable amount) and/or cause the Title Company to insure
and/or endorse over such Violation, provided that the terms of such
insurance and/or endorsements are reasonably satisfactory to Purchaser.
(k) Litigation. Except as indicated on Exhibit I, there are no
pending, or, to Seller's knowledge, threatened, judicial, municipal or
administrative proceedings affecting the Project in which either Seller
or, to Seller's knowledge, Owner is or will be a party by reason of
Owner's ownership or Seller's operation of the Project or any portion
thereof, including, without limitation, proceedings for or involving
condemnation, eminent domain, alleged building code or environmental or
zoning violations. No attachments, execution proceedings, assignments
for the benefit of creditors, insolvency, bankruptcy, reorganization or
other proceedings are pending, or, to Seller's knowledge, threatened,
against Seller or Owner, nor are any of such proceedings contemplated
by Seller. In the event any proceeding of the character described in
this Subparagraph 8(k) is initiated or threatened prior to Closing,
Seller shall promptly advise Purchaser thereof in writing.
(l) Intentionally deleted.
(m) Intentionally deleted.
(n) Re-Zoning. Seller has no knowledge of any pending or
threatened proceeding for the rezoning of the Project or any portion
thereof, or the taking of any other action by governmental authorities
that would have an adverse or material impact on the current value of
the Project.
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<PAGE>
(o) Intentionally deleted.
(p) Authority. The execution and delivery of this Agreement by
Seller, and the performance of this Agreement by Seller, have been duly
authorized by Seller, and this Agreement is binding on Seller and
enforceable against Seller in accordance with its terms. No consent of
any creditor, investor, tenant, landlord, the Owner, judicial or
administrative body, Governmental Authority, or other governmental body
or agency, or other party to such execution, delivery and performance
by Seller is required. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in
a breach of, default under, or acceleration of, any agreement to which
Seller is a party or by which Seller or to Seller's knowledge the
Project are bound; or (ii) violate any restriction, court order,
agreement or other legal obligation to which Seller and/or to Seller's
knowledge the Project is subject.
(q) Real Estate Taxes. The most recent real estate "Tax Bill(s)"
for (and the only real estate tax bills applicable to) the Project are
attached hereto as (or described in) Exhibit J. Except as set forth on
Exhibit J attached hereto, Seller has not received notice of nor does
it have any knowledge of any proposed increase in the assessed
valuation of the Project. Except as described on Exhibit J attached
hereto, there is not now pending, any proceeding or application for a
reduction in the real estate tax assessment of the Project or any other
relief for any tax year. There are no outstanding agreements with
attorneys or consultants with respect to the Tax Bills that will be
binding on Purchaser or the Project after the expiration or termination
of the New Lease.
(r) Easements and Other Agreements. To Seller's knowledge,
neither Owner nor Seller is in default in complying with the terms and
provisions of any of the covenants, conditions, restrictions,
rights-of-way or easements constituting one or more of the Permitted
Exceptions.
(s) Existing Leases; Agreements to Acquire or Terminate; Lease
Controversies. Set forth on Exhibit K is a description of each and
every lease, ground lease, sublease or occupancy agreement affecting
the Project (the "Leases"). Seller has entered into binding agreements
with each of the tenants under said Leases pursuant to which Seller has
either acquired such tenant's interest in the Lease or obtained the
unconditional right or option to effect a termination of such Lease at
or prior to Closing. No controversy, complaint, negotiation or
renegotiation, proceeding, suit or litigation relating to any Lease, is
pending or, to Seller's knowledge, threatened, whether in any tribunal
or informally. Seller is and shall remain responsible after the Closing
Date for defending (or continuing) any such suit, proceeding or other
matter relating to periods prior to the Closing Date, and all damages,
loss, expenses and costs related thereto.
(t) Intentionally deleted.
(u) United States Person. Seller and to Seller's knowledge,
Owner is a "United States Person" within the meaning of Section
1445(f)(3) of the Internal Revenue Code of 1986, as
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<PAGE>
amended, and shall execute and deliver to Purchaser an "Entity
Transferor" certification at Closing.
(v) Intentionally deleted.
(w) Intentionally deleted.
(x) Intentionally deleted.
(y) Intentionally deleted.
(z) Disclosure. No representation or warranty made by Seller in
this Agreement contains any untrue statement of a material fact, or
omits to state a material fact necessary in order to make the
statements contained therein not misleading or necessary in order to
provide a prospective purchaser of the Project with adequate
information as to the Project and its management, operation,
maintenance and repair.
The representations and warranties made in this Agreement by Seller shall be
continuing, and shall be deemed remade by Seller as of the date of Closing with
the same force and effect as if in fact specifically remade at that time. All
representations and warranties made in this Agreement shall survive the Closing
for a period of one (1) year and shall not merge into any instrument of
conveyance delivered at the Closing except that the representations made in
subparagraph 8(b) shall not survive the Closing Date. Except as otherwise
provided herein, the effect of the representations and warranties made in this
Agreement shall not be diminished, abrogated or deemed to be waived by the Basic
Project Inspection, Assessment(s), or any other inspections or investigations
made by Purchaser. If any written reports delivered to Purchaser by Seller, or
if the professional written reports and studies prepared for Purchaser as part
of the Basic Project Inspection of establish the untruth of any representation
or warranty made by Seller hereunder prior to the Closing Date; and Purchaser
nevertheless elects to close under this Agreement, then Purchaser shall be
deemed to have waived the breach in question and shall not assert any
post-closing claim against Seller with respect to that breach. Such waiver shall
not limit Purchaser's right to refuse to close based on Seller's breach of a
representation and warranty under circumstances other than as set forth above.
8A. REPRESENTATIONS OF PURCHASER.
The execution and delivery of this Agreement by Purchaser and the
performance of this Agreement by Purchaser, have been duly authorized by
Purchaser, and this Agreement is binding on Purchaser and enforceable against
Purchaser in accordance with its terms. No consent of any creditor, investor,
judicial or administrative body, Governmental Authority, or other governmental
body or agency, or other party to such execution, delivery and performance by
Purchaser is required. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in a breach
of, default under, or acceleration of, any agreement to which Purchaser is a
party or otherwise bound; or (ii) violate any restriction, court order,
agreement or other legal obligation to which Purchaser is subject.
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9. COVENANTS OF SELLER.
Effective as of the execution of this Agreement, Seller hereby
covenants with Purchaser as follows:
(a) New Leases. Seller shall not amend any Lease in any material
respect nor, except in accordance with the terms of the New Lease,
execute any new lease, license, or other agreement affecting the
ownership or occupancy of the Project, without Purchaser's prior
written approval.
(b) New Contracts. Seller shall not enter into any new contract
with respect to the ownership and operation of the Project which would
be binding upon Purchaser or which will not be terminable on 30 days
notice after the expiration or termination of the New Lease, without
Purchaser's prior written consent.
(c) Intentionally deleted.
(d) Operation of Project. Seller shall operate and manage the
Project in the manner in which it is being operated, maintaining
present services, and shall maintain the Project in its same repair and
working order; and shall perform, when due, all of Seller's obligations
under the Leases, Contracts, Governmental Approvals and other
agreements relating to the Project and otherwise in accordance with
applicable laws, ordinances, rules and regulations affecting the
Project. Except as otherwise specifically provided herein, Seller shall
deliver the Project at Closing in substantially the same condition as
it is on the Contract Date, reasonable wear and tear excepted.
(e) Pre-Closing Expenses. All bills and invoices for labor,
goods, material and services of any kind relating to the Project and
utility charges, relating to the period prior to Closing and the costs
and expenses associated with any alterations, installations,
decorations and other work required to be performed under any and all
agreements affecting the Project have been or will, by the Closing, be
completed and paid for in full or insured over by the Title Company.
(f) Good Faith. All action required pursuant to this Agreement
that is necessary to effectuate the transaction contemplated herein
will be taken promptly and in good faith by Seller, and Seller shall
furnish Purchaser with such documents or further assurances as
Purchaser may reasonably require.
(g) No Assignment. Except as permitted in Section 18 hereof,
after the Contract Date and prior to Closing, Seller shall not assign,
alienate, lien, encumber or otherwise transfer all or any part of the
Project or any interest therein.
(h) Intentionally deleted.
(i) Change in Conditions. Seller shall promptly notify Purchaser
of the occurrence of any event or circumstance that makes any
representation or warranty of Seller to Purchaser under this Agreement
untrue or misleading in any material
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respect, or any covenant of Seller under this Agreement incapable or
less likely of being performed.
(j) Intentionally deleted.
9A. COVENANTS OF PURCHASER.
Good Faith. All action required pursuant to this
Agreement that is necessary to effectuate the transaction contemplated
herein will be taken promptly and in good faith by Purchaser, and
Purchaser shall furnish Seller with such documents or further
assurances as Seller may reasonably require.
10. ENVIRONMENTAL WARRANTIES AND AGREEMENTS.
(a) Definitions.
Unless the context otherwise requires:
(1) "Environmental Law" or "Environmental Laws" shall
mean: all applicable past, present or future federal, state and
local statutes, regulations, directives, ordinances, rules,
court orders, decrees, arbitration awards and the common law,
which pertain to environmental matters, contamination of any
type whatsoever or health and safety matters, as such have been
amended, modified or supplemented from time to time (including
all present and future amendments thereto and re-authorizations
thereof). Environmental Laws include, without limitation, those
relating to: (i) the manufacture, processing, use, treatment,
storage, disposal, generation of Hazardous Materials; (ii) air,
soil, surface, subsurface, groundwater pollution; (iii)
Releases; (iv) protection of wildlife, endangered species,
wetlands or natural resources; (v) Tanks; and (vi) notification
requirements relating to the foregoing. Without limiting the
above, Environmental Law also includes the following: (i) the
Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. ss.ss. 9601 et seq.), as amended ("CERCLA"); (ii)
the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act (42 U.S.C. ss.ss. 6901 et seq.),
as amended ("RCRA"); (iii) the Emergency Planning and Community
Right to Know Act of 1986 (42 U.S.C. ss.ss. 11001 et seq.), as
amended; (iv) the Clean Air Act (42 U.S.C. ss.ss. 7401 et seq.),
as amended; (v) the Clean Water Act (33 U.S.C. ss.1251 et seq.),
as amended; (vi) the Toxic Substances Control Act (15 U.S.C. ss.
2601 et seq.), as amended; (vii) the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.), as
amended; (viii) the Federal Safe Drinking Water Act (42 U.S.C.
ss. 300f et seq.), as amended; (ix) the Federal Radon and Indoor
Air Quality Research Act (42 U.S.C. ss. 7401 note, et seq.); (x)
any state, county, municipal or local statutes, laws or
ordinances similar or analogous to (including counterparts of)
any of the statutes listed above; and (xi) any rules,
regulations, directives, orders or the like adopted pursuant to
or implementing any of the above.
(2) "Environmental Permit" or "Environmental Permits"
shall mean licenses, certificates, permits, directives,
250140-8 2/23/98
15
<PAGE>
requirements, registrations, government approvals, agreements,
authorizations, and consents which are required under or are
issued pursuant to an Environmental Law or are otherwise
required by Governmental Authorities.
(3) "Governmental Authority" or "Governmental
Authorities" shall mean any agency, commission, department or
body of any municipal, township, county, local, state or Federal
governmental or quasi-governmental regulatory unit, entity or
authority having jurisdiction or authority over all or any
portion of the Project or the management, operation, use or
improvement thereof.
(4) "Hazardous Conditions" refers to the existence or
presence of any Hazardous Materials on, in, under, at, the
Project or any portion thereof (including groundwater).
(5) "Hazardous Material" or "Hazardous Materials" shall
mean any chemical, pollutant, contaminant, pesticide, petroleum
or petroleum product or by product, asbestos,
asbestos-containing material, polychlorinated biphenyls
("PCBs"), solvents and waste oil, radioactive substance, solid
waste (hazardous or extremely hazardous), special, dangerous or
toxic waste, substance, chemical or material regulated, listed,
limited or prohibited under any Environmental Law.
(6) "Release" means any spill, discharge, leak,
migration, emission, escape, injection, dumping or other release
or threatened release of any Hazardous Material into the
environment, whether or not notification or reporting to any
Governmental Authority was or is required. Release includes,
without limitation, historical releases and the meaning of
Release as defined under CERCLA.
(7) "Qualified Consulting Firm" shall mean a
first-class nationally or regionally recognized environmental
engineering and/or consulting firm (the parties hereby
specifically recognize ERM, O'Brien & Gere, Warzyn Engineering,
Ground Water Technologies, Inc., ICF Kaiser
and Dames and Moore as such firms).
(8) "Remedial Action" shall mean any and all corrective
or remedial action, preventative measures, response, removal,
transport, disposal, clean-up, abatement, treatment and
monitoring of Hazardous Materials or Hazardous Conditions,
required to be performed under Environmental Law, and includes
all studies, assessments, reports or investigations performed in
connection therewith to determine if such actions are necessary
or appropriate (including investigations performed to determine
the progress or status of any such actions), all occurring on or
after the Opening of Escrow.
(9) "Tank" or "Tanks" mean above-ground and underground
storage tanks, vessels and related equipment, including, but not
limited to, appurtenant pipes, lines and fixtures, containing or
previously containing any Hazardous Material or fraction
thereof.
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(10) "Remedial Costs" shall include all out-of-pocket
costs, liabilities, expenses and fees incurred on or after the
date of this Agreement in connection with Remedial Action,
including but not limited to: (i) the fees of environmental
consultants and contractors; (ii) reasonable attorneys' fees;
(iii) the costs associated with the preparation of reports, and
laboratory analysis (including charges for expedited results if
reasonably necessary); (iv) regulatory, permitting and review
fees; (v) costs of soil and/or water treatment (including
groundwater monitoring) and/or transport and disposal; and (iv)
the cost of supplies, equipment, material and utilities used in
connection with Remedial Action.
(b) Representations and Warranties.
(1) Seller has made available or delivered (or
will make available or deliver in accordance with Section 6) to
Purchaser originals (or true, complete and accurate copies) of
all of the documents in Seller's possession, custody or control
which include and/or relate to:
(x) All approvals, plans, specifications,
test borings, percolation tests, engineering studies,
surveys or other environmental data concerning the
Project;
(y) All permits (including Environmental
Permits), approvals, registration, Tank registration
and/or closure documentation, certificates,
applications, notices, orders, directives, legal
pleadings, correspondence, or other documents of any
nature which Owner or Seller, any tenant of Owner or
Seller, any of Owner's or Seller's
predecessors-in-title, or any tenant of Owner's or
Seller's predecessors- in-title have submitted to or
received from any Governmental Authority regarding
the Project and its use, compliance or non-compliance
with Environmental Laws; and
(z) The results of any investigation of the
Project including, but not limited to, Phase I or
Phase II site assessments, asbestos inspection and/or
removal reports, tests or investigations of soil or
other substrate, air, groundwater, surface water, or
the building interior, and any testing or
investigation results relating to the removal from or
abandonment at the Project of any Tanks.
(2) Except as disclosed on Exhibit N attached
hereto, Seller has received no notice that either the Project or
the operations of Seller at the Project, or of any
predecessor(including underlying groundwater), were, are or will
be in violation of any Environmental Laws and Environmental
Permits.
(3) Except as disclosed on Exhibit N attached
hereto, to Seller's knowledge, there have been no past and
Seller has not received any written notice of any pending or, to
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17
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Seller's knowledge, threatened: (i) claims, complaints, notices,
correspondence or requests for information received by Seller
with respect to any violation or alleged violation of any
Environmental Law or Environmental Permit or with respect to any
corrective or remedial action for or cleanup of the Project or
any portion thereof, and (ii) written correspondence, claims,
complaints, notices, or requests for information from or to
Seller regarding any actual, potential or alleged liability or
obligation under or violation of any Environmental Law or
Environmental Permit with respect to the Project or any portion
thereof.
(4) Except as disclosed in Exhibit N attached
hereto, Seller has not received, and does not have in its
possession or control, any written notice alleging any Releases
of Hazardous Materials on, in, under, or at the Project or any
portion thereof.
(5) To Seller's knowledge, except as listed and
described in Exhibit M attached hereto, there are no Tanks in
use or abandoned at, on or under the Project. Any and all Tanks
which have heretofore been removed from or closed at the Project
by Seller, or to Seller's knowledge by any other person, have
been removed or closed in accordance with all Environmental
Laws.
(6) Except as disclosed on Exhibit N attached
hereto, to Seller's knowledge, the Project is not listed,
proposed or nominated for listing on the National Priorities
List pursuant to CERCLA (the "NPL"), the CERLIS or on any other
similar list of sites under any other Environmental Law.
(7) Except as disclosed on Exhibit N attached
hereto, Seller has not received, and does not have in its
possession or control, any written notice alleging or advising
the existence of any PCBs or friable or damaged asbestos at the
Project.
Notwithstanding the fact that certain of the foregoing
representations and warranties in this Subparagraph 10(b) are
made to Seller's knowledge, Seller shall nevertheless be deemed
to have knowledge of the information set forth in, or described
or discussed in, the Environmental Reports in Seller's
possession, including, but not limited to, those described on
Exhibit N attached hereto.
