SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 24, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 1-11274
FRED MEYER, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0798201
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3800 S.E. 22nd Avenue
Portland, Oregon 97202
(Address of principal executive offices) (Zip Code)
(503) 232-8844
(Registrant's telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year,
if changed since last report.)
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 (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days.
Yes XX No
---- ----
Shares of Common Stock Outstanding at May 24, 1997: 26,642,779
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
May 24, February 1,
1997 1997
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................................. $ 64,152 $ 48,769
Receivables-net........................................................ 25,265 23,729
Inventories............................................................ 624,356 604,910
Prepaid expenses and other............................................. 32,911 43,149
Current portion of deferred taxes..................................... 17,226 17,226
---------- ----------
Total current assets............................................... 763,910 737,783
---------- ----------
PROPERTY AND EQUIPMENT-NET................................................ 997,995 929,765
---------- ----------
OTHER ASSETS.............................................................. 26,684 25,866
---------- ----------
TOTAL........................................................... $1,788,589 $1,693,414
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and outstanding checks................................ $ 430,632 $ 398,430
Current portion of long-term debt
and lease obligations............................................... 1,038 1,038
Income taxes payable................................................... 7,077 5,115
Accrued expenses and other............................................. 103,461 99,998
---------- ----------
Total current liabilities........................................... 542,208 504,581
---------- ----------
LONG-TERM DEBT AND MORTGAGES.............................................. 558,089 521,512
---------- ----------
CAPITAL LEASE OBLIGATIONS................................................. 13,182 13,227
---------- ----------
DEFERRED LEASE TRANSACTIONS............................................... 41,547 46,318
---------- ----------
DEFERRED INCOME TAXES..................................................... 35,176 35,176
---------- ----------
OTHER LONG-TERM LIABILITIES............................................... 5,555 5,302
---------- ----------
STOCKHOLDERS' EQUITY
Common stock........................................................... 291 287
Additional paid-in capital............................................. 215,722 203,314
Retained earnings...................................................... 447,381 434,122
Treasury stock and other............................................... (70,562) (70,425)
---------- ----------
Total stockholders' equity.......................................... 592,832 567,298
---------- ----------
TOTAL............................................................ $1,788,589 $1,693,414
========== ==========
See notes to consolidated financial statements.
</TABLE>
2
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<TABLE>
<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
16 Weeks Ended
------------------------------
May 24, May 25,
1997 1996
---------- ----------
<S> <C> <C>
NET SALES.................................................................. $1,193,936 $1,040,028
COST OF MERCHANDISE SOLD................................................... 838,515 737,956
---------- ----------
GROSS MARGIN............................................................... 355,421 302,072
OPERATING AND ADMINISTRATIVE EXPENSES...................................... 320,428 273,736
---------- ----------
INCOME FROM OPERATIONS..................................................... 34,993 28,336
INTEREST EXPENSE-NET....................................................... 13,607 13,104
---------- ----------
INCOME BEFORE INCOME TAXES................................................. 21,386 15,232
PROVISION FOR INCOME TAXES................................................. 8,127 5,788
---------- ----------
NET INCOME................................................................. $ 13,259 $ 9,444
========== ==========
EARNINGS PER COMMON SHARE.................................................. $.48 $.33
==== ====
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING............................................... 27,817 28,539
====== ======
See notes to consolidated financial statements.
</TABLE>
3
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<TABLE>
<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
16 Weeks Ended
----------------------------
May 24, May 25,
1997 1996
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................................. $ 13,259 $ 9,444
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
property and equipment........................................... 38,172 35,322
Amortization of goodwill............................................ 95 95
Deferred lease transactions......................................... (4,771) (860)
Other liabilities................................................... 253 (430)
Income taxes........................................................ 1,961 (269)
Inventories......................................................... (19,446) (38,454)
Other current assets................................................ 7,669 3,781
Accounts payable and accrued expenses............................... 32,042 65,719
Other............................................................... 144 (6,203)
-------- -------
Net cash provided by operating activities.............................. 69,378 68,145
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock-net........................................... 12,227 151
Increase (decrease) in outstanding checks.............................. 3,622 (1,136)
Increase in notes receivable........................................... (139) (273)
Long-term financing:
Borrowings.......................................................... 36,845 ---
Repayments.......................................................... (313) (39,632)
-------- -------
Net cash provided by (used for)
financing activities................................................ 52,242 (40,890)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................................... (111,702) (36,131)
Net proceeds from sale of real property................................ 5,465 5,827
-------- -------
Net cash used for investing activities................................. (106,237) (30,304)
-------- -------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) for the period................................. 15,383 (3,049)
Beginning of period.................................................... 48,769 41,849
-------- -------
End of period.......................................................... $ 64,152 $38,800
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest............................................................ $13,117 $12,510
Income taxes........................................................ 3,013 6,038
See notes to consolidated financial statements.
</TABLE>
4
<PAGE>
FRED MEYER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Reporting Periods
-------------------------
The Company's interim reporting periods for reports to stockholders are
the 16th, 28th, and 40th weeks of its fiscal year.