(c) Remediation. In the event the Additional Assessment,
indicates that there exists at the Project any Hazardous Conditions or
Hazardous Materials for which Purchaser's Qualified Consulting Firm
recommends Remedial Action as necessary or appropriate in order to
comply with Environmental
Laws, the following shall apply:
(1) If the Remedial Costs for all Remedial Action at
the Project are reasonably anticipated by such Qualified
Consulting Firm to be equal to or to exceed Fifty Thousand and
00/100 Dollars ($50,000), then Purchaser, at its sole option,
may either (A) proceed under subparagraph (2) below, with Seller
being obligated to deposit, from Seller's or its designee's
proceeds of sale at Closing or from Seller's own funds into the
Remediation Escrow therein
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18
<PAGE>
described the sum of $50,000 plus one half the cost of the
Additional Assessment up to $12,500; or (B) on or before the
Approval Date, as the same may have been extended, terminate
this Agreement by notice to Seller, with a copy to Escrowee,
receive a refund of the Deposit, together with all interest
thereon and Seller shall reimburse Purchaser for one half the
cost of the Additional Assessment up to $12,500, whereupon the
parties shall be relieved of all further rights or obligations
hereunder, except for such rights and obligations as expressly
survive termination of this Agreement. The "reasonably
anticipated Remedial Costs" shall be the good faith estimate of
Remedial Costs as set forth in a proposal by Purchaser's
Qualified Consulting Firm. Prior to arriving at a final
estimate, Purchaser's Qualified Consulting Firm shall confer
with Seller's consultant, Philip A. Lutin, Consulting Engineer,
and the two consulting firms shall arrive at a Remedial Cost
that both agree is reasonable; and
(2) If the Remedial Costs for all Remedial Actions at
the Project are reasonably anticipated by a Qualified Consulting
Firm to be less than $50,000, then (A) the terms and provision
of this Agreement shall remain in full force and effect, and (B)
Seller shall be obligated to deposit into a "Remediation Escrow"
at Closing, from Seller's proceeds of sale or from Seller's own
funds an amount (not to exceed $50,000) equal to 100% of the
reasonably anticipated Remedial Costs as determined by such
Qualified Consulting Firm plus one half the cost of the
Additional Assessment up to $12,500. Purchaser shall be entitled
to draw on the escrowed funds (including interest) from time to
time after Closing for payment of (or reimbursement for)
Remedial Costs (including, but not limited to, Seller's share of
the costs of any Additional Assessment related to such Hazardous
Condition) incurred in connection with the Remedial Action
provided that all work shall be completed within one year after
the Closing. Any escrowed funds remaining in the Remediation
Escrow upon completion of the Remedial Action shall be promptly
repaid to Seller or its designee. In the event funds are
escrowed pursuant to this provision, Purchaser and Seller shall
enter into a Remediation Escrow and Disbursement Agreement
reasonably satisfactory to Purchaser, Seller and their
respective counsel at Closing.
(d) Reservation of Rights. Purchaser shall retain all
rights under statutory and common law not explicitly waived or
released in this Agreement, including, but not limited to, any
rights that may exist under CERCLA or the New York State
Navigation Law to obtain contribution. In the event of any
litigation pursuant to this Subparagraph 10(d), the prevailing
party shall be entitled to recover from the other party its
reasonable attorney, consultant and witness fees and litigation
costs.
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11. ADDITIONAL CONDITIONS PRECEDENT TO CLOSING.
In addition to the other conditions enumerated in this Agreement, it
shall be an additional Condition Precedent to Purchaser's obligation to close
hereunder that except as discovered by Purchaser during the Inspection Period or
as should have been discovered at such time with the use of commercially
customary and reasonable due diligence:
(a) Physical Condition. The physical condition of the Project
shall be substantially the same on the Closing Date as on the Approval
Date, reasonable wear and tear excepted, unless the alteration of said
physical condition is the result of Damage (as defined in Paragraph 16
hereof).
(b) Pending Actions. At Closing, there shall be no
administrative agency, litigation or governmental proceeding of any
kind whatsoever, pending or threatened, that, after Closing, would, in
Purchaser's sole discretion, materially and adversely affect the value
or marketability of the Project, or the ability of Purchaser to operate
the Project in the manner it is being operated on the Contract Date.
(c) Real Estate Taxes. As of the Closing Date, there shall have
been no actual or pending reassessment of the value of the Project for
the purpose of calculating real estate taxes.
(d) Zoning. On the Closing Date, no proceedings shall be pending
or threatened that could or would involve the change, redesignation,
redefinition or other modification of the zoning classifications of (or
any building, environmental, or code requirements applicable to) the
Project, or any portion thereof, or any property adjacent to the
Project.
(e) Flood Insurance. As of the Closing Date, if the Project is
located in a flood plain, Purchaser shall have obtained flood plain
insurance in form and substance acceptable to Purchaser.
(f) Utilities. On the Closing Date, no moratorium or proceeding
shall be pending or threatened affecting the availability, at regular
rates and connection fees, of sewer, water, electric, gas, telephone or
other services or utilities servicing the Project.
(g) Termination of Leases. As of the Closing Date, all leases
affecting the Project including without limitation those Leases
described on Exhibit K shall be duly and unconditionally terminated and
cancelled of record or, at Seller's option, assigned to Purchaser. In
the event Seller elects to arrange for the assignment of the Leases to
Purchaser, Seller shall be responsible for and shall furnish Purchaser
with an indemnity agreement relating to all transfer taxes imposed on
the assignments. All obligations of each Landlord under such leases,
which shall accrue prior to the termination thereof, shall be fulfilled
and fully performed.
(h) Execution of New Lease. Seller and Purchaser have entered
into a triple net lease (the "New Lease") commencing as of the Closing
Date in the form annexed hereto as Exhibit Q.
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<PAGE>
12. INTENTIONALLY DELETED.
13. SELLER'S CLOSING DELIVERIES.
At Closing (or such other times as may be specified below), Seller
shall deliver or cause to be delivered to Purchaser the following, in form and
substance acceptable to Purchaser:
(a) Deed. The Deed, executed by Owner, in recordable form
conveying good and marketable fee simple absolute title to the Project
to Purchaser, free and clear of all liens, claims and encumbrances
except for the Permitted Exceptions.
(b) Intentionally deleted.
(c) General Assignment. An assignment, executed by Seller to
Purchaser of all the right, title and interest in and to the
Governmental Approvals which relate to the ownership and/or operation
of the Project, and which do not specifically relate to Seller's
business.
(d) Intentionally deleted.
(e) Intentionally deleted.
(f) Keys. Keys to all exterior doors located in the Project.
(g) Affidavit of Title. An affidavit (without warranty of title)
executed by Seller and in form and substance reasonably acceptable to
the Title Company, and as required by the Title Company to issue the
Title Policy with the Endorsements and otherwise in accordance with
Paragraph 7 hereof and with regard to Owner such documents as are
required under the Contract.
(h) Intentionally deleted.
(i) New Lease. A fully executed copy of the New Lease, in
accordance with and upon the terms and conditions set forth in the form
of lease annexed hereto as Exhibit Q.
(j) Intentionally deleted.
(k) Closing Statement. A closing statement conforming to the
proration and other relevant provisions of this Agreement.
(l) Plans and Specifications. All plans and specifications in
Seller's possession and control or otherwise available to Seller.
(m) Tax Bills. Copies of the most currently available Tax Bills.
(n) Entity Transfer Certificate. Entity Transfer Certification
confirming that neither Owner nor Seller is a "United States Person"
within the meaning of Section 1445 of the Internal Revenue Code of
1986, as amended.
(o) Intentionally deleted.
(p) Intentionally deleted.
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(q) Certificate as to Representations and Warranties. A
certificate from Seller as to the truth, accuracy and completeness of
the representations and warranties made by it hereunder as of the
Closing Date.
(r) Other. Such other documents and instruments as may
reasonably be required by Purchaser, its (or its underwriters' or
lenders') counsel or the Title Company and that may be necessary to
consummate this transaction and to otherwise effect the agreements of
the parties hereto.
For a period of one (1) year after Closing, each of the parties shall execute
and deliver to the other such further documents and instruments as the
requesting party shall reasonably request to effect this transaction and
otherwise effect the agreements of the parties hereto.
14. PRORATIONS AND ADJUSTMENTS.
(a) Such items that are customarily prorated in transactions of
this nature shall be ratably prorated between Purchaser and Seller as
of the Closing Date, other than those items as to which, pursuant to
the New Lease, Seller is fully responsible and obligated to make direct
payment of all amounts due and owing to the appropriate creditors,
which items shall be prorated and adjusted as at and upon the
expiration or earlier termination of the New Lease.
For purposes of calculating prorations, Purchaser shall be
deemed to be in title to the Project, and therefore entitled to the
income therefrom and responsible for the expenses thereof, for the
entire day upon which the Closing occurs. All such prorations shall be
made on the basis of the actual number of days of the year and month
that shall have elapsed as of the Closing Date. The amount of such
prorations shall be adjusted at Closing, as and when complete and
accurate information becomes available. Seller and Purchaser agree to
cooperate and use their good faith and diligent efforts to make such
adjustments no later than thirty (30) days after the Closing. Bills
received after Closing that relate to expenses incurred, services
performed or other amounts allocable to the period prior to the Closing
Date shall be paid by Seller. Any amounts not so paid by Seller shall
be paid in accordance with the New Lease. The obligations of the
parties pursuant to this Paragraph 14 shall survive the Closing.
15. CLOSING EXPENSES.
Seller will pay, or cause to be paid, the entire cost of any fees
associated with terminating or assigning each of the Leases, prepayment of debt
encumbering the Project, all bond transfer costs, the fees of Seller's attorney,
all documentary and state, county and municipal transfer taxes relating to the
instruments of conveyance contemplated herein, and the cost of any special or
specific escrows hereunder. Purchaser will pay the fees of Purchaser's attorney,
the cost of recording the Deed, and the cost of the Title Evidence.
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<PAGE>
16. DESTRUCTION, LOSS OR DIMINUTION OF PROJECT
If, prior to Closing, all or any portion of the Project is damaged by
fire or other natural casualty (collectively "Damage"), or is taken or made
subject to condemnation, eminent domain or other governmental acquisition
proceedings (collectively "Eminent Domain"), then the following procedures shall
apply:
(a) If the aggregate cost of repair or replacement of the
Damage (collectively, "repair and/or replacement") is $1,450,000.00 or
less, in the opinion of Purchaser's and Seller's respective engineering
consultants, Purchaser shall close and take the Project as diminished
by such events, subject to a reduction in the Purchase Price applied
against the cash otherwise due at the Closing, in the full amount of
the estimated cost of such repair and/or replacement not to exceed
$1,450,000.00. Any casualty insurance shall be the sole property of
Seller.
(b) If the aggregate cost of repair and/or replacement is
greater than $1,450,000.00, in the opinion of Purchaser's and Seller's
respective engineering consultants, or in the event of an Eminent
Domain, then either Purchaser or Seller may elect to terminate this
Agreement by notice to the other party, with a copy to Escrowee,
whereupon Purchaser shall receive an immediate return of the Earnest
Money, (the interest earned thereon to be split between the parties),
and neither party shall have any further liability to the other
hereunder, except as otherwise provided herein. If neither party elects
to terminate this Agreement within thirty (30) days of the casualty,
the parties shall proceed to close, the New Lease shall, upon and after
the Closing Date be in full force and effect, Tenant will rebuild or
restore the Project as provided in the New Lease, and the insurance
proceeds shall be applied, as provided in the New Lease.
(c) In the event of a dispute between Seller and Purchaser
with respect to the cost of repair and/or replacement with respect to
the matters set forth in this Paragraph 16, an engineer designated by
Seller and an engineer designated by Purchaser shall select an
independent engineer licensed to practice in the jurisdiction where the
Project is located who shall resolve such dispute. All fees, costs and
expenses of such third engineer so selected shall be shared equally by
Purchaser and Seller.
17. DEFAULT.
(a) Default by Seller. If any of Seller's representations and
warranties contained herein shall not be true and correct in any
material respect on the Contract Date and continuing thereafter through
and including the Closing Date, or if Seller shall have failed in any
material respect to perform any of the covenants and agreements
contained herein to be performed by Seller within the time for
performance as specified herein (including Seller's obligation to
close), and such failure shall continue for more than twenty (20) days
after written notice, Purchaser may elect either to (i) terminate
Purchaser's obligations under this Agreement by notice to Seller, with
a copy to Escrowee, in which event the Earnest Money, together with all
interest earned thereon, shall
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23
<PAGE>
be returned immediately to Purchaser, and Seller shall reimburse
Purchaser for the cost of the Title Evidence [not to exceed $10,000]
(which reimbursement obligation shall survive the termination or
cancellation of this Agreement), or (ii) file an action for specific
performance. Seller hereby covenants and agrees that in the event that
(x) Purchaser elects (i) above and (y) as a result of, due to, or
because of any willful or intentional act of Seller (A) any of Seller's
representations and warranties contained herein shall not be true and
correct in all material respects on the Closing Date, (B) any of the
covenants and agreements are not performed in all materials respects by
Seller within the time for performance as specified herein (including
Seller's obligation to close), and/or (C) any of the Conditions
Precedent shall not have been satisfied in all material respects,
Purchaser may (in addition to any and all other remedies of Purchaser
hereunder) file an action for damages actually suffered by Purchaser by
reason of Seller's defaults hereunder (including, but not limited to,
attorneys' fees, engineering fees, fees of environmental consultants,
appraisers' fees, and accountants' fees incurred by Purchaser in
connection with this Agreement and any action hereunder) provided,
however, that in any such event Purchaser's monetary damages shall not
exceed $1,000,000. The foregoing covenant shall survive any termination
of this Agreement. Nothing in this Subparagraph 17(a) shall be deemed
to in any way limit or prevent Purchaser from exercising any right of
termination provided to Purchaser elsewhere in this Agreement.
Notwithstanding the foregoing, in the event Seller defaults in any of
its post-closing obligations under Paragraph 14 or Paragraph 23 hereof,
Purchaser shall have all of its remedies at law or in equity on account
of such default. Anything to the contrary contained herein
notwithstanding, in the event Seller is unable to close in a timely
fashion due to a default by Owner under the Contract, or by any party,
other than Seller, to a Lease, and provided that Seller institutes a
legal action within ten (10) business days of the original Closing Date
and take all other actions as may be necessary to specifically enforce
Owner or such other party to perform under the Contract or other
agreement with Seller and convey the Project to Purchaser, Purchaser
shall forbear from canceling this Contract or exercising any other
remedies granted to it hereunder for up to 90 days following the
Closing Date. In the event that Seller is unable to close before the
end of such extended period, Purchaser may cancel this Agreement by a
notice to Seller and Escrowee and shall receive a return of the Escrow
Money plus all of its out of pocket due diligence costs.
(b) Default by Purchaser. In the event Purchaser defaults in
its obligations to close the purchase of the Project, then Seller's
sole and exclusive remedy shall be to cause the Escrowee to deliver the
Earnest Money, together with all interest earned thereon, to Seller,
the amount thereof being fixed and liquidated damages, it being
understood that Seller's actual damages in the event of such default
are difficult to ascertain and that such proceeds represent the
parties' best current estimate of such damages. Seller shall have no
other remedy for any default by Purchaser; provided, however that,
notwithstanding the foregoing, in the event Purchaser defaults in any
of its post-closing obligations under Paragraph 14 or Paragraph 23
hereof, Seller shall have all of its remedies at law or in equity on
account of such default.
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<PAGE>
18. SUCCESSORS AND ASSIGNS.
The terms, conditions and covenants of this Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
nominees, successors, beneficiaries and assigns; provided, however, no
conveyance, assignment or transfer of any interest whatsoever of, in or to the
Project shall be made by Seller during the term of this Agreement. Purchaser may
assign all or any of its right, title and interest under this Agreement to (i)
any third party intermediary (an "Intermediary") in connection with a 1031
exchange, including, but not limited to, Chicago Deferred Exchange Corporation,
and (ii) First Industrial Realty Trust, Inc., a Maryland corporation ("First
Industrial"), or to any corporate or partnership entity affiliated with, or
related to, First Industrial ("Affiliate"). The foregoing notwithstanding,
Seller may assign its rights or delegate its duties hereunder to any Affiliate
who succeeds to all of its interests in the Project and the Leases. First
Industrial is a publicly-owned real estate investment trust that owns all of the
capital stock of Purchaser. For purposes of this Paragraph 18, an Affiliate
shall, without limitation, include any entity having substantially common
ownership or management with Purchaser or Seller, including with respect to
Purchaser, First Industrial and First Industrial, L.P., a Delaware limited
partnership. No such assignee shall accrue any obligations or liabilities
hereunder until the effective date of such assignment. In addition to its right
of assignment, Purchaser shall also have the right, exercisable prior to
Closing, to designate any Affiliate or Intermediary, as the grantee or
transferee of any or all of the conveyances, transfers and assignments to be
made by Seller at Closing hereunder, independent of, or in addition to, any
assignment of this Agreement. In the event of an assignment of this Agreement by
either party, its assignee shall be deemed to be the Purchaser or Seller (as the
case may be) hereunder for all purposes hereof, and shall have all rights of the
assigning party hereunder (including, but not limited to, the right of further
assignment), provided that the Assignor shall remain fully liable for all
liability hereunder. In the event that an Affiliate shall be designated as a
transferee hereunder, that transferee shall have the benefit of all of the
representations and rights which, by the terms of this Agreement, are
incorporated in or relate to the conveyance in question. In the event either
party elects to assign this Agreement to an Intermediary, the other party shall
cooperate in connection with such election, including, but not limited to, by
executing an acknowledgment of such assignment of this Agreement to the
Intermediary and by executing such additional documents as may be reasonably
necessary to effect such assignment, provided that the non-assigning party shall
not be required to take title to the Project or incur any costs with respect to
any ss. 1031 exchange.
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19. LITIGATION.
In the event of litigation between the parties with respect to the
Project, this Agreement, the Escrow Agreement, the performance of their
respective obligations hereunder or the effect of a termination under this
Agreement or the Escrow Agreement, the losing party shall pay all costs and
expenses incurred by the prevailing party in connection with such litigation,
including, but not limited to, reasonable attorneys' fees of counsel selected by
the prevailing party. Notwithstanding any provision of this Agreement to the
contrary, the obligations of the parties under this Paragraph 19 shall survive
termination of this Agreement.
20. NOTICES.
Any notice, demand, request or other communication which may be
permitted, required or desired to be given in connection herewith shall be given
in writing and directed to Seller and Purchaser as follows:
Seller: Di Giorgio Corporation
380 Middlesex Avenue
Carteret, New Jersey 07008
Attn.: Mr. Richard B. Neff, Chief
Financial Officer and Executive
Vice President
With a copy to
its attorneys: Sills Cummis Zuckerman Radin
Tischman Epstein & Gross
One Riverfront Plaza
Newark, New Jersey 07102-5400
Attn.: Margaret F. Black, Esq.
Purchaser: FR Acquisitions, Inc.
311 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Attn.: Mr. Johannson Yap and
Mr. Scott McGregor
With a copy to its
regional office: First Industrial
575 Underhill Boulevard
P.O. Box 830
Syosset, New York 11791
Attn.: Mr. Jan Burman,
Senior Regional Director
With a copy to
its attorneys: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attn.: Miles M. Borden, Esq.
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26
<PAGE>
With a copy to its
general counsel: Barrack Ferazzano Kirschbaum
Perlman & Nagelberg
333 W. Wacker Drive, 27th Floor
Chicago, Illinois 60606
Attn.: Suzanne Bessette-Smith, Esq.
Notices shall be deemed properly delivered and received (i) the same day when
personally delivered; or (ii) one (1) business day after timely deposit with
Federal Express or other nationally recognized commercial overnight courier,
charges prepaid; or (iii) the same day when sent by confirmed facsimile; or (iv)
three (3) business days after timely deposit in the United States Mail, by
registered mail, return receipt requested, postage prepaid.
The attorneys for the parties hereto are hereby authorized on
behalf of their respective client to (i) deliver any notice permitted or
required by the terms of this Agreement and (ii) extend, in writing, any of the
time limitations set forth in this Agreement, by a notice delivered in
accordance with this paragraph 20.
21. BENEFIT.
This Agreement is for the benefit only of the parties hereto and their
nominees, successors, beneficiaries and assignees as permitted in Paragraph 18
and no other person or entity shall be entitled to rely hereon, receive any
benefit herefrom or enforce against any party hereto any provision hereof.
22. LIMITATION OF LIABILITY.
Upon the Closing, Purchaser shall neither assume nor undertake to pay,
satisfy or discharge any liabilities, obligations or commitments of Seller or
Owner other than those specifically agreed to between the parties and set forth
in this Agreement. Purchaser shall not assume or discharge any debts,
obligations, liabilities or commitments of Seller, whether accrued now or
hereafter, fixed or contingent, known or unknown.
23. BROKERAGE.
Each party hereto represents and warrants to the other that it has
dealt with no brokers or finders in connection with this transaction, except for
Island Realty Services, Inc. ("Seller's Broker"). Seller shall pay any brokers'
commission due to Seller's Broker pursuant to the terms of a separate agreement
between Seller and Seller's Broker. Seller and Purchaser each hereby indemnify,
protect and defend and hold the other harmless from and against all losses,
claims, costs, expenses, damages (including, but not limited to, attorneys' fees
of counsel selected by the indemnified party) resulting from the claims of any
broker, finder, or other such party, other than Seller's Broker, claiming by,
through or under the acts or agreements of the indemnifying party. The
obligations of the parties pursuant to this Paragraph 23 shall survive the
Closing or any earlier termination of this Agreement.
24. REASONABLE EFFORTS
Seller and Purchaser shall use their reasonable, diligent and good
faith efforts, and shall cooperate with and assist each other
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in their efforts, to obtain such consents and approvals of third parties
(including, but not limited to, governmental authorities), to the transaction
contemplated hereby, and to otherwise perform as may be necessary to effectuate
the transfer of the Project to Purchaser in accordance with this Agreement.
25. EXCULPATION OF AFFILIATES
The Affiliates of either party shall not be liable for the obligations
and liabilities of such party under this Agreement. Without limitation on the
foregoing, none of the shareholders, officers, employees, representatives or
agents of either party shall be personally liable for the satisfaction of
obligations of any nature whatsoever of the party under this Agreement to which
it is an Affiliate.
26. MISCELLANEOUS.
(a) Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the transaction
contemplated herein, and all prior or contemporaneous oral agreements,
understandings, representations and statements, and all prior written
agreements, understandings, letters of intent and proposals are merged
into this Agreement. Neither this Agreement nor any provisions hereof
may be waived, modified, amended, discharged or terminated except by an
instrument in writing signed by the party against which the enforcement
of such waiver, modification, amendment, discharge or termination is
sought, and then only to the extent set forth in such instrument.
Neither party has relied upon any statement of the other party except
as set forth in this Agreement.
(b) Time of the Essence. Time is of the essence of this
Agreement. If any date herein set forth for the performance of any
obligations by Seller or Purchaser or for the delivery of any
instrument or notice as herein provided should be on a Saturday, Sunday
or legal holiday, the compliance with such obligations or delivery
shall be deemed acceptable on the next business day following such
Saturday, Sunday or legal holiday. As used herein, the term "legal
holiday" means any state or federal holiday for which financial
institutions or post offices are generally closed in the State of New
York for observance thereof.
(c) Conditions Precedent. The obligations of Purchaser to make
the payments described in Paragraph 2 and to close the transaction
contemplated herein are subject to the express Conditions Precedent set
forth in this Agreement, each of which is for the sole benefit of
Purchaser and may be waived at any time by notice thereof from
Purchaser to Seller. The waiver of any particular Condition Precedent
shall not constitute the waiver of any other.
(d) Seller's Representations and Warranties. Relative to each
representation and warranty made by Seller in this Agreement, Seller
shall be charged with only that knowledge and information of its
officers and directors, and the actual and constructive knowledge of
such persons will be imputed to Seller.
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(e) Construction. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of
the fact that it may have been prepared by counsel for one of the
parties, it being recognized that both Seller and Purchaser have
contributed substantially and materially to the preparation of this
Agreement. The headings of various Paragraphs in this Agreement are for
convenience only, and are not to be utilized in construing the content
or meaning of the substantive provisions hereof.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
regard to conflicts of laws principals.
(g) Partial Invalidity. The provisions hereof shall be deemed
independent and severable, and the invalidity or partial invalidity or
enforceability of any one provision shall not affect the validity of
enforceability of any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Purchase and Sale on the date first above written.
SELLER:
Di GIORGIO CORP.,
a Delaware corporation
By: /s/ Lawrence S. Grossman
Name: Lawrence S. Grossman
Title: Vice President
PURCHASER:
FR ACQUISITIONS, INC.,
a Maryland corporation
By:
Name:
Title:
250140-8 2/23/98
29
<PAGE>
SCHEDULE OF EXHIBITS
A Legal Description of Land
B Intentionally Deleted.
C Earnest Money Escrow Instructions
D Seller's Deliveries
E Title Exceptions Disclosed by Purchaser's
Title Commitment
F Intentionally Deleted
G Surveyor's Certification
H Service Contracts
I Pending Litigation
J Real Estate Tax Bills
K Existing Leases; Agreements to Acquire or
Terminate; Lease Controversies
L Intentionally Deleted
M Tanks
N Seller's Environmental Tests and
Government Orders
O Intentionally Deleted
P Intentionally Deleted
Q Form of New Lease
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EXHIBIT A
Legal Description of the Land
ALL THAT CERTAIN PLOT, PIECE OR PARCEL OF LAND, SITUATE, LYING AND BEING NEAR
CARLE PLACE, TOWN OF HEMPSTEAD, COUNTY OF NASSAU AND STATE OF NEW YORK, BOUNDED
AND DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERLY SIDE OF EAST GATE BOULEVARD SOUTH, DISTANT
369.60 FEET SOUTHERLY FROM THE SOUTHERLY END OF A CURVE HAVING A RADIUS OF 40.00
FEET AND A LENGTH OF 62.83 FEET WHICH CURVE CONNECTS THE SAID WESTERLY SIDE OF
EAST GATE BOULEVARD SOUTH WITH THE SOUTHERLY SIDE OF ZECKENDORF BOULEVARD;
RUNNING THENCE ALONG SAID WESTERLY SIDE OF EAST GATE BOULEVARD SOUTH THE
FOLLOWING THREE COURSES AND DISTANCES:
(1) SOUTH 04 DEGREES 35 MINUTES 24 SECONDS EAST, 590.35 FEET;
(2) SOUTHERLY ALONG THE ARC OF A CIRCLE BEARING TO THE RIGHT AND
HAVING A RADIUS OF 65.00 FEET A DISTANCE ALONG SAID ARC OF
63.06 FEET;
(3) SOUTHERLY ALONG THE ARC OF A CIRCLE BEARING TO THE LEFT HAVING A RADIUS
OF 50.00 FEET A DISTANCE ALONG SAID ARC OF 115.98 FEET TO LAND OF THE
PEOPLE OF THE STATE OF NEW YORK AS MEADOWBROOK STATE PARKWAY;
THENCE ALONG SAID LAST MENTIONED LAND THE FOLLOWING TWO COURSES OF
DISTANCE:
(1) NORTHWESTERLY ALONG THE ARC OF A CIRCLE BEARING TO THE RIGHT
AND HAVING A RADIUS OF 2030.00 FEET A DISTANCE ALONG SAID ARC
OF 945.89 FEET;
(2) NORTHERLY ALONG THE ARC OF A CIRCLE BEARING TO THE LEFT AND HAVING A
RADIUS OF 700.00 FEET A DISTANCE ALONG SAID ARC OF 245.42 FEET TO THE
LAND OF THE LONG ISLAND RAILROAD COMPANY;
THENCE NORTHERLY ALONG SAID LAST MENTIONED LAND ALONG THE ARC OF A
CIRCLE BEARING TO THE LEFT HAVING A RADIUS OF 500.00 FEET A DISTANCE
ALONG SAID ARC OF 84.01 FEET;
THENCE NORTH 85 DEGREES 24 MINUTES 36 SECONDS EAST, 910.92 FEET TO THE POINT OR
PLACE OF BEGINNING.
FOR INFORMATION ONLY: SECTION 44 BLOCK 72 LOTS 6 AND 7.
EAST GATE BOULEVARD IS NOW KNOWN AS DIBBLEE DRIVE.
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EXHIBIT C
Earnest Money Escrow Instructions
THESE EARNEST MONEY ESCROW INSTRUCTIONS ("Instructions") are entered
into as of this _______ day of February, 1998 by and among Di GIORGIO CORP., a
Delaware corporation("Seller"), FR ACQUISITIONS, INC., a Maryland corporation
("Purchaser"), and CHICAGO TITLE INSURANCE COMPANY ("Escrowee").
WHEREAS, Purchaser and Seller entered into an Agreement of Purchase and
Sale, dated February __, 1998 (the "Agreement"), for the purchase and sale of
the Project (as defined in the Agreement and hereinafter collectively referred
to as the "Property"); and
WHEREAS, the parties desire to enter into escrow instructions with
Escrowee pursuant to which Purchaser shall deposit earnest money, as required
under the Agreement (the "Escrow").
NOW, THEREFORE, in consideration of the mutual covenants contained in
these Instructions, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Deposit.
(a) Earnest Money. Pursuant to the terms and provisions of the
Agreement, and within two (2) business days after the date of the
Agreement, Purchaser has deposited or will deposit with Escrowee
earnest money in the sum of Five Hundred Thousand and 00/100 Dollars
($500,000.00) (the "Earnest Money").
(b) Investment of Earnest Money. Escrowee shall invest the
Earnest Money in interest-bearing securities, bank deposits and/or
so-called "money market funds" established and managed by nationally
recognized firms, as selected by Purchaser. All interest earned on the
Earnest Money shall be paid as specifically provided in these
Instructions.
2. Application of Earnest Money at Closing and Upon Termination of
Agreement.
(a) At Closing. At Closing (as defined in the Agreement), (i)
the Earnest Money shall be delivered by Escrowee to Seller and credited
against the payment of the Purchase Price, and (ii) all interest earned
thereon shall be split equally between the parties, whereupon the
Escrow shall terminate.
(b) Upon Termination of Contract. Notwithstanding the
foregoing, the Agreement provides certain circumstances in which
Purchaser shall have the unilateral right to terminate the Agreement,
(i) pursuant to Section 6 thereof, on or before two (2) days after the
last day of the Inspection Period (as defined in the Agreement) (the
"Approval Date"), and (ii) pursuant to certain other specified
instances expressly set forth in the Agreement, in each instance by
delivery of written notice to Seller and Escrowee (the "Termination
Notice"). Furthermore, under the terms of the Agreement, the Approval
Date may be unilaterally extended by Purchaser under certain
circumstances, pursuant to Section 6 hereof; however,
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<PAGE>
Purchaser's election to so extend the Approval Date (the "Extended
Approval Date") shall be evidenced by delivery, on or before the
above-specified Approval Date, of written notice to Seller and Escrowee
(the "Extension Notice"). Upon Escrowee's receipt of the Termination
Notice (provided Escrowee receives such Termination Notice on or before
the Approval Date or the Extended Approval Date, whichever is
applicable, or if Purchaser specifies that the Termination Notice is
being delivered pursuant to Section 7(e), 10(c) or 16(b) of the
Agreement, whichever is applicable), Escrowee shall immediately and
simultaneously (x) deliver a copy of the Termination Notice to Seller,
in the manner provided in Paragraph 5 below, and (y) disburse the full
amount of the Earnest Money to Purchaser and shall disburse all
interest earned thereon equally between the parties.
3. Default.
(a) Purchaser's Default. In the event that Purchaser breaches
or defaults under the obligations imposed on it under the Agreement,
and Seller desires to obtain the Earnest Money from Escrowee (pursuant
to the terms of the Agreement), Seller shall be required to present to
Escrowee: Seller's affidavit of default (the "Default Affidavit"),
executed under penalty of perjury by an authorized representative of
Seller, certifying to Purchaser and Escrowee that Purchaser is in
default under the Agreement and, therefore, Seller is entitled to the
Earnest Money proceeds. Upon receipt of the Default Affidavit from
Seller, Escrowee shall (i) deliver a copy of the Default Affidavit to
Purchaser, in the manner as provided in Paragraph 5 below and (ii) if,
within four (4) business days after the date on which the Default
Affidavit is deemed to be delivered to Purchaser (pursuant to Paragraph
5 below), Escrowee has not received from Purchaser a notice ("Objection
Notice") objecting to Escrowee's compliance with the Default Affidavit,
Escrowee shall deliver the Earnest Money, together with all interest
earned thereon, to Seller.
(b) Seller's Default. In the event that after the Approval
Date, as the case may be, Seller breaches or defaults under the
obligations imposed on it under the Agreement, and Purchaser desires
the return of the Earnest Money from Escrowee (pursuant to the terms of
the Agreement), Purchaser shall be required to present to Escrowee: its
own Default Affidavit executed under penalty of perjury by an
authorized representative of Purchaser certifying to Seller and
Escrowee that Seller is in default under the Agreement and, therefore,
Purchaser is entitled to return of the Earnest Money proceeds. Upon
receipt of the Default Affidavit from Purchaser, Escrowee shall (i)
deliver a copy of the Default Affidavit to Seller as provided in
Paragraph 5 below, and (ii) if, within four (4) business days after the
date on which the Default Affidavit is deemed to be delivered to Seller
(pursuant to Paragraph 5 below), Escrowee has not received from Seller
an Objection Notice, objecting to Escrowee's compliance with the
Default Affidavit, Escrowee shall deliver the Earnest Money, together
with all interest earned thereon, to Purchaser.
4. Objection Notices. If Escrowee receives an Objection Notice from
either Seller or Purchaser within the time period set forth in
Paragraph 3 above, then Escrowee shall refuse to
250140-8 2/23/98
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<PAGE>
comply with the Default Affidavit then in question ("Objectionable
Default Affidavit") until Escrowee receives (a) joint written
instructions executed by both Purchaser and Seller, or (b) a final
non-appealable order with respect to the disposition of the Earnest
Money from a federal or state court of competent jurisdiction ("Court
Order"), in either of which events Escrowee shall then disburse the
Earnest Money and all interest earned thereon, in accordance with such
direction or order, as the case may be.
5. Notices. Notices hereunder shall be deemed properly delivered and
received (a) the same day when personally delivered; or (b) one (1)
business day after timely deposit with Federal Express or other
nationally recognized commercial overnight courier, charges prepaid;
(c) the same day when sent by confirmed facsimile or (d) three (3)
business days after timely deposit in the U.S. Mail, by registered or
certified mail, return receipt requested, postage prepaid, to the
parties as set forth below:
Seller: Di Giorgio Corp.
380 Middlesex Avenue
Carteret, New Jersey 07008
Attn.: Mr. Richard B. Neff, Chief
Financial Officer and Executive
Vice President
With a copy to
its attorneys: Sills Cummis Zuckerman Radin
Tischman Epstein & Gross
One Riverfront Plaza
Newark, New Jersey 07102-5400
Attn.: Margaret F. Black, Esq.
Purchaser: FR Acquisitions, Inc.
311 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Attn.: Mr. Johannson Yap and
Mr. Scott McGregor
With a copy to its
regional office: First Industrial
575 Underhill Boulevard
P.O. Box 830
Syosset, New York 11791
Attn.: Mr. Jan Burman
Senior Regional Director
With a copy to
its attorneys: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attn.: Miles M. Borden, Esq.
250140-8 2/23/98
34
<PAGE>
With a copy to its
general counsel: Barrack Ferazzano Kirschbaum
Perlman & Nagelberg
333 W. Wacker Drive, 27th Floor
Chicago, Illinois 60606
Attn.: Suzanne Bessette-Smith, Esq.
Escrowee: Chicago Title Insurance Company
330 Old Country Road
Mineola, New York 11501
Attn.: Kim Pipczynski or Carrie Vitale
6. Escrowee Obligations. The parties agree that, except as
otherwise expressly provided in Paragraph 4 above, the actions of, and
the relationship between, Purchaser and Seller shall be governed by the
terms of the Agreement. In all events and under all circumstances
(except as otherwise expressly provided in Paragraph 4 above), the
ultimate rights and obligations of Seller and Purchaser shall be
strictly governed and controlled by the terms and provisions of the
Agreement, rather than these Instructions. In the event of any conflict
between the terms and provisions of the Agreement and these
Instructions, the terms and provisions of the Agreement shall control
in all events and circumstances except as otherwise expressly provided
in Paragraph 4 above. Notwithstanding the existence of the Agreement or
any references herein to the Agreement, the parties agree that Escrowee
(but not Seller and Purchaser) shall be governed solely by the terms
and provisions of these Instructions. The parties furthermore agree
that, except as otherwise specifically provided in Paragraph 4 above,
Escrowee is hereby expressly authorized to regard, comply with, and
obey any and all orders, judgments or decrees entered or issued by any
court, and, in case Escrowee obeys and complies with any such order,
judgment or decree of any court, it shall not be liable to either of
the parties hereto or to any other person, firm or corporation by
reason of such compliance. Notwithstanding any such order, judgment or
decree entered without jurisdiction or subsequently reversed, modified,
annulled, set aside or vacated in case of any suit or proceeding
regarding this escrow to which Escrowee is or may be at any time a
party, Escrowee shall have a lien on the contents hereof for any or all
costs, attorneys' fees (whether such attorneys shall be regularly
retained or specially employed) and other expenses that have been
incurred by Escrowee or for which Escrowee becomes, and Escrowee shall
be entitled to reimburse itself therefor out of the Earnest Money
deposit.