2. Inventories
-----------
Inventories consist mainly of merchandise held for sale. Substantially all
of the inventories are valued at the lower of last-in, first-out (LIFO)
cost or market. Estimated gross margins have been used for determining the
cost of merchandise sold for those operating departments not taking
physical inventories at the end of the interim periods.
3. Income Taxes
------------
Income taxes have been provided for based upon the current estimate of the
Company's annual effective tax rate.
4. Stockholders' Equity
--------------------
Changes in stockholders' equity for the sixteen weeks ended May 24, 1997
were:
(In thousands)
--------------
Stockholders' equity, February 1, 1997 $567,298
Issuance of common stock - net 12,227
Amortization of unearned compensation 48
Net income 13,259
--------
Stockholders' equity, May 24, 1997 $592,832
========
5. Earnings Per Common Share
-------------------------
Fully diluted earnings per common share are computed by dividing net
income by the weighted average number of common and common equivalent
shares outstanding. Weighted average shares reflect the dilutive effect of
outstanding stock options (ranging in exercise price from $12.125 to
$41.25 per share) which was determined by using the "treasury stock"
method.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share, which establishes new standards for computing and presenting
earnings per share (EPS) and applies to entities with publicly held common
stock or potential common stock. SFAS No. 128 replaces the presentation of
primary EPS with a presentation of basic EPS, requires dual presentation
of basic and diluted EPS on the face of the income statement, and requires
additional disclosures regarding EPS. SFAS No. 128 will require changes in
the computation and presentation of the Company's EPS commencing with the
financial statements for the year ending January 31, 1998 and require
restatement of all prior periods presented. Earlier application of this
statement is not permitted. However, if the Company computed its EPS for
the 16 weeks ended May 24, 1997 in a manner consistent with SFAS No. 128,
the pro forma amounts would have been as follows:
Basic earnings per share $.50
Diluted earnings per share $.48
Basic weighted average number of common shares
outstanding to the nearest thousand 26,525
Diluted weighted average number of common and
common equivalent shares outstanding to
the nearest thousand 27,628
5
<PAGE>
6. Commitments and Contingencies
-----------------------------
The Company and its subsidiaries are parties to various legal claims,
actions, and complaints, certain of which involve material amounts.
Although the Company is unable to predict with certainty whether or not it
will ultimately be successful in these legal proceedings or, if not, what
the impact might be, management presently believes that disposition of
these matters will not have a material adverse effect on the Company's
consolidated financial position or consolidated results of operations.
---------------
The financial information furnished in this Form 10-Q reflects all adjustments
of a normal recurring nature which, in the opinion of management, are necessary
for a fair presentation of the results for the 16 weeks ended May 24, 1997 and
May 25, 1996.
The consolidated results of operations presented herein are not necessarily
indicative of the results to be expected for the year due to the seasonality of
the Company's business. These consolidated financial statements should be read
in conjunction with the financial statements and related notes incorporated by
reference in the Company's latest annual report filed on Form 10-K.
6
<PAGE>
FRED MEYER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company funded its working capital and capital expenditure needs in 1996 and
the first quarter 1997 through internally generated cash flow and sale-leaseback
proceeds, supplemented by borrowings under committed and uncommitted bank lines
of credit and unrated commercial paper.
The Company modified and extended its credit facility on April 23, 1997 with
several domestic and foreign banks for a committed line of credit which provides
for borrowings of up to $500.0 million. Modifications included more favorable
pricing as well as less restrictive financial covenants. This agreement
continues through June 30, 2002, at which time the agreement terminates and any
outstanding amounts must be paid in full. In addition to this committed credit
facility, at May 24, 1997 the Company had $105.0 million of uncommitted money
market lines with several foreign banks and $120.0 million of uncommitted money
market lines with banks which are also in the committed credit facility. The
bank lines and unrated commercial paper are used primarily for seasonal
inventory requirements, new store construction and financing, existing store
remodeling, acquisition of land, and major projects such as the development of
Management Information Systems. At May 24, 1997 the Company had unrated
commercial paper outstanding in the amount of $314.9 million and a total of
approximately $185.1 million available for borrowings that would be supported by
its committed credit facility.
The Company has entered into interest rate swap and cap agreements to reduce the
impact of changes in interest rates on its floating rate long-term debt. At May
24, 1997, the Company had outstanding four interest rate contracts, for a total
notional principal amount of $75.0 million, with commercial banks. Two swap
agreements effectively fix the Company's interest rate on unrated commercial
paper, floating rate facilities and uncommitted lines of credit at rates between
5.20% and 7.595% on a notional principal amount of $40.0 million. These
contracts expire through 1998. Two cap agreements effectively limit the maximum
interest rate the Company will pay at rates between 5.0% and 9.0% on notional
principal amounts totaling $35 million. These contracts expire through 1999. The
Company has entered into swap and cap agreements to reduce the impact of changes
in rent expense on its two lease lines of credit. At May 24, 1997, the Company
had outstanding seven rent rate contracts, for a total notional principal amount
of $80.0 million, with commercial banks. Three of these agreements effectively
fix the Company's rental rate on the lease lines at rates between 6.2775% and
6.5369% on notional principal amounts of $40.0 million. The remaining four
agreements effectively limit the maximum rental rate the Company will pay at
7.25% on notional principal amounts totaling $40.0 million. All seven of these
contracts expire in 2000. The Company is exposed to credit loss in the event of
nonperformance by the counterparties to the interest rate and rent rate swap and
cap agreements. The Company requires an A or better rating of the counterparties
and, accordingly, does not anticipate nonperformance by the counterparties.