7. Litigation. In the event of litigation between the parties
with respect to these Instructions, the performance of their respective
obligations hereunder, or the effect of a termination under the
Agreement or these Instructions, the losing party shall pay all costs
and expenses incurred by the prevailing party in connection with such
litigation, including, but not limited to, court costs and reasonable
fees of counsel selected by the prevailing party. Notwithstanding any
provision of the Agreement or these Instructions to the contrary, the
obligations of the parties under this Paragraph 7 shall survive a
termination of either or both of the Agreement and these Instructions.
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<PAGE>
8. Counterpart. These Instructions may be executed in
counterparts, each of which shall constitute an original but
all of which together shall constitute one and the same
instrument.
SELLER:
Di GIORGIO CORP.,
a Delaware corporation
By: /s/ Lawrence S. Grossman
Name: Lawrence S. Grossman
Title: Vice President
PURCHASER:
FR ACQUISITIONS, INC.,
a Maryland corporation
By:
Name:
Title:
ACCEPTED BY ESCROWEE:
CHICAGO TITLE INSURANCE COMPANY
By:
Name:
Title:
250140-8 2/23/98
36
<PAGE>
EXHIBIT D
Seller's Deliveries
1. Copies, with monetary and other confidential and proprietary terms
deleted, at Seller's option, of the agreements, contracts or understandings made
by Seller with Owner, Waldbaums, Inc. (A&P), Sysco Corporation and WRGFF
Associates, L.P., pursuant to which Seller shall (i) cause Owner to convey the
Project to Purchaser at Closing and (ii) terminate or cause the assignment to
Purchaser of the Leases presently affecting the Project.
2. Copies of all hazard, rent loss, liability and other insurance
policies currently in force with respect to the Project and/or Seller's use and
occupancy of the Project (the "Existing Insurance Policies").
3. Copies of all engineering and architectural plans and
specifications, drawings, studies and surveys relating to the Project
(collectively the "Plans"), in Seller's possession or control, and copies of any
reports or studies (including, but not limited to, inspection reports of
governmental authorities or insurance carriers), in Seller's possession or
control, in respect of the physical condition or operation of the Project or
recommended improvements thereto. Copies of all material records in Seller's
possession pertaining to the repair, replacement and maintenance of the
mechanical systems at the Building, the roof and the structural components of
the Building.
4. Copies of the bill or bills issued for the tax years 1993/94,
1994/95, 1995/96, 1996/97, and, if available, 1997/98, for all real estate taxes
and personal property taxes and copies of any and all notices pertaining to real
estate taxes or assessments applicable to the Project (the "Tax Bills"). Seller
shall promptly deliver to Purchaser copies of any such bills or notices received
by Seller after the Contract Date, even if received after Closing.
5. Copies of all management, maintenance, repair, service, pest control
and supply contracts (including, without limitation, janitorial, elevator,
scavenger, laundry and landscaping agreements), equipment rental agreements and
master antenna agreements (if applicable), and any other contracts or agreements
relating to or affecting the Project (other than Major Repair Contracts, as
defined herein), all as amended (the "Contracts").
6. Copies of all contracts for repairs or capital replacements to be
performed at the Project, or covering such work performed during the two (2)
years immediately preceding the Contract Date for a contract price in excess of
$25,000 ("Major Repair Contracts").
7. Copies of all certificates of occupancy, and similar or related real
estate, use or occupancy, licenses, permits, authorizations and approvals
required by law or by any governmental authority having jurisdiction thereover
in respect of the use, occupancy or maintenance of the Project or the
improvements thereupon (the "Governmental Approvals").
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<PAGE>
8. Copies of any operating budgets for the Project for the years 1994,
1995 and 1996 and 1997 or, in lieu thereof, a detailed, descriptive summary of
maintenance costs for such year.
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EXHIBIT E
Title Exceptions Disclosed by Purchaser's Title Commitment
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<PAGE>
EXHIBIT G
Surveyor's Certification
TO: FR Acquisitions, Inc.; First Industrial Realty Trust, Inc.,
First Industrial, L.P., and Chicago Title Insurance Company; and
Parker Chapin Flattau & Klimpl, LLP
I hereby certify that on the ______ day of _______________, 1998 (a) an
accurate, "as-built" on the ground instrument survey entitled
"___________________" the ("Survey") of the premises (the "Property") known by
street address 700 Dibblee Drive, Garden City, New York, was conducted under my
direction according to local professional practices; (b) the Survey and the
information, courses and distances shown thereon are correct; (c) all monuments
shown on the survey actually exist, and the location , size and type of
materials thereof are correctly shown; (d) the title lines and lines of actual
possession of the Property are the same; (e) the size, location and type of all
buildings and improvements, if any, on the Property are shown on the Survey; (f)
the Property has direct access to Dibblee Drive, which is a dedicated public
way; (g) there are no easements, rights-of-way, old highways or abandoned roads,
lanes or driveways affecting the Property appearing from a careful physical
inspection of the same, other than those shown and depicted on the Survey or
those which may be discovered by a complete title exam of the subject property
and all adjoiners; (h) there are no visible boundary line conflicts (i) all
recorded easements, as noted in Title Company Commitment No. N16175N
(97050155000495), dated June 20, 1997, and all set-back lines, have been
correctly platted or noted on the Survey; (j) except as shown on the Survey
there are no improvements on the Property upon any easement, rights-of-way or
adjacent land or encroachments of improvements located on adjacent land upon the
Property; (k) there were no cemeteries or burying ground observed on the
Property; (l) the Survey shows the location of any visible telephone, telegraph,
electric or other power lines, wires and poles on the Property; (m) the Survey
shows the location of all visible and unobstructed manholes; (n) the parcel(s)
described on the Survey do not lie within flood areas in accordance with maps
entitled "Flood Insurance Rate Map", which such map covers the area in which the
Property is situated; (o) the Property is made up of more than one parcel, each
of which constitutes a separate tax lot and none of which constitutes a portion
of any other tax lot; and (p) all utilities for the operation of the Premises
have been shown.
I further certify that this map or plat and the survey on which it is
based were made (i) in accordance with "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" jointly established and adopted by ALTA and ACSM
in 1992 and includes Items 1 (excluding the placement of new monuments), 3, 4, 6
(showing setback lines only), 7(a), 7(b)(1),8, 9, 10, 11 and 13 of Table A
thereof and (ii) pursuant to the Accuracy Standards (as adopted by ALTA/ACSM and
in effect on the date of this Certification) of an urban survey.
Date: ______________________
-----------------------
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EXHIBIT H
Service Contracts
To be delivered pursuant to Schedule D
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<PAGE>
EXHIBIT I
Pending Litigation
None
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EXHIBIT J
Real Estate Tax Bills
To be delivered pursuant to Schedule D
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EXHIBIT K
Existing Leases; Agreements to Acquire or Terminate;
Lease Controversies
Existing Leases - See Title Commitment (Exhibit E)
Agreements to Acquire / Terminate - attached hereto
250140-8 2/23/98
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<PAGE>
EXHIBIT M
Tanks
See Exhibit N and permits attached
250140-8 2/23/98
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<PAGE>
EXHIBIT N
Seller's Environmental Tests and Government Orders
Information previously delivered to purchaser
250140-8 2/23/98
46
<PAGE>
EXHIBIT O
Form of New Lease between Purchaser,
as Landlord, and Seller, as Tenant
250140-8 2/23/98
47
AGREEMENT OF LEASE
Agreement of Lease, made this 19th day of February, 1998, between FR
ACQUISITIONS, INC., a Maryland corporation, party of the first part, hereinafter
referred to as Owner, and DI GIORGIO CORPORATION, a Delaware corporation, party
of the second part, hereinafter referred to as Tenant.
WITNESSETH:
Owner hereby leases to Tenant and Tenant hereby hires from Owner all of
the land, property and improvements, known as and by the following street
address, 700 Dibblee Drive, Garden City, New York, in the County of Nassau,
State of New York, for the term of two (2) years (or until such term shall
sooner cease and expire as hereinafter provided) to commence on the ________ day
of __________________, 1998, and to end on the __________ day of
_______________, 20___ and both dates inclusive, at an annual rental rate of ONE
MILLION FIVE HUNDRED TWENTY-FIVE THOUSAND FIVE HUNDRED DOLLARS and 00/100
($1,525,500.00) which Tenant agrees to pay in lawful money of the United States
which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, in equal monthly installments in advance on the
first day of each month during said term, at the office of Owner or such other
place as Owner may designate, without any set off or deduction whatsoever,
except that Tenant shall pay the first monthly installment on the commencement
date.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
1. RENT
Tenant shall pay the rent as above and as hereinafter
provided.
2. OCCUPANCY
Tenant shall use and occupy demised premises for warehousing
and distributing products that are not hazardous materials (as defined in the
annexed Rider) with appurtenant offices (including computer room) and/or for all
other purposes which are lawful and in compliance with the certificate of
occupancy for the demised premises provided such use is in accordance with the
certificate of occupancy for the building, if any, and for no other purpose.
3. ALTERATIONS - See Rider
If any mechanic's lien is filed against the demised premises,
or the building of which the same forms a part, for work claimed to have been
done for, or materials furnished to, Tenant, whether or not done pursuant to
this Article, the same shall be discharged by Tenant within thirty (30) days
thereafter, at Tenant's expense, by payment or filing the bond required by law
or otherwise. All fixtures and all paneling, partitions, railings and like
installations, installed
<PAGE>
in the premises at any time, either by Tenant or by Owner on Tenant's behalf,
shall, upon installation, become the property of Owner and shall remain upon and
be surrendered with the demised premises. Nothing in this Article shall be
construed to give Owner title to or to prevent Tenant's removal of trade
fixtures, moveable office furniture and equipment, but upon removal of any such
from the premises or upon removal of other installations as may be required by
Owner, Tenant shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and repair any damage
to the demised premises or the building due to such removal. All property
permitted or required to be removed by Tenant at the end of the term remaining
in the premises after Tenant's removal shall be deemed abandoned and may, at the
election of Owner, either be retained as Owner's property or removed from the
premises by Owner, at Tenant's expense. Subject to Rider
4. REPAIRS
Tenant shall, throughout the term of this lease, take good
care of the demised premises including the bathrooms and lavatory facilities and
the windows and window frames and, the fixtures and appurtenances therein and at
Tenant's sole cost and expense promptly make all repairs thereto and to the
building, whether structural or non-structural in nature. Tenant shall also
repair all damage to the building and the demised premises caused by the moving
of Tenant's fixtures, furniture or equipment. All the aforesaid repairs shall be
of quality or class equal to the original work or construction. If Tenant fails
, after thirty (30) days notice, to proceed with due diligence to commence
repairs required to be made by Tenant, the same may be made by the Owner at the
expense of Tenant, and the reasonable expenses thereof incurred by Owner shall
be collectible, as additional rent, after rendition of a bill or statement
therefor. If the demised premises be or become infested with vermin, Tenant
shall, at its expense, cause the same to be exterminated. The provisions of this
Article 4 with respect to the making of repairs shall not apply in the case of
fire or other casualty with regard to which Article 9 hereof shall apply.
5. WINDOW CLEANING
Tenant will not clean nor require, permit, suffer or allow any
window in the demised premises to be cleaned from the outside in violation of
Section 202 of the New York State Labor Law or any other applicable law or of
the Rules of the Board of Standards, and Appeals, or of any other Board or body
having or asserting jurisdiction.
6. REQUIREMENTS OF LAW, FIRE INSURANCE
Prior to the commencement of the lease term, if Tenant is then
in possession, and at all times thereafter Tenant shall, at Tenant's sole cost
and expense, promptly comply with all present and future laws, orders and
regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the New York Board of Fire
Underwriters, or the Insurance Services Office, or any similar body which shall
impose any violation, order or duty upon Owner or Tenant with respect to the
demised premises, whether or
<PAGE>
not arising out of Tenant's use or manner of use thereof. Tenant shall not do or
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
lability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premisses except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction. Tenant shall not place a load upon any floor of the demised
premises exceeding the floor load per square foot area which it was designed to
carry and which is allowed by law. Owner reserves the right to prescribe the
weight and position of all safes, business machines and mechanical equipment.
Such installations shall be placed and maintained by Tenant, at Tenant's
expense, in settings sufficient, in Owner's judgement, to absorb and prevent
vibration, noise and annoyance.
7. SUBORDINATION
This lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which demised premises are a part and to all
renewals, modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
reasonably request, provided it provides for non-disturbance.
8. TENANT'S LIABILITY INSURANCE PROPERTY LOSS, DAMAGE,
INDEMNITY
Owner or its agents shall not be liable for any damage to
property of Tenant or of others entrusted to employees of the building, nor for
loss of or damage to any property of Tenant by theft or otherwise, nor for any
injury or damage to persons or property resulting from any cause of whatsoever
nature, unless caused by or due to the negligence of Owner, its agents, servants
or employees; Owner or it agents shall not be liable for any damage caused by
other tenants or persons in, upon or about said building or caused by operations
in connection of any private, public or quasi public work. If at any time any
windows of the demised premises are temporarily closed, darkened or bricked up
(or permanently closed, darkened or bricked up, if required by law) for any
reason whatsoever including, but not limited to Owner's own acts, Owner shall
not be liable for any damage Tenant may sustain thereby and Tenant shall not be
entitled to any compensation therefor nor abatement or diminution of rent nor
shall the same release Tenant from its obligations hereunder nor constitute an
eviction. Tenant shall indemnify and save harmless Owner against and from all
liabilities, obligations, damages, penalties, claims, costs and expenses for
which Owner shall not be reimbursed by insurance, including reasonable
attorney's fees, paid, suffered or incurred as a result of any breach by Tenant,
Tenant's agents, contractors, employees, invitees, or licensees, of any covenant
or condition of this lease, or the carelessness, negligence or improper conduct
of the Tenant, Tenant's agents, contractors, employees, invitees or licensees,
unless due to Landlord's gross negligence. Tenant's liability under this lease
extends to the acts and omissions of any sub-tenant, and any agent, contractor,
<PAGE>
employee, invitee or licensee of any sub-tenant. In case any action or
proceeding is brought against Owner by reason of any such claim, Tenant, upon
written notice from Owner, will, at Tenant's expense, resist or defend such
action or proceeding.
9. DESTRUCTION, FIRE AND OTHER CASUALTY
If the demised premises or any part thereof shall be damaged
by fire or other casualty, Tenant shall give immediate notice thereof to Owner
and this lease shall continue in full force and effect except as hereinafter set
forth. Owner and Tenant each hereby releases and waives all right of recovery
above, against the other or any one claiming through or under each of them by
way of subrogation or otherwise. The release and waiver herein referred to shall
be deemed to include any loss or damage to the demised premises and/or to any
personal property, equipment, trade fixtures, goods and merchandise located
therein. Tenant acknowledges that Owner will not carry insurance on Tenant's
furniture and or furnishings or any fixtures or equipment, improvements, or
appurtenances removable by Tenant and agrees that Owner will not be obligated to
repair any damage thereto or replace the same. Tenant hereby waives the
provisions of Section 227 of the Real Property Law and agrees that the
provisions of this Article shall govern and control in lieu thereof.
10. EMINENT DOMAIN
If in whole or any material part of the demised premises shall
be acquired or condemned by Eminent Domain for any public or quasi public use or
purpose, then and in that event, at Tenant's option, to be exercised by a
written notice delivered within thirty (30) days of the taking by Eminent
Domain, the term of this lease shall cease and terminate from the date of title
vesting in such proceeding and Tenant shall have no claim for the value of any
unexpired term of said lease. Tenant shall have the right to make an independent
claim to the condemning authority for the value of Tenant's moving expenses and
personal property, trade fixtures and equipment, provided Tenant is entitled
pursuant to the terms of the lease to remove such property, trade fixtures and
equipment at the end of the term and provided further such claim does not reduce
Owner's award.
11. ASSIGNMENT, MORTGAGE, ETC.
Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign, mortgage or encumber this agreement, nor
underlet, or suffer or permit the demised premises or any part thereof to be
used by others, without the prior written consent of Owner in each instance; not
to be unreasonably withheld. If this lease be assigned, or if the demised
premises or any part thereof be underlet or occupied by anybody other than
Tenant, Owner may, after default by Tenant, collect rent from the assignee,
under-tenant or occupant, and apply the net amount collected to the rent herein
reserved, but no such assignment, underletting, occupancy or collection shall be
deemed a waiver of this covenant, or the acceptance of the assignee, undertenant
or occupant as tenant, or a release of Tenant from the further performance by
Tenant of covenants on the part of Tenant herein contained. The consent by Owner
to an assignment or
<PAGE>
underletting shall not in any wise be construed to relieve Tenant from obtaining
the express consent in writing of Owner to any further assignment or
underletting.
12. ELECTRIC CURRENT - (Deleted)
13. ACCESS TO PREMISES
Owner or Owner's agents shall have the right (but shall not be
obligated) to enter the demised premises in any emergency at any time, and, at
other reasonable times, upon reasonable notice, to examine the same and to make
such repairs, replacements and improvements as Owner may elect to perform in the
premises after Tenant's failure to make repairs or perform any work which Tenant
is obligated to perform under this lease, or for the purpose of complying with
laws, regulations and other directions of governmental authorities. Owner may,
during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. In accessing the demised premises, Landlord shall act so
as to not to significantly interfere with Tenant's business operations and shall
give reasonable prior notice of said access. Throughout the term hereof Owner
shall have the right to enter the demised premises at reasonable hours for the
purpose of showing the same to prospective purchasers or mortgagees of the
building, and during the last six (6) months of the term for the purpose of
showing the same to prospective tenants and may, during said six months period,
place upon the demised premises the usual notices "To Let" and "For Sale" which
notices Tenant shall permit to remain thereon without molestation. If Tenant is
not present to open and permit an entry into the demised premises, Owner or
Owner's agents may enter the same whenever such entry may be necessary or
permissible by master key or forcibly and provided reasonable care is exercised
to safeguard Tenant's property, such entry shall not render Owner or its agents
liable therefor, nor in any event shall the obligations of Tenant hereunder be
affected.
14. VAULT, VAULT SPACE, AREA
No Vaults, vault space or area, whether or not enclosed or
covered, not within the property line of the building is leased hereunder
anything contained in or indicated on any sketch, blue print or plan, or
anything contained elsewhere in this lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant, if used by
Tenant, whether or not specifically leased hereunder.
<PAGE>
15. OCCUPANCY
Tenant will not at any time use or occupy the demised premises
in violation of the certificate of occupancy issued for the building of which
the demised premises are a part. Tenant has inspected the premises and accepts
them as is, subject to the riders annexed hereto with respect to Owner's work,
if any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record. If any governmental license or permit shall be required for the
proper and lawful conduct of Tenant's business, Tenant shall be responsible for
and shall procure and maintain such license or permit.
16. BANKRUPTCY
(a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the debtor; or (2) the making by Tenant
to an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this Lease.
(b) It is stipulated and agreed that in the event of the
termination of this lease pursuant to (a) hereof, Owner shall forthwith,
notwithstanding any other provisions of this lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rental reserved hereunder for the unexpired portion of
the term demised and the fair and reasonable rental value of the demised
premises for the same period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after the date of
termination and the fair and reasonable rental value of the demised premises for
the period for which such installment was payable shall be discounted to the
date of termination at the rate of four percent (4%) per annum. If such premises
or any part thereof be relet by the Owner for the unexpired term of said lease
or any part thereof, before presentation of proof of such liquidated damages to
any court, commission or tribunal, the amount of rent reserved upon such
reletting shall be deemed to be the fair and reasonable rental value for the
part or the whole of the premises so re-let during the term of the re-letting.
Nothing herein contained shall limit or prejudice the right of the Owner to
prove for and obtain as liquidated damages by reason of such termination, 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, such damages are to be
proved, whether or not such amount be greater, equal to, or less than the amount
of the difference referred to above.
<PAGE>
17. DEFAULT
If Tenant defaults in fulfilling its covenant to any rent or
additional rent, and Tenant fails to cure said default, (i) as to the first such
default in any calendar year in the payment of base rent and as to all defaults
in the payment of additional rent, within five (5) days of written notice of
said default and (ii) as to all other defaults in payment of base rent within
ten (10) days of the date on which said payment was due, the Owner may serve a
five (5) day notice of cancellation, and upon the expiration of said five (5)
days this Lease and the term thereunder shall end and expire as fully and
completely as if the expiration of such five (5) day period were the day herein
definitely fixed for the end and expiration of this Lease and the term thereof
and Tenant shall then quit and surrender the demised premises to Owner but
Tenant shall remain liable as hereinafter provided.
(1) If Tenant defaults in fulfilling any of the covenants of
this lease other than the covenants for the payment of rent or additional rent;
or if the demised premises becomes vacant or deserted "or if this lease be
rejected under ss.235 of Title 11 of the US Code (Bankruptcy code);" or if any
execution or attachment shall be issued against Tenant or any of Tenant's
property whereupon the demised premises shall be taken or occupied by someone
other than Tenant; then in any one or more of such events, upon Owner serving a
written thirty (30) days notice upon Tenant specifying the nature of said
default and upon the expiration of said thirty (30) days, if Tenant shall have
failed to comply with our remedy such default, or if the said default or
omission complained of shall be of a nature that the same cannot be completely
cured or remedied within said thirty (30) day period, and if Tenant shall not
have diligently commenced during such default within such thirty (30) day
period, and shall not thereafter with reasonable diligence and in good faith,
proceed to remedy or cure such default, then Owner may serve a written five (5)
days' notice of cancellation of this lease upon Tenant, and upon the expiration
of said five (5) days this lease and the term thereunder shall end and expire as
fully and completely as if the expiration of such five (5) day period were the
day herein definitely fixed for the end and expiration of this lease and the
term thereof and Tenant shall then quit and surrender the demised premises to
Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been
given, and the term shall expire as aforesaid; or if Tenant shall make default
in the payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises and dispossess Tenant by summary proceedings and the legal
representative of Tenant or other occupant of demised premises and remove their
effects and hold the premises as if this lease had not been made, and Tenant
hereby waives the service of notice of intention to re-enter or to institute
legal proceedings to that end.
18. REMEDIES OF OWNER AND WAIVER OF REDEMPTION
In case of any such default, re-entry, expiration and/or
dispossess by summary proceedings or other wise, (A) the rent, and additional
rent, shall become due thereupon and be paid up to the time of such re-entry,
dispossess and/or expiration, (B) Owner may re-let the
<PAGE>
premises or any part or parts thereof, either in the name of Owner or otherwise,
for a term or terms, which may at Owner's option be less than or exceed the
period which would otherwise have constituted the balance of the term of this
lease and may grant concessions or free rent or charge a higher rental than that
in this lease, (C) Tenant or the legal representatives of Tenant shall also pay
Owner as liquidated damages for the failure of Tenant to observe and perform
said Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and or covenanted to be paid and the net amount, if any, of the rents
collected on account of the subsequent lease or leases of the demised premises
for each month of the period which would otherwise have constituted the balance
of the term of this lease. The failure of Owner to re-let the premises or any
part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency such expenses as Owner may incur in connection with re-letting, such
as legal expenses, reasonable attorneys' fees, brokerage, advertising and for
keeping the demised premises in good order. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent day specified in this lease
and any suit brought to collect the amount of the deficiency for any month shall
not prejudice in any way the rights of Owner to collect the deficiency for any
subsequent month by a similar proceeding. Owner, in putting the demised premises
in good order or preparing the same for re-rental may, at Owner's option, make
such alterations, repairs, replacements, and/or decorations in the demised
premises as Owner, in Owner's sole judgment, considers advisable and necessary
for the purpose of re-letting the demised premises, and the making of such
alterations, repairs, replacements, and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Owner shall
in no event be liable in any way whatsoever for failure to re-let the demised
premises, or in the event that the demised premises are re-let, for failure to
collect the rent thereof under such re-letting, and in no event shall Tenant be
entitled to receive any excess, if any, of such net rents collected over the
sums payable by Tenant to Owner hereunder. In the event of a breach or
threatened breach by Tenant of any of the covenants or provisions hereof, Owner
shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other remedies were not
herein provided for. Mention in this lease of any particular remedy, shall not
preclude Owner from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws.
19. FEES AND EXPENSES
If Tenant shall default in the observance or performance of
any term or covenant on Tenant's part to be observed or performed under or by
virtue of any of the terms or provisions in any article of this lease, after
notice if required and upon expiration of any applicable grace period if any,
(except in an emergency), then, unless otherwise provided elsewhere in this
lease, Owner may immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in connection with the
foregoing or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs and obligations for the payment
of money, including but not limited to reasonable attorney's fees, in
instituting, prosecuting or defending any action or proceedings, and prevails in
any such action or proceeding, then Tenant will reimburse Owner for such sums so
paid or obligations incurred with interest and costs. The foregoing expenses
incurred by reason of Tenant's default shall be
<PAGE>
deemed to be additional rent hereunder and shall be paid by Tenant to Owner
within ten (10) days of rendition of any bill or statement to Tenant therefor.
If Tenant's lease term shall have expired at the time of making of such
expenditures or incurring of such obligations, such sums shall be recoverable by
Owner as damages.
20. BUILDING ALTERNATIONS AND MANAGEMENT - (Deleted)
21. NO REPRESENTATIONS BY OWNER
Neither Owner nor Owner's agents have made any representations
or promises with respect to the physical condition of the building, the land
upon which it is erected or the demised premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related to the demised
premises or the building except as herein expressly set forth and no rights,
easements or licenses are acquired by Tenant by implication or otherwise except
as expressly set forth in the provisions of this lease. Tenant has inspected the
building and the demised premises and is thoroughly acquainted with their
condition and agrees to take the same "as is" on the date possession is tendered
and acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in satisfactory condition at the time such possession
was so taken, except as to latent defects. All understandings and agreements
heretofore made between the parties hereto are merged in this contract, which
alone fully and completely expresses the agreement between Owner and Tenant and
any executory agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of it in whole or in part, unless such
executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.
22. END OF TERM
Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Owner the demised premises, free of
debris, in good order and condition, ordinary wear and damages which Tenant is
not required to repair as provided elsewhere in this lease excepted, and Tenant
shall remove all its property from the demised premises subject to the Rider.
Tenant's obligation to observe or perform this covenant shall survive the
expiration or other termination of this lease. If the last day of the term of
this Lease or any renewal thereof, falls on Sunday, this lease shall expire at
noon on the preceding Saturday unless it be a legal holiday in which case it
shall expire at noon on the preceding business day.
23. QUIET ENJOYMENT
Owner covenants and agrees with Tenant that upon Tenant paying
the rent and additional rent and observing and performing all the terms
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 34 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
<PAGE>
24. FAILURE TO GIVE POSSESSION - (Deleted)
25. NO WAIVER
The failure of either party to seek redress for violation of,
or to insist upon the strict performance of any covenant or condition of this
lease, shall not prevent a subsequent act which would have originally
constituted a violation from having all the force and effect of an original
violation. The receipt by Owner of rent with knowledge of the breach of any
covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. All checks rendered to Owner
as and for the rent of the demised premises shall be deemed payments for the
account of Tenant. Acceptance by Owner of rent from anyone other than Tenant
shall not be deemed to operate as an attornment to Owner by the payor of such
rent or as a consent by Owner to an assignment or subletting by Tenant of the
demised premises to such payor, or as a modification of the provisions of this
lease. No act or thing done by Owner or Owner's agents during the term hereby
demised shall be deemed an acceptance of a surrender of said premises and no
agreement to accept such surrender shall be valid unless in writing signed by
Owner. No employee of Owner or Owner's agent shall have any power to accept the
keys of said premises prior to the termination of the lease and the delivery of
keys to any such agent or employee shall not operate as a termination of the
lease or a surrender of the premises.
26. WAIVER OF TRIAL BY JURY
It is mutually agreed by and between Owner and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other (except for personal injury or property damage) on any matters
whatsoever arising out of or in any way connected with the lease, the
relationship of Owner and Tenant, Tenant's use of or occupancy of said premises,
and any emergency statutory or any other statutory remedy. It is further
mutually agreed that in the event Owner commences any proceeding or action for
possession including a summary proceeding for possession of the premises, Tenant
will not interpose any counterclaim of whatever nature or description in any
such proceeding including a counterclaim under Article 4 except for mandatory
counterclaims.
27. INABILITY TO PERFORM
This Lease and the obligation of Tenant to pay rent hereunder
and perform all of the other covenants and agreements hereunder on part of
Tenant to be performed shall in no wise be affected, impaired or excused because
Owner is unable to fulfill any of its obligations under this lease or to supply
or delayed in supplying any service expressly or impliedly to be supplied
<PAGE>
or is unable to make, or is delayed in making any repair, additions, alterations
or decorations or is unable to supply or is delayed in supplying any equipment,
fixtures or other materials if Owner is prevented or delayed from doing so by
reason of strike or labor troubles or any cause whatsoever beyond Owner's sole
control including, but not limited to, government preemption or restrictions or
by reason of any rule, order or regulation of any department or subdivision
thereof of any government agency or by reason of the conditions which have been
or are affected, either directly or indirectly, by war or other emergency.
28. BILLS AND NOTICES
Except as otherwise in this lease provided, a bill statement,
notice or communication which Owner may desire or be required to give to Tenant,
shall be deemed sufficiently given or rendered if, in writing, delivered to
Tenant personally or sent by registered or certified mail addressed to Tenant at
Di Giorgio Corporation, 380 Middlesex Avenue, Carteret, NJ 07008, Attn: Mr.
Richard B. Neff, CFO and EVP, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail or by nationally recognized overnight carrier
addressed to Owner at the address first hereinabove given or at such other
address as Owner shall designate by written notice.
29. WATER CHARGES
(See Rider)
30. SPRINKLERS
Anything elsewhere in this lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the New York Fire
Insurance Exchange or any bureau, department or official of the federal, state
or city government recommend that any changes, modifications, alterations, or
additional sprinkler heads or other equipment be made or supplied in an existing
sprinkler system by reason of Tenant's business, or the location of partitions,
trade fixtures, or other contents of the demised premises, or for any other
reason, or if any such sprinkler system installations, modifications,
alterations, additional sprinkler heads or other such equipment, become
necessary to prevent the imposition of a penalty or charge against the full
allowance for a sprinkler system in the fire insurance rate set by any said
Exchange or by any fire insurance company, Tenant shall, at Tenant's expense,
promptly make such sprinkler system changes, modifications, alterations, and
supply additional sprinkler heads or other equipment as required whether the
work involved shall be structural or non-structural in nature.
31. ELEVATORS, HEAT, CLEANING - (Deleted)
32. SECURITY - (Deleted)
<PAGE>
33. CAPTIONS
The Captions are inserted only as a mater of convenience and
for reference and in no way define, limit or describe the scope of this lease
nor the intent of any provision thereof.
34. DEFINITIONS
The term "Owner" as used in this lease means only the owner,
of the fee or of the leasehold of the building, or the mortgagee in possession,
for the time being of the land and building (or the owner of a lease of the
building or of the land and building) of which the demised premises form a part,
so that in the event of any sale or sales of said land and building or of said
lease, or in the event of a lease of said building, or of the land and building,
the said Owner shall be and hereby is entirely freed and relieved of all
covenants and obligations of Owner hereunder accruing from and after the sale,
and it shall be deemed and construed without further agreement between the
parties or their successors in interest, or between the parties and the
purchaser, at any such sale, or the said lessee of the building, or of the land
and building, that the purchaser or the lessee of the building has assumed and
agreed to carry out any and all covenants and obligations of Owner hereunder
accruing from and after the sale. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to Owner from Tenant under this lease, in addition to the annual
rental rate. The term "business days" as used in this lease, shall exclude
Saturdays, Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.
35. ADJACENT EXCAVATION - SHORING
If an excavation shall be made upon land adjacent to the
demised premises, or shall be authorized to be made, Tenant shall afford to the
person causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which demised premises form a
part from injury or damage and to support the same by proper foundations without
any claim for damages or indemnity against Owner, or diminution or abatement of
rent.
36. RULES AND REGULATIONS - (Deleted)
37. GLASS - (Deleted)
38. ESTOPPEL CERTIFICATE - (Deleted)
39. DIRECTORY BOARD LISTING - (Deleted)
<PAGE>
40. SUCCESSORS AND ASSIGNS
The covenants, conditions and agreements contained in this
lease shall bind and inure to the benefit of Owner and Tenant and their
respective heirs, distributees, executors, administrators, successors, and
except as otherwise provided in this lease, their assigns. Tenant shall look
only to Owner's estate an interest in the land and building for the satisfaction
of Tenant's remedies for the collection of a judgement (or other judicial
process) against Owner in the event of any default by Owner hereunder, and no
other property or assets of such owner (or any partner, member, officer or
director thereof, disclosed or undisclosed), shall be subject to levy, execution
or other enforcement procedure for the satisfaction of Tenant's remedies under
or with respect to this lease, the relationship of Owner and Tenant hereunder,
or Tenant's use and occupancy of the demised premises.
See Rider annexed hereto and made a part hereof.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
FR ACQUISITIONS, INC.
Witness for Owner:
____________________________ By: ______________________________________
DI GIORGIO CORPORATION
Witness for Tenant
____________________________ By: ______________________________________
<PAGE>
ACKNOWLEDGMENTS
CORPORATE TENANT
STATE OF NEW JERSEY s.s.:
County of Middlesex
On this ____ day of February, 1998, before me personally came Lawrence
S. Grossman to me known, who being by me duly sworn, did depose and say that he
is the Vice President of Di Giorgio Corporation , the corporation described in
and which executed the foregoing instrument, as TENANT; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.
--------------------------
<PAGE>
RIDER TO LEASE BETWEEN
FR ACQUISITIONS, INC.,a Maryland corporation,
AS LANDLORD
AND
Di GIORGIO CORP., a Delaware corporation,
AS TENANT
41. RIDER CONTROLS:
In case of a conflict between the provisions of this rider, and the
printed provisions of this lease, the provisions of this rider shall prevail.
42. ADDITIONAL RENT/OPERATING EXPENSES:
Any sums of money required to be paid under this lease by Tenant in
addition to the rent herein provided, shall be deemed "additional rent due and
payable." It shall be paid after demand therefor with the rent next due or as
may be otherwise provided herein. Such additional rent shall be deemed to be and
shall constitute rent hereunder and shall be collectible in the same manner and
with the same remedies as if they had been rents originally reserved herein.
Tenant's obligation to pay additional rent shall survive the earlier termination
and/or expiration of the term of this lease. If Landlord receives from Tenant
any payment less than the sum of the annual rental rate, additional rent, and
other charges then due and owing, Landlord, in its sole discretion, may allocate
such payment in whole or in part to any annual rental rate, any additional rent,
and/or other charge or to any combination thereof. Landlord's failure to deliver
to Tenant a statement showing Tenant liability for additional rent for any
portion of the term of this lease during the term of this lease shall neither
prejudice or waive Landlord's right to deliver any such statement for a
subsequent period or to include in such subsequent period a previous period.
43. LATE CHARGE/RETURNED CHECK CHARGE:
(a) Tenant shall pay a late charge of 5% of any payment of rent or
additional rent or any other sum of money or payment not received by Landlord
within ten (10) days after the same is due. Such late charge shall be in
addition to all of Landlord's other rights and remedies hereunder in the event
of Tenant's default and shall be payable as additional rent.
(b) If any check tendered by Tenant to Landlord is returned by the bank
for non-payment for any reason whatsoever, there will be an administrative
<PAGE>
charge of $25.00 per check, each time it is returned which amount shall be
deemed additional rent.
44. TAXES:
(a) The Tenant shall pay any and all Real Estate Taxes accruing during the
term of this lease for the demised premises directly to the municipality or
governmental authority assessing such Real Estate Taxes before such payment is
due without penalty. Tenant shall provide Landlord with reasonable proof of
payment of any such Real Estate Taxes within twenty (20) days after written
request. If Tenant shall fail to make any such payment prior to the imposition
of penalties, Landlord shall have the right, but not the obligation to pay such
Real Estate Taxes and any payment made by Landlord for such Real Estate Taxes
shall be deemed additional rent under this lease and shall accrue interest at a
per annum fixed rate equal to the Prime Rate plus two (2) percentage points (the
"Interest Rate") from the date paid by Landlord until Tenant shall reimburse
Landlord for such payment. The Prime Rate shall be the "prime rate" announced by
the Chase Manhattan Bank from the time to time.
(b) Real Estate Taxes shall mean any and all taxes, assessments, sewer
and water rents, rates and charges, license fees, impositions, liens, and all
other municipal and governmental charges of any nature whatsoever (except only
inheritance, franchise and estate taxes and income taxes not herein expressly
agreed to be paid by Tenant), whether general or special, ordinary or
extraordinary foreseen or unforeseen which may presently or in the future become
due or payable or which may be levied, assessed or imposed by any taxing
authority against the demised premises, including without limitation, all taxes
and assessments for improving any streets, alleys, sidewalks, sidewalk vaults
and alley vaults, if any.
(c) (i) If required to be paid to the holder of the first mortgage
affecting the demised premises (provided same is not Landlord or an affiliate of
Landlord), Landlord may, at its election, require Tenant to pay estimated
monthly installments, in advance, of Real Estate Taxes which may be next due
under this lease on the first day of each month, as additional rent. Said
installments shall be equal to the estimated Real Estate Taxes next due (as
reasonably estimated by the Landlord) less all installments already paid
therefor, divided by the number of months that are to elapse before one month
prior to the date when such Real Estate Taxes will become due. If Landlord shall
exercise its rights hereunder, Landlord and not Tenant shall then pay the Real
Estate Taxes directly or cause the mortgagee to pay the Real Estate Taxes.
(ii) Any deficiency in the amount of any such aggregate
payment shall constitute a default under this lease entitling Landlord to all
its rights and remedies hereunder as a default in the payment of rent, unless
paid by Tenant within twenty (20) days after notice of such deficiency.
(iii) If the total of the payments made by the Tenant shall
exceed the amount of payments actually made for Real Estate Taxes, such excess
shall be promptly refunded to Tenant by the Landlord provided Tenant is not then
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in default beyond applicable grace period. If, however, said payments made by
the Tenant shall not be sufficient to pay such Real Estate Taxes when same shall
become due and payable, then, within ten (10) days of the notice of the
deficiency from Landlord, the Tenant shall pay to the Landlord any amount
necessary to make up the deficiency. If there shall be a default under any of
the provisions of this lease and an action or proceeding shall be commenced as
herein provided, the Landlord shall be and hereby is, authorized and empowered
to apply, at the time of the commencement of such action or proceeding, or at
any time thereafter, the balance then remaining in the funds accumulated for
Real Estate Taxes as a credit against the rent and additional rent then
remaining unpaid hereunder.
(d) Not used.
(e) Not used.
(f) Landlord shall have the exclusive right to contest or protest the
assessed value of the demised premises and the land and building of which it
forms a part for all periods after the Commencement Date, provided, however,
that if Landlord shall not have commenced such a proceeding within twenty (20)
days after request from Tenant to do so, Tenant may, at its expense and cost,
bring such a proceeding (in Landlord's name, if necessary). In the event that
Landlord commences a tax certiorari proceeding without the consent and not at
the request of Tenant and such tax certiorari proceeding results in an increased
assessment, Tenant will not be responsible for any resulting increase in real
estate taxes.
(g) If as a result of any tax certiorari proceeding, whether previously
settled, now pending or hereafter brought by either Landlord or Tenant, Landlord
shall receive a refund of or credit against future payments of Real Estate Taxes
(after deducting all costs and expenses incurred to collect same), for any year
(i) prior to the Commencement Date or (ii) in which this lease is in full force
and effect and for which Tenant shall have paid the additional rent and annual
rental rate set forth herein, then, provided this lease shall not have been
terminated for Tenant's default, Tenant shall receive 100% of such refund which
shall be pro rated for any partial year in which the term of this lease expires.
This provision shall survive the expiration of the term of this lease. If as a
result of a tax certiorari proceeding Tenant shall receive a refund in Real
Estate Taxes (after deducting all costs and expenses incurred to collect same)
which Landlord is entitled to receive, Tenant shall receive such payment on
behalf of Landlord and pay Landlord such amount promptly after receipt.
45. INSURANCE:
Tenant shall, at its sole cost and expense, at all times during the
term of this lease (and any extensions thereof) obtain and pay for and maintain
in full force and effect the insurance policy or policies described in Schedule
C attached hereto. Certified copies of all insurance policies required pursuant
to this lease (or certificates thereof, in form and substance acceptable to
Landlord), shall be delivered to Landlord not less than five (5) days prior to
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the commencement of the term of this lease. If Tenant fails to submit such
policies or certificates to Landlord within the specified time, or otherwise
fails to obtain and maintain insurance coverages in accordance with this
paragraph, and such failure continues for more than ten (10) days after written
notice from Landlord, then Landlord's sole option, may, but shall not be
obligated to, procure such insurance on behalf of, and at the expense of,
Tenant. Tenant shall reimburse Landlord for such amounts upon demand, it being
understood that any such sums for which Tenant is required to reimburse Landlord
shall constitute additional rent.
46. TENANT TO PROVIDE FINANCIAL STATEMENT:
Tenant agrees that upon request by Landlord or Landlord's Agent, as
defined below, it will furnish to Landlord and to prospective or current
mortgagees of the building, and/or land of which it forms a part, such publicly
filed financial information as such current or prospective mortgagees may
request.
47. NO BROKER:
(a) Each party represents and warrants to the other that no broker has
earned or is otherwise entitled to a commission or finder's fee in connection
with this leasing, except that Ralph Perna shall be entitled to a commission
upon Tenant's exercise of the option granted hereunder, to be paid by Landlord.
Each indemnifying party agrees to indemnify, defend, and hold harmless the other
party for any and all costs, expenses, and liability including legal fees
incurred by the other party as a result of a breach by the indemnifying party of
the aforementioned warranty or any inaccuracy or alleged inaccuracy of the above
representation.
(b) If any lien shall be filed against the demised premises, or the
building of which same is a part, by any broker based upon dealings with an
indemnifying party, such lien shall be discharged by the indemnifying party
within thirty (30) days thereafter, at the indemnifying party's expense, by
payment or by filing the bond required by law.
48. TENANT'S REPAIRS/MAINTENANCE:
(a) TENANT REPAIRS:
(i) Tenant shall, at its expense, throughout the term of this lease, maintain
and preserve, in working order (i.e. the building operational and the roof free
from leaks) and subject to paragraphs ll and 64 hereof, casualty excepted, the
demised premises and the facilities and systems thereof (including, but not
limited to, structural elements including the roof, the demised premises'
parking lot, and the electrical, mechanical, HVAC, and plumbing systems).
Without limiting the generality of the foregoing, Tenant, at its expense, shall
promptly replace or repair all broken doors and broken glass in and about the
demised premises and repair and maintain all sanitary and electrical fixtures
therein. Any repairs or replacements required to be made by Tenant to the
mechanical, electrical, sanitary, HVAC, or other systems of the demised premises
shall be performed by qualified employees or appropriately licensed contractors
4
<PAGE>
approved by Landlord, which approval shall not be unreasonably withheld. All
repairs and replacements shall be made with materials of equal or better quality
than the items being repaired or replaced.
(ii) It is acknowledged by the parties hereto that the
maintenance of the driveways, snow removal, sump (if any), parking areas,
illumination of said parking areas, buffer area, live planting, fencing, and
insuring of the parking area shall be the responsibility of the Tenant.
(iii) Tenant shall supply at its own expense all gas,
electricity, fuel, heat, water, window cleaning and air conditioning.
(iv) To the extent that Requirements of Law (as defined in
paragraph 6), including (I) any requirements pursuant to the Americans with
Disabilities Act and the regulations promulgated thereunder and/or, (II) the
installation of a sprinkler system, require any structural or capital repairs,
the cost of such structural or capital repairs shall be amortized over their
useful life and the resulting monthly payment shall be paid by Tenant as
Additional Rent during the Term as the same may be extended. However, in the
event said repairs are necessitated due to Tenant's Alterations or particular
use of the Premises, Tenant shall bear full and complete responsibility for
same.
(v) If Tenant does not maintain or repair such elements as
provided in this Article, the Landlord may, but shall not be obligated to, after
not less than thirty (30) days additional notice (except in the case of
emergency), provided such period shall be extended if same can not be reasonably
be performed within such 30 day period, for the reasonable period necessary,
therefor, provided Tenant promptly commences same and diligently prosecutes same
to completion, make the necessary repair or cure the defective condition at the
expense of the Tenant and the Tenant shall reimburse Landlord promptly upon
request therefor. The amount of such reimbursement shall be considered
additional rent upon the failure of the Tenant to reimburse Landlord within ten
(10) days of demand thereof.
(b) VANDALISM:
Notwithstanding any contrary provision of this lease, Tenant,
at its expense, shall make any and all repairs including structural repairs to
the demised premises which may be necessitated by any break-in, forcible entry
or other trespass into or upon the demised premises, regardless of whether or
not such entry and damage is caused by the negligence or fault of Tenant or
occurs during or after business hours.
(c) WINDOWS:
Tenant shall, at its own cost and expense, clean and maintain,
including repair or replacement when necessary, all windows in the demised
premises. Tenant shall keep and maintain insurance for all glass in the demised
premises naming Landlord as additional insured.
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(d) REFUSE PICK-UP:
Tenant shall provide for the removal at least biweekly of all
garbage, at its cost and expense and for such purpose obtain a service to pick
up rubbish on a regular basis. Garbage and refuse shall be kept in containers or
dumpsters.
(e) BUILDING CLEANING:
Tenant shall, at its cost and expense, take good care of and
keep clean and free from debris both the interior and exterior area in front of
the demised premises including exterior sidewalks adjacent to the demised
premises.
49. LANDLORD'S REPAIRS:
During the term of this lease, the Landlord shall only be responsible
for structural repairs to the demised premises which shall have been occasioned
by the negligent, willful or intentional acts of omission or commission of the
Landlord, its agents, employees or invitees. Tenant shall promptly give written
notice to Landlord with respect to any damages to the interior or exterior of
the demised premises.
50. LANDLORD'S WORK:
N/A
51. "AS IS," "WHERE IS" CONDITION OF DEMISED PREMISES:
Tenant agrees that Tenant is in occupancy of the demised premises, is
familiar with the condition of the demised premises, and Tenant hereby accepts
the demised premises on an "AS-IS," "WHERE-IS" basis, in its present condition,
subject to all latent and patent defects, damage, and its other conditions,
title defects, encumbrances, liens or title conditions, violations, notices of
violations, real estate taxes, assessments, and all other matters to which
Landlord has agreed to accept or has accepted title to the demised premises from
Tenant as Seller under the Contract (hereinafter defined) or otherwise. Tenant
acknowledges that neither Landlord nor any agent of Landlord ("Agent") nor any
representative of Landlord has made any representation as to the condition of
the demised premises or the suitability of the demised premises for Tenant's
intended use. Tenant represents and warrants that Tenant has made its own
inspection of the demised premises and is not relying on any representation of
Landlord with respect thereto. Neither Landlord nor Agent shall be obligated to
make any repairs, replacements or improvements of any kind or nature to the
demised premises (whether structural or nonstructural and whether or not
involving the roof of the building, the building's heating, ventilating and air
conditioning system, the demised premises' parking lot, or any other component
of the demised premises) in connection with, or in consideration of, this lease.
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52. TENANT RESTRICTIONS:
(a) NOISE/ODORS:
Tenant covenants and agrees that throughout the demised term
it shall not suffer, allow or permit any condition at the demised premises to
constitute a nuisance or other violation of law, including without limitation,
any offensive or obnoxious vibration, noises, odor, or other undesirable effect,
and upon Landlord's notice thereof to Tenant, Tenant shall, within five (5) days
thereof, eliminate or control same. If any such condition is not so remedied
then Landlord may at its discretion either: (a) remedy such condition and any
cost and expense incurred by Landlord therefore shall be deemed additional rent
and paid by Tenant to Landlord together with the next installment of rent due
hereunder, or (b) treat such failure on the part of the Tenant to remedy such
condition as a material default under the provisions of this lease on the part
of the Tenant hereunder, entitling Landlord to any of its remedies, pursuant to
the terms of this lease. In no event, however, shall the Tenant make any
alteration, addition or structural installation in or to the premises or any
parts thereof to remedy or cure such default without the prior written consent
of the Landlord.
(b) TOXIC/HAZARDOUS WASTES:
(i) Tenant shall not cause or permit any Hazardous Material
(as hereinafter defined) to be brought upon, kept or used in or about the
demised premises by Tenant, its agents, employees, contractors or invitees,
except in compliance with all applicable laws and in compliance with all
required or necessary permits, if any. Tenant further covenants and agrees that
it shall not discharge any Hazardous Material in the ground or sewer disposal
system, except in compliance with all applicable laws and in compliance with all
required or necessary permits, if any. If Tenant breaches the obligations stated
in the preceding sentences, or if Tenant's introduction of Hazardous Material on
the demised premises results in contamination of the demised premises or any
other part of the building or land of which it forms a part or if there is such
a discharge during the Term of this Lease, then Tenant shall (A) immediately
give Landlord written notice thereof, and (B) indemnify, defend and hold
harmless Landlord from any and all claims, judgments, damages, penalties, fines,
costs, liabilities or losses (including, without limitation, diminution in value
of the demised premises or the building or land of which it forms a part, loss
or restriction on use of space in the building of land of which it forms a part,
reasonable sums paid in settlement of claims, reasonable attorneys',
consultants' and other expert fees) which arise during or after the term as a
result of such breach, contamination, or discharge. The foregoing
indemnification includes, without limitation, costs incurred in connection with
any required investigation of site conditions or any clean-up, remedial, removal
or restoration work required by any federal, state or local governmental agency
or political subdivision. Without limiting the foregoing, if the presence of any
Hazardous Material within the demised premises caused or permitted by Tenant
results in any contamination of the demised premises or any other part of the
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building or land of which it forms a part, Tenant shall promptly take all
actions at its sole expense as are necessary to return the demised premises or
any other part of the building or land of which it forms a part to the condition
existing prior to the introduction of any such Hazardous Material.
(ii) As used herein, the term "Hazardous Material" means: (A)
asbestos, petroleum products, and polychlorinated biphenyls, and (B) hazardous
or toxic materials, wastes and substances which are defined, determined or
identified as such pursuant to all present and future federal, state or local
laws, rules or regulations and judicial or administrative interpretations
thereof (collectively "Governmental Laws").
(iii) Landlord and its agents shall have the right, but not
the duty, to inspect the demised premises at any reasonable time and upon
reasonable notice to Tenant to determine whether Tenant is complying with the
terms of this Article. If Tenant is not in compliance with the provisions of
this Article, Landlord shall have the right upon five (5) days written notice
(except in the event of an emergency) to immediately enter upon the demised
premises to remedy said noncompliance at Tenant's expense and any expense
incurred by Landlord shall be paid by Tenant upon demand and shall be deemed
additional rent. Landlord shall use reasonable efforts to minimize interference
with Tenant's business.
(iv) Tenant's obligations under this paragraph 52(d) shall
survive the termination of this Lease for any reason.
53. LIMITATION OF LANDLORD'S LIABILITY AND TENANT'S INDEMNIFICATION:
(a) None of Landlord, any managing agent, Superior Parties (as defined
below), or their respective affiliates, owners, partners, directors, officers,
agents and employees (collectively "Landlord's Affiliates") shall be liable to
Tenant for any loss, injury, or damage, to Tenant or to any other person, or to
its or their property, irrespective of the cause of such injury, damage or loss,
unless caused by, or resulting from, the negligence or willful acts or omissions
of Landlord, or its agents, servants or employees in the operation or
maintenance of the demised premises (subject, however, to the doctrine of
comparative negligence in the event of negligence on the part of Tenant or any
of its contractors). Further, none of Landlord or Landlord's Affiliates, shall
be liable (i) for any such damage caused by other persons in, upon or about the
demised premises, or caused by operations in construction of any private, public
or quasi-public work; or (ii) with respect to matters for which Landlord is
liable, for consequential or indirect damages purportedly arising out of any
loss of use of the demised premises or any equipment or facilities therein by
Tenant or any person claiming through or under Tenant.
(b) Tenant hereby indemnifies, defends, and holds Landlord and all
Landlord Affiliates harmless from and against any and all claims, judgments,
liens, causes of action, liabilities, damages, costs, losses and expenses
(including, but not limited to reasonable legal, engineering and consulting fees
of engineers, attorneys and consultants selected by Landlord) arising from or in
connection with (i) the conduct or management of the demised premises or any
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business therein, or any work or Alterations done, or any condition created
(other than by Landlord or Landlord's Affiliates or Agents) in or about the
demised premises during either or both of the term of this lease and the period
of time, if any, prior to the Commencement Date that Tenant may have been given
access to the demised premises pursuant to this Lease, including any and all
mechanics and other liens and encumbrances; (ii) any act, omission or negligence
of Tenant or any of its subtenants or licensees or their partners, directors,
officers, agents, employees, invitees or contractors; (iii) any accident, injury
or damage whatsoever (unless caused by Landlord's gross negligence or willful
acts or those of its Affiliates or Agents) occurring in, at or upon the demised
premises; (iv) any breach or default by Tenant in the full and prompt payment
and performance of Tenant's obligations under this lease; (v) any breach by
Tenant of any of its warranties and representations under this lease; and (vi)
any actions necessary to protect Landlord's interest under this lease in a
bankruptcy proceeding or other proceeding under the Bankruptcy Code. In case any
action or proceeding is brought against Landlord or any Landlord Affiliate by
reason of any such claim, Tenant, upon notice from any or all of Landlord, Agent
or any Superior Party (hereinafter defined), shall resist and defend such action
or proceeding. Tenant's obligations under this Paragraph 53(b) shall survive the
termination of this Lease for any reason.
(c) The obligations of Tenant hereunder shall not be affected, impaired
or excused, and Landlord shall have no liability whatsoever to Tenant, with
respect to any act, event or circumstance arising out of (i) Landlord's failure
to fulfill, or delay in fulfilling any of its obligations under this lease by
reason of labor dispute, governmental preemption of property in connection with
a public emergency or shortages of fuel, supplies, or labor, or any other cause,
whether similar or dissimilar, beyond Landlord's reasonable control; or (ii) any
failure or defect in the supply, quantity or character of utilities furnished to
the demised premises, or by reason of any requirement, act or omission of any
public utility or others serving the demised premises beyond Landlord's
reasonable control. Tenant shall not hold Landlord or Agent liable for any
latent defect in the demised premises, nor shall Landlord be liable for injury
or damage to person or property caused by fire, or theft, or resulting from the
operation of heating or air conditioning or lighting apparatus, or from falling
plaster, or from steam, gas, electricity, water, rain, snow, ice, or dampness,
that may leak or flow from any part of the demised premises, or from the pipes,
appliances or plumbing work of the same. Tenant agrees that under no
circumstances shall Landlord be liable to Tenant for any loss of, destruction
of, damage to or shortage of any property; including, but not limited to,
Tenant's Property, unless caused by Landlord's gross negligence, willful acts or
omissions or those of its Affiliates or Agents.
(d) Notwithstanding anything to the contrary contained in this lease,
the liability of Landlord and Landlord's Affiliates (and of any Successor
Landlord hereunder) to Tenant shall be limited to the interest of Landlord in
the demised premises, and Tenant agrees to look solely to Landlord's interest in
the demised premises for the recovery of any judgment or award against Landlord
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and Landlord's Affiliates, it being intended that Landlord and Landlord's
Affiliates shall not be personally liable for any judgment or deficiency.
54. UTILITIES:
Notwithstanding anything previously written anywhere in this lease,
Tenant shall bear the cost and expense of the following services and utilities
supplied to the demised premises, to the extent incurred during or otherwise
attributable to the Term or to Tenant's use or occupancy of the demised
premises:
(a) all electricity in and about the demised premises;
(b) fuel for heating purposes in and about the demised
premises;
(c) water and sewer charges assessed against the demised
premises; and
(d) all other utilities and services delivered or otherwise furnished
to or for the demised premises.
55. TENANT'S FAILURE TO VACATE:
In the event the Tenant does not vacate the demised premises upon the
expiration date of this lease, or upon the expiration of any extension or
renewal thereof, then and in that event the Tenant shall remain as a month to
month Tenant at a monthly rental equal to one hundred and fifty (150%) percent
of the monthly rent payable for the month immediately preceding the end of the
Term, plus all additional rent due under this lease for any such holdover period
and Tenant shall also remain liable for all real estate taxes, insurance and
utilities. The acceptance by the Landlord of such rental after the expiration
date of this lease shall not be construed as consent to such continued
occupancy.
56. ASSIGNMENT/SUBLET:
Tenant covenants that it shall not assign this lease nor sublet the
demised premises or any part thereof without the prior written consent of
Landlord in each instance. Tenant may, without the consent of Landlord, assign
or sublet all or any portion of its leasehold to an Affiliate under common
control with Tenant or to a successor entity incident to a merger or
consolidation or to the Purchaser of substantially all of Tenant's assets.
Landlord shall not unreasonably withhold its consent to a proposed
assignment or sublet, provided:
(a) Such assignment or sublease shall be for a use which is in
compliance with the then existing zoning regulations and the Certificate of
Occupancy for the demised premises or the building, and consistent with the use
hereinabove set forth;
(b) At the time of such assignment or subletting, Tenant shall not be
in default under the terms, covenants, agreements and conditions of this Lease;
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(c) In addition to any other sums payable hereunder, Landlord shall be
entitled to and Tenant shall promptly remit to Landlord, fifty percent (50%) of
(i) any consideration received by Tenant as a result of any assignment of its
leasehold interest and/or (ii) the difference between the rent payable by any
subtenant and the rent payable under this Lease, in each case net of Tenant's
reasonable costs of preparing the demised premises for the assignee or
subtenant, reasonable attorneys fees incurred in connection with preparing the
assignment or sublet documents and reasonable brokerage commissions paid to an
independent, licensed real estate broker.
(d) In the event of an assignment, the assignee must assume in writing
the performance of all of the terms, covenants, conditions, agreements and
obligations of the within lease;
(e) A duly executed duplicate original of said assignment or sublease
must be delivered by Certified Mail, Return Receipt Requested to the Landlord at
the address herein set forth not less than ten (10) days before the date of said
assignment or sublease;
(f) Such assignment or subletting shall not, however, release the
within Tenant from its liability for the full and faithful performance of all of
the terms, covenants, agreements, and conditions of this lease, including the
payment of rent and additional rent;
(g) If this lease shall be assigned, or if the demised premises or any
part thereof be sublet, underlet or occupied by anyone other than Tenant,
Landlord may after default by Tenant, collect rent from the assignee, subtenant,
undertenant or occupant, and apply the net amount collected to the rent herein
reserved or additional rent due hereunder.
(h) A request for Landlord's consent to a proposed assignment or
proposed sublet shall be deemed Tenant's offer to terminate this lease as of the
last day of the calendar month during the term hereof immediately preceding the
commencement of such sublease or the effective date of such assignment and to
vacate and surrender the demised premises to Landlord on the date fixed in the
notice. If Landlord within ten (10) business days after the receipt thereof has
not accepted in writing the offer by Tenant to cancel and terminate said lease
and to vacate and surrender the demised premises, the lease shall remain in full
force and effect and Landlord shall not unreasonably withhold its consent to the
proposed assignment or sublet. This subparagraph (i) shall not apply to an
assignment or sublet to a parent or other affiliate.
(i) As additional security for the prompt payment of the rent herein
reserved to Landlord, and for the faithful performance and punctual observance
of all the other terms, covenants, agreements, and conditions herein contained,
Tenant hereby assigns to Landlord all of Tenant's rights, title, and interest in
and to any sublease which may be made by Tenant affecting the demised premises,
or any part thereof, and in and to the rents due or to become due under the
terms of any such sublease. The aforesaid assignment shall take effect, however,
only in the event of any default hereunder made or suffered by Tenant and after
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written notice given by Landlord to the subtenant or subtenants, as the case may
be, and shall take effect as to such of said subleases as Landlord shall elect
to continue in full force and effect.
57. COMMENCEMENT DATE:
In the event that the term of this lease commences or ends on a date
other than the first or last of the month, the rent for that month shall be
prorated.
58. TERMINATION:
At the expiration of the term of this Lease or upon the early termination of
this Lease, Tenant shall deliver to Landlord any and all equipment belonging to
Landlord in working condition, reasonable wear and tear excepted, including
equipment installed or replaced by the Tenant. In no event shall Tenant remove
any of the following materials or equipment without Landlord's prior written
consent: any power wiring or power panels, lighting or lighting fixtures, wall
or window coverings, carpets or other floor coverings, heaters, air conditioners
or any other heating or air conditioning equipment, fencing or security gates,
or other similar building operating equipment and decorations. However, Tenant,
shall have the right to and shall, upon request by Landlord prior to the
termination of this lease, shall remove all personal property of Tenant, its
movable business and trade equipment (including, without limitation, its racks,
and signs prior to the Expiration Date, and upon removal, Tenant shall repair
and restore any damage due to such removal and restore the demised premises to a
usable condition (as to the racks, Tenant shall cut all related bolts and file
or otherwise level them even with the flooring) and a condition substantially in
conformity with that of the remaining areas of the demised premises. With
respect to its Racks and its refrigeration and freezer equipment only, Tenant
shall have up to forty-five (45) days after the end of the Term to remove same,
provided that Tenant shall have no right to use, occupy or possess the demised
premises during said 45 day period except as may be necessary to remove its
racks and its refrigeration and freezer equipment and provided, further, that
Tenant in removing its racks and its refrigeration and freezer equipment, shall
make all reasonable efforts necessary to minimize interference with the efforts
of Landlord or any successor Tenant attempting to install tenant improvements or
otherwise to prepare the demised premises for occupancy by another party.
Tenant, may, but shall not be obligated to remove its refrigeration and freezer
equipment from the demised premises as permitted above.
59. ESTOPPEL CERTIFICATES:
Either party shall, from time to time and within ten (10) days after
any request by the other party, execute and deliver to the requesting party (and
to any other party designated by the requesting party), a statement: (i)
certifying that this lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications); (ii) certifying the dates to which the
rent has been paid; (iii) stating whether the requesting party is in default in
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performance of any of its obligations under this lease, and, if so, specifying
each such default; (iv) stating whether any event has occurred which, with the
giving of notice or passage of time, or both, would constitute such a default,
and, if so, specifying each such event; and (v) stating whether any substantial
rights of the non-requesting party (e.g., options) have been waived. Any such
statement delivered pursuant hereto shall be deemed a representation and
warranty to be relied upon by the party requesting the certificate and by others
with whom the requesting party may be dealing, regardless of independent
investigation. The non-requesting party also shall include in any such
statements such other information concerning this lease as the requesting party
may reasonably request.
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60. DEFAULT:
It is specifically understood and agreed that if either party commences
a Summary Proceeding or any other action against the other party due to any
violation and/or defaults by the other party in the observance or performances
of the terms, covenants, conditions or agreements to be performed or observed by
the other party under this Lease, the prevailing party shall bear the cost of
the other party's reasonable attorney fees.
61. MISCELLANEOUS:
(a) This instrument contains the entire and only agreement between the
parties with respect to the leasing of the demised premises. No oral statements
or representations or prior written matter not contained herein shall have any
force or effect.
(b) This lease shall not be modified, changed, or amended in any way or
except by a writing subscribed by both parties.
(c) Any reference in the printed portion of this lease to the City of
New York and the Administrative Code of the City of New York shall, where
applicable, be deemed to refer to the ordinances, rules and regulations of the
county, town, village and other governmental authorities with jurisdiction over
the demised premises.
(d) If any term or provision of this lease or the application thereof
to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this lease, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term and
provision of this lease shall be valid and enforced to the fullest extent
permitted by law.
(e) This agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(f) Neither this lease nor any memorandum hereof shall be recorded
without Landlord's prior written consent.
(g) Each provision of this Lease which requires the consent or approval
of a party shall be deemed to require the same in each instance in which such
provision may be applicable. Any consent or approval by a party to or of any act
or omission by the other party requiring consent or approval shall not be deemed
to waive any future requirement for such consent or approval to or of any
subsequent similar act or omission.
(h) This lease shall not be construed more strictly against one party
than against the other merely by virtue of the fact that it may have been
prepared by counsel for one of the parties, it being recognized that both
Landlord and Tenant have contributed substantially and materially to the
preparation of this lease. To the headings of various Articles in this lease are
for convenience only, and are not to be utilized in construing the content or
meaning of the substantive provisions hereof.
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62. ALTERATIONS:
(a) Tenant may, from time to time, at its expense, make alterations or
improvements in and to the demised premises (hereinafter collectively referred
to as "Alterations"), provided that with respect to any alterations the cost of
which exceeds $50,000.00 in the aggregate in any calendar year, Tenant first
obtains the written consent of Landlord in each instance. Landlord's consent to
Alterations shall not be unreasonably withheld, provided that: (i) the
Alterations are non-structural and the structural integrity of the demised
premises shall not be impacted, (ii) the Alterations are to the interior of the
demised premises; (iii) the proper functioning of the mechanical, electrical,
heating, ventilating, air-conditioning ("HVAC"), sanitary and other service
systems of the demised premises shall not be impacted and the usage of such
systems by Tenant shall not be increased beyond their capacity; (iv) Tenant
shall have appropriate insurance coverage reasonably satisfactory to Landlord
regarding the performance and installation of the Alterations; (v) the
Alterations shall conform with all other requirements of this lease; and (vi)
Tenant shall have provided Landlord with detailed plans (the "Plans") for such
Alterations in advance of requesting Landlord's consent. Additionally, after
obtaining Landlord's preliminary consent to the Plans, but before proceeding
with any Alterations, Tenant shall, at its expense, obtain all necessary
governmental permits and certificates for the commencement and prosecution of
Alterations and shall submit to Landlord, drawings, plans and specifications
conforming to and consistent with the plans, and all permits for the work to be
done.
(b) Tenant shall cause the Alterations to be performed in compliance
with all applicable permits, laws and requirements of public authorities, and
with Landlord's reasonable rules and regulations or any other conditions and
restrictions that Landlord may have imposed as a condition to granting its
consent to the Alterations. Tenant shall cause the Alterations to be diligently
performed in a good and workmanlike manner, using new materials and equipment at
least equal in quality and class to the standards for the demised premises
established by Landlord. Tenant shall obtain all necessary permits and
certificates for final governmental approval of the Alterations and shall
provide Landlord with "as built" plans, copies of all construction contracts,
governmental permits and certificates and copies of paid final lien waivers.
(c) Tenant shall pay when due all claims for labor and material
furnished to the demised premises in connection with the Alterations. Tenant
shall not permit any mechanics or materialmen's liens to attach to the demised
premises or Tenant's leasehold estate. Tenant, at its expense, shall procure the
satisfaction or discharge of record of all such liens and encumbrances within
thirty (30) days after the filing thereof. In the event Tenant has not so
performed, Landlord may, at its option, pay and discharge such liens and Tenant
shall be responsible to reimburse Landlord, on demand, for all costs and
expenses incurred in connection therewith, together with interest thereon at the
rate of 18% per annum, which expenses shall include reasonable fees of attorneys
of Landlord's choosing, and any costs in posting bond to effect discharge or
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release of the lien as an encumbrance against the demised premises. Any sums due
from Tenant pursuant to the preceding sentence shall constitute additional rent
under this lease.
63. LIEN PROHIBITION:
Nothing contained in this lease shall be deemed to be, or construed in
any way as constituting, the consent of Landlord to any person for the
performance of any labor or the furnishing of any materials at or to the demised
premises or the building and land of which the demised premises are a part, nor
as giving Tenant any right, power or authority to contract or permit the
performance of any labor or the furnishing of any material which might give rise
to the right to record or file a lien against the demised premises or the real
property of which the demised premises are a part or against the interests
therein of Landlord or Tenant, it being intended that all persons who may
perform any labor or furnish any materials to Tenant at the demised premises
shall look only to the credit of Tenant and such security as Tenant may furnish
to such persons for the payment of all such labor and materials. Landlord does
not consent to the recording or filing of any mechanics' or other liens against
the leased premises or the real property of which the demised premises are a
part or the interest of Landlord or Tenant therein.
64. FURTHER RE: CASUALTY:
(a) Notification. Tenant shall give prompt notice to Landlord of (i)
any fire or other casualty in the demised premises, and (ii) any damage to or
defect in any part or appurtenance of the demised premises' sanitary,
electrical, HVAC, elevator or other systems located in or passing through the
demised premises or any part thereof.
(b) Repair Provisions. If the demised premises are damaged by fire or
other insured casualty, Tenant shall repair or cause to be repaired the damage
and restore and rebuild the demised premises with reasonable dispatch in order
to restore the demised premises as nearly as practicable to a condition and fair
market value not less than the condition required to be maintained and fair
market value thereof, immediately prior to such casualty. All such repair or
restoration work shall be undertaken and completed in a good and workmanlike
manner and in compliance with all applicable laws, codes, ordinances and
recorded instruments, without regard to the sufficiency or immediate
availability of insurance proceeds attributable to such damage, and Tenant shall
repair the damage to and restore and repair Tenant's Property, with reasonable
dispatch after such damage or destruction. All such work by Tenant shall be
deemed Alterations for the purposes of this lease.
(c) To the foregoing, notwithstanding, following any substantial
casualty or other damage, Tenant may terminate this Lease in accordance and in
compliance with the provisions of paragraph "70" hereof, provided that, in such
event only, Tenant shall assign to Landlord all insurance proceeds resulting
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from such casualty and shall thereafter remain liable for all Rents, Additional
Rents, Real Estate Taxes and Insurance Premiums, as provided in paragraph "70".
(d) No Rental Abatement. Any damage by fire or other casualty caused to
the demised premises notwithstanding, Tenant shall remain fully liable for rent
and all additional rent without abatement, setoff reduction of any kind and
shall remit said sums in accordance with the terms of this Lease.
(e) Tenant hereby expressly waives the provisions of Section 227 of the
Real Property Law and agrees that the foregoing provisions of this paragraph
shall govern and control in lieu thereof.
65. NOTICES:
Any notice required to be given by either party pursuant to this lease,
shall be in writing and shall be deemed to have been properly given, rendered or
made only if personally delivered, or if sent by Federal Express or other
comparable commercial overnight delivery service, addressed to the other party
at the addresses set forth below (or to such other address as Landlord or Tenant
may designate to each other from time to time by written notice), and shall be
deemed to have been given, rendered or made on the day so delivered or on the
first business day after having been deposited with the courier service:
If to Landlord: FR Acquisitions, Inc.
311 South Wacker Drive, Suite 4000
Chicago Illinois 60606
Att: Mr. Johannson Yap and
Mr. Scott McGregor
With a copy to its
Regional Office: First Industrial
575 Underhill Boulevard
P. O. Box 830
Syosset, New York 11791
Att: Mr. Jan Burman,
Sr. Regional Director
With a copy to: Barack, Ferrazzano, Kirschbaum &
Perlman
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
Att: Howard Nagelberg and
Suzanne Bessette-Smith
With an additional
copy to: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of Americas
New York, New York 10036
Att: Miles M. Borden, Esq.
If to Tenant: Di Giorgio Corporation
380 Middlesex Avenue
Carteret, New Jersey 07008
Att: General Counsel
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With a copy to: Di Giorgio Corporation
380 Middlesex Avenue
Carteret, New Jersey 07008
Att: Chief Financial Officer
66. NET LEASE:
This is an absolutely net lease, and, except as otherwise specifically
provided herein, this lease shall not terminate nor shall Tenant have any right
to terminate this lease except as provided in paragraph "70" or paragraph "64";
nor shall Tenant be entitled to any abatement, deduction, deferment, suspension
or reduction of, or setoff, defense or counterclaim against, any rentals,
charges, or other sums payable by Tenant under this lease; nor shall the
respective obligations of Landlord and Tenant be otherwise affected by reason of
damage to or destruction of the demised premises from whatever cause, any taking
by condemnation or eminent domain, the lawful or unlawful prohibition of
Tenant's use of the demised premises, the interference with such use by any
persons, corporations or other entities unrelated to Landlord, it being the
intention that the obligations of Landlord and Tenant hereunder shall be
separate and independent covenants and agreements and that the annual rental,
additional rent and all other charges and 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 of this lease; and Tenant
covenants and agrees that it will remain obligated under this lease in
accordance with its terms, and that it will not take any action to terminate,
cancel, rescind or void this lease, notwithstanding the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Landlord or any assignee of, or successor to,
Landlord, and notwithstanding any action with respect to this lease that may be
taken by a trustee or receiver of Landlord or any assignee of, or successor to,
Landlord or by any court in any such proceeding.
67. LANDLORD'S TITLE:
Tenant acknowledges that Tenant transferred title to the demised
premises to Landlord on the date hereof pursuant to a contract of sale dated
February , 1998 ("Contract") and, accordingly, Tenant shall, during the term of
this lease:
(a) remain responsible for complying, at its expense, subject, however,
to Paragraph 48(a)(iv) in respect of any required alteration or addition to the
demised premises, with the Americans with Disabilities Act of 1990 (42 U.S.C.
ss.ss.12101 et. seq.) and the regulations promulgated thereunder (the "ADA"),
insofar as the ADA relates to the demised premises. Tenant shall indemnify,
defend and hold harmless Landlord from and against all loss, cost, damage or
expense (including, without limitation, reasonable attorneys' fees and
disbursements) which result from any claim arising out of Tenant's use during
the term that the demised premises does not comply with the ADA or the
guidelines set forth therein, whether or not Tenant uses the demised premises as
a "place of public accommodation" (as defined in the ADA).
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68. RENT PAYMENTS:
All rent and additional rent and all other sums and charges due under
this lease, shall be paid to Landlord in accordance with the payment directions
attached hereto as Schedule C or pursuant to such other directions as Landlord
shall designate in this lease or otherwise.
69. SUBORDINATION AND ATTORNMENT:
(a) This lease, and all rights of Tenant hereunder, are subject and
subordinate to all ground leases of the land and building of which the demised
premises forms a part (the "Property") now or hereafter existing and to the lien
of all mortgages or trust deeds or deeds of trust and all renewals,
modifications, replacements and extensions thereof; and to all "Spreaders" and
consolidations thereof (all of which are hereafter referred to collectively as
"Mortgages"), that may now or hereafter affect or encumber all or any portion of
Landlord's interest in the Property. This subordination shall apply to each and
every advance made, or to be made, under such Mortgages. This paragraph shall be
self-operative and no further instrument of subordination shall be required,
however, in confirmation of such subordination, Tenant shall, from time to time,
execute acknowledge and deliver any instrument that Landlord may, from time to
time, reasonably require in order to evidence or confirm such subordination
provided that any such instrument shall provide non-disturbance protection for
Tenant. Tenant acknowledges that this lease and the rents due under this lease
have been (and, in the future, may be) assigned by Landlord to a Superior
Mortgagee (defined below) as additional collateral security for the loans
secured by the Superior Mortgage (defined below) held by such Superior
Mortgagee. Any ground lease to which this Lease is subject and subordinate is
hereafter referred to as a "Superior Lease", the Lessor under a Superior Lease
is hereinafter referred to as a "Superior Lessor," and the lessee thereunder, a
"Superior Lessee" and any Mortgage to which this Lease is subject and
subordinate is hereinafter referred to as a "Superior Mortgage" and the holder
of a Superior Mortgage is hereinafter referred to as a Superior Mortgagee.
(b) In the event that Landlord breaches or otherwise fails to timely
perform any of its obligations under this lease, Tenant shall give, by
registered or certified mail, return receipt requested, written notice of such
alleged breach or default to Landlord and to each Superior Mortgagee and
Superior Lessor whose name and address shall previously have been furnished, in
writing, to Tenant. Any or all of Landlord, a Superior Mortgagee or Superior
Lessor may remedy or cure such breach or default within thirty (30) days
following the giving of such notice; provided, however, that said thirty (30)
day cure period shall be automatically extended in the event that the breach or
default cannot, by its nature, be cured within thirty (30) days and one or more
of Landlord, the Superior Mortgagee or the Superior Lessor is diligently
proceeding to cure said default.
(c) If any Superior Lessor or Superior Mortgagee (whether by receiver
or otherwise) shall succeed to the rights of Landlord hereunder or comes into
possession of the Property or any part thereof, then, at the request of such
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party (hereinafter referred to as a "Successor Landlord"), Tenant shall attorn
to and recognize each Successor Landlord as Tenant's landlord under this lease
and shall promptly execute and deliver any instrument such Successor Landlord
may reasonably request to further evidence such attornment. Tenant hereby
acknowledges that in the event of such succession, then from and after the date
on which the Successor Landlord acquires Landlord's rights and interest under
this lease (the "Succession Date"), the rights and remedies available to Tenant
under this Lease with respect to any obligations of any Successor Landlord shall
be limited to the equity interest of the Successor Landlord in the Property; and
the Successor Landlord shall not (i) be liable for any act, omission or default
of Landlord or other prior lessor under this lease if and to the extent that
such act, omission or default occurs prior to the Succession Date; (ii) except
as required under Paragraphs 49 and Paragraph 9 of this lease, be required to
make or complete any tenant improvements or capital improvements or to repair,
restore, rebuild or replace the demised premises or any part thereof in the
event of damage casualty or condemnation; or (c) be required to pay any amounts
to Tenant that are due and payable, under the express terms of this lease, prior
to the Succession Date. Additionally, from and after the Succession Date,
Tenant's obligation to pay the annual rental rate or additional rent or any
other sum due the Landlord under this lease, shall not be subject to any
abatement, deduction, set-off or counterclaim against the Successor Landlord
that arises as a result of, or due to, a default of Landlord or any other lessor
that occurs prior to the Succession Date. Moreover, no Successor Landlord shall
be bound by any advance payments of the annual rental rate or additional rent or
any other sum due the Landlord under this lease made prior to the calendar month
in which the Succession Date occurs nor by any Security that is not actually
delivered to, and received by, the Successor Landlord. To the provisions of this
Paragraph 69(c) shall be self operative upon demand of such Superior Lessor or
Superior Mortgage and no further instrument shall be required to give effect to
such provisions.
70. TENANT'S RIGHT TO CANCEL:
(a) Notwithstanding anything to the contrary herein, Tenant shall have
the right and option to cancel this lease, subject to the conditions described
below in paragraph 70(b) provided that the Tenant shall serve a written notice
to such effect upon Landlord by certified mail, return receipt requested not
less than sixty (60) days before the proposed date of cancellation ("Effective
Date"). If Tenant shall exercise such option, this lease and the term hereof
shall expire and terminate on such Effective Date with the same effect as if
that were the date originally set forth herein for the expiration of the term
hereof, and Tenant shall vacate and surrender the demised premises to Landlord,
in the manner and condition required by this lease, on or before such date as if
such date were the date originally set forth herein for the expiration of the
term hereof.
(b) The above described right of cancellation shall be effective and
binding on Landlord if and only if:
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(i) such notice is sent by the Tenant named herein, such right
being personal to such Tenant and not transferable to any assignee or subtenant.
(ii) Tenant shall not be in default under any of the terms,
covenants, conditions, and provisions of this lease at the time of any such
notice or on the Effective Date, beyond applicable notice and grace period, if
any.
(iii) Tenant shall remit to Landlord, simultaneous with its
delivery of the aforesaid notice, a lump sum payment equal to all Rent and
Additional Rent due under the Lease through the expiration of the Term and
Tenant shall thereafter remit to Landlord, on an as accrued basis, all real
estate taxes and insurance premiums relating to the demised premises during the
remainder of the Term provided Landlord continues to own the premises. Except as
provided in this paragraph 70 and in paragraph 64(c), if applicable, following
the Effective Date, Tenant shall have no other or further obligations with
respect to the Lease or the demised premises.
(c) If and only if, Landlord lets the Premises to another tenant for
all or a portion of the remaining Term of this Lease, and provided Tenant has
remitted to Landlord all of the sums required under the terms of this paragraph
"70", then within thirty (30) days of the end of this Lease (without taking into
consideration, for purposes of setting this date, Tenants prior cancellation)
Landlord shall remit to Tenant, after deducting all "reletting" expenses, the
aggregate amount of any base rent and additional rent (for real estate taxes and
insurance premiums only) collected up to a maximum of the amount remitted to
Landlord by Tenant incident to its cancellation under this paragraph "70". For
purposes of this paragraph, reletting expenses shall include all related
broker's commissions, advertising costs, tenant improvements, maintenance, rent
concessions, repairs to the premises, legal fees and other related costs.
71. NO NEW CONTRACTS:
During the term of the Lease, Tenant shall not enter into any Contract,
agreement or arrangement for the provision of goods or services to be performed,
delivered at or otherwise benefitting the Premises, which shall survive the term
of the lease unless same may be terminated by Tenant or its successor on no more
than 30 days notice.
72. OPTION TO RENEW:
So long as no Default shall have occurred and be continuing on either
the last day of the initial term or on the day Tenant purports to exercise the
option granted by this paragraph, Tenant may elect to extend and renew the term
for one (1) additional term of five (5) years (the "Option Term"). Such election
shall be exercised by Tenant giving Landlord written notice not less than one
hundred eighty (180) days prior to the expiration of the initial term. Time will
be of the essence with respect to the giving of notice by Lessee of its election
to extend the term. The Rent payable during the Option Term shall be as set
forth on Schedule A and all other terms of this Lease shall continue in full
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force and effect throughout the Option Term, except that Tenant shall have no
further option to extend or renew this Lease.
FR ACQUISITIONS, INC., a
Maryland Corporation
By:
Name:
Title:
Di GIORGIO CORP., a Delaware
corporation
By: /s/ Lawrence S. Grossman
Name: Lawrence S. Grossman
Title: Vice President
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SCHEDULE "A"
RENTAL SCHEDULE
COMMENCEMENT DATE: Date of closing of the Contract.
EXPIRATION DATE: To the last day of the Second Lease Year
or earlier upon default or otherwise as
provided in this Lease.
OPTION PERIOD: Five (5) years from the expiration of the
initial Term, if and only if Tenant duly
and timely exercises its renewal option
in accordance with the terms of the
Lease.
LEASE YEAR: The term "Lease Year" shall mean a period of time
conforming to the following: The first "Lease
Year" of the term of this lease shall mean the
period beginning on the Commencement Date and
ending on the date 12 months after the Commencement
Date, the second Lease Year of the term of this
lease shall commence on the day following the last
day of the first Lease Year and end l2 months
thereafter.
TERM MONTHLY ANNUALLY
---- ------- --------
FIRST LEASE YEAR $127,125.00 $1,525,500.00
SECOND LEASE YEAR $127,125.00 $1,525,500.00
FIRST OPTION YEAR $137,295.00 $1,647,540.00
SECOND OPTION YEAR $137,295.00 $1,647,540.00
THIRD OPTION YEAR $137,295.00 $1,647,540.00
FOURTH OPTION YEAR $137,295.00 $1,647,540.00
FIFTH OPTION YEAR $137,295.00 $1,647,540.00
<PAGE>
SCHEDULE "B"
RENT PAYMENT DIRECTIONS
MAILING DIRECTIONS:
Rent sent through the U.S. Postal Service (other than by overnight delivery)
shall be addressed as follows:
FIRST INDUSTRIAL, L.P.
P.O. BOX 13581
NEWARK, NEW JERSEY 07188-3581
COMMERCIAL OVERNIGHT
DELIVERY DIRECTIONS:
Rent sent by a commercial overnight delivery service such as Federal Express,
UPS, First Priority Overnight Mail or other comparable overnight delivery
service shall be addressed as follows:
Northern Trust Company
801 South Canal
4th Floor
Receipt & Dispatch
Chicago, Illinois 60607
Attn: First Industrial, L.P.
Lock Box No. 75631
NOTE: ALL CHECKS SHOULD BE MADE PAYABLE TO FIRST INDUSTRIAL, L.P.
<PAGE>
LEASE SCHEDULE "C"
REQUIRED INSURANCE
(a) "All-Risk" Property and Loss of Income Coverage for Tenant's
Property. "All Risk" (including without limitation earthquake and flood) (i)
property insurance on a replacement cost basis, covering all structural and
non-structural elements of the building which forms a part of the demised
premises, all alterations, building systems, fixtures, whether or not attached
to, or built into, the demised premises, which are installed in the demised
premises, all in an amount not less than the full replacement cost of all such
property and providing coverage for all risks, including fire and extended
coverage, sprinkler leakage, water damage, water damage legal liability, rental
insurance, and public liability and property damage insurance (combined single
limit) with respect to any accident or casualty occurring therein or with
respect thereto (ii) loss-of-income insurance in an amount sufficient to assure
that Landlord shall recover the loss of any rental income due and owing to
Landlord from Tenant under the terms of this lease, which coverage shall provide
such protection to Landlord for a period of not less than the unexpired term of
the Lease, as the same may have been extended. To the total amount of the
deductible required under each policy providing such coverage shall be no more
than $25,000.00 per loss. Landlord and any other parties designated by Landlord
(including, but not limited to, its beneficiary, its general and limited
partners, and Superior Mortgagees and/or Superior Lessors) shall be included as
loss payee(s).
(b) Liability Coverage. Commercial general public liability and
comprehensive automobile liability (and, if necessary to comply with any
conditions of this Lease, umbrella liability insurance) covering Tenant against
any claims arising out of liability for bodily injury and death and personal
injury and advertising injury and property damage occurring in and about the
demised premises, and/or the Property and otherwise resulting from any acts and
operations of Tenant, its agents and employees, with limits of not less than
total limits of $2,000,000.00 per occurrence and $5,000,000.00 annual general
aggregate, per location. To the total amount of a deductible or otherwise
self-insured retention with respect to such coverage shall be not more than
$50,000.00 per occurrence. Such insurance shall include, inter alia: (i)
"occurrence" rather than "claims made" policy forms unless such "occurrence"
policy forms are not available; (ii) any and all liability assumed by Tenant
under the terms of this lease, to the extent such insurance is available;(iii)
Landlord and any other parties designated by Landlord or Agent (including, but
not limited to, its beneficiary, its general and limited partners, and Superior
Mortgagees and/or Superior Lessors) shall be designated as Additional Insured(s)
with respect to (x) the demised premises, and (y) all operations of Tenant, and
(z) any property and areas and facilities of Landlord used by Tenant, its
employees, invitees, customers or guests; and (iv) severability of insured
parties and cross-liability so that the protection of such insurance shall be
afforded to Landlord and its designees in the same manner as if separate
policies had been issued to each of the insured parties.
<PAGE>
(c) Workers' Compensation Coverage. Workers' compensation and
employer's liability insurance as required by the laws of New York State, unless
Tenant is permitted under applicable law to be self insured in this regard.
All insurance policies required under this lease Schedule shall: (i) be
issued by companies licensed to do business in the State in which the Property
is located and acceptable to Landlord and any Superior Mortgagees, Superior
Lessors and any other party having any interest in the Property; (ii) not be
subject to cancellation or material change or non-renewal without at least
thirty (30) days' prior written notice to Landlord and any other parties
designated by Landlord (A) to be loss payee(s) or additional insured(s) under
the insurance policies required from Tenant, or (B) to receive such notices;
(iii) be deemed to be primary insurance in relation to any other insurance
maintained by Landlord or Agent; and (iv) at the sole option and discretion of
Landlord, include other appropriate endorsements or extensions of coverage
typically carried by triple net tenants or owners of similar properties as would
be reasonably required of Landlord by any Superior Mortgagees, Superior Lessors
or any other party having any interest in the Property.
Exhibit 21 - Subsidiaries of the Registrant
Fiesta Market, Inc.
MF Corp. (merger into Di Giorgio pending)
Pioneer Food Stores, Inc.
Quick Trip Food Corp.
Rose Trucking Corp.
W.R. Activities Corp.
W.R. Hillside Corp.
W.R. Purchasing Corp.
W.R. Service Corp.
W.R. Service II Corp.
W.R. Service III Corp.
White Rose, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS, STATEMENTS OF OPERATIONS, STATEMENT OF
STOCKHOLDERS' EQUITY (DEFICIENCY) AND STATEMENT OF CASH FLOWS FROM FORM 10K FOR
THE PERIOD ENDED DECEMBER 27, 1997
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> DEC-27-1997
<CASH> 2,426
<SECURITIES> 0
<RECEIVABLES> 75,918
<ALLOWANCES> 4,203
<INVENTORY> 56,121
<CURRENT-ASSETS> 138,496
<PP&E> 35,837
<DEPRECIATION> 13,693
<TOTAL-ASSETS> 279,961
<CURRENT-LIABILITIES> 115,131
<BONDS> 162,450
0
0
<COMMON> 0
<OTHER-SE> (3,081)
<TOTAL-LIABILITY-AND-EQUITY> 279,961
<SALES> 1,065,381
<TOTAL-REVENUES> 1,071,800
<CGS> 959,167
<TOTAL-COSTS> 1,045,260
<OTHER-EXPENSES> 161
<LOSS-PROVISION> 1,300
<INTEREST-EXPENSE> 21,890
<INCOME-PRETAX> 4,489
<INCOME-TAX> (1,241)
<INCOME-CONTINUING> 5,730
<DISCONTINUED> 0
<EXTRAORDINARY> (8,693)
<CHANGES> 0
<NET-INCOME> (2,963)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