The Company believes that a combination of cash flow from operations and
borrowings under its credit facilities will permit it to finance its capital
expenditure requirements for 1997, currently budgeted to be approximately $167.0
million, net of estimated real estate sales and stores financed on leases. If
the Company determines that it is preferable, it may fund its capital
expenditure requirements by mortgaging facilities, entering into sale-leaseback
transactions, or by issuing additional debt or equity.
7
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THE 16 WEEKS ENDED MAY 24, 1997 WITH THE 16 WEEKS ENDED MAY 25,
1996.
Net sales for the first quarter of 1997 increased $153.9 million or 14.8% over
the corresponding quarter in 1996. This increase reflects sales growth at
existing stores, openings of new stores, and, to a lesser extent, inflation.
Comparable store sales increased 7.0% for the first quarter of 1997. Comparable
food store sales increased 6.0%, and comparable nonfood store sales increased
8.7%. The Company's food operations accounted for 59.8% of the overall sales in
1997 and 61.0% in 1996.
Gross margin as a percent of net sales was 29.8% for the first quarter of 1997,
compared with 29.0% in 1996's first quarter. Gross margins increased as a
percent of net sales due primarily to lower markdowns, the effects of increased
sales of higher-margin jewelry, mainly from 71 stores acquired in 1996, and the
improved mix of sales in nonfood, particularly in apparel.
Operating and administrative expenses as a percent of net sales were 26.8% for
the first quarter of 1997, compared with 26.3% in 1996's first quarter. Expenses
as a percent of sales increased in 1997's first quarter due to increased wages
in certain remerchandised nonfood sections of the multidepartment stores,
increased expenses in the fine jewelry stores, and expenses associated with the
opening of five new multidepartment stores versus one opening in 1996's first
quarter.
Net interest expense for the first quarters of 1997 and 1996 was $13.6 million
and $13.1 million, respectively.
The effective tax rate was 38.0% for the first quarters of 1997 and 1996.
Net income increased 40.4% to $13.3 million in the first quarter of 1997 from
$9.4 million in 1996. Earnings per share were $.48 for the first quarter of 1997
based on 27.8 million shares outstanding, compared with $.33 for the prior
year's first quarter based on 28.5 million shares outstanding.
EFFECT OF LIFO
During each year, the Company estimates the LIFO adjustment for the year based
on estimates of three factors: inflation rates (calculated by reference to the
Department Stores Inventory Price Index published by the Bureau of Labor
Statistics for softgoods and jewelry, and to internally generated indices based
on Company purchases during the year for all other departments), expected
inventory levels, and expected markup levels (after reflecting permanent
markdowns and cash discounts). The Company reviewed these year-to-date indices
at the end of the first quarter and adjusted its LIFO reserve on a year-to-date
basis to reflect the Company's overall product mix, anticipated year-end
inventory levels, and the Company's expectations of the indices for the
remainder of the year.
8
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
On May 11, 1997, Fred Meyer and Smith's Food & Drug Centers,
Inc., a Delaware corporation, entered into an Agreement and Plan
of Reorganization and Merger, which was filed with the Company's
Current Report on Form 8-K dated May 11, 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
10I. Form of Lease Agreement for substantially identical leases
covering 36 stores and other locations leased by Fred Meyer,
Inc. (or a wholly owned subsidiary) from Real Estate Properties
Limited Partnership (formerly Fred Meyer Real Estate Properties,
Ltd.) including form of Assignment of Master Lease wherein Fred
Meyer Real Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership) assigned its interest to Metropolitan Life
Insurance Company and a First Amendment to Lease Agreement,
dated November 25, 1986, with appendices containing certain
nonstandard provisions of the Lease Agreement and the First
Amendment; Collateral Matters Agreement and Indemnification
Agreement, each dated November 25, 1986, between Fred Meyer,
Inc. and Metropolitan Life Insurance Company. Incorporated by
reference to Exhibit 10I to the Company's Annual Report on Form
10-K for the year ended January 31, 1987 (File No. 0-15023).
Memorandum of First Amendment to Lease Agreement, dated March 6,
1987, between Metropolitan Life Insurance Company
("Metropolitan"), Landlord and Fred Meyer, Inc., Tenant; and
Assignment of Master Lease, dated March 6, 1987, between Real
Estate Properties Limited Partnership (formerly Fred Meyer Real
Estate Properties, Ltd.) (Assignor) and Metropolitan (Assignee)
for Nampa, Idaho. Incorporated by reference to Exhibit 10I to
the Company's Annual Report on Form 10-K for the year ended
January 30, 1988 (File No. 0-15023). Form of Modification to
Master Lease Agreement entered into as of February 4, 1997
between Metropolitan, as Landlord and the Company, as
Tenant/lessee relating to 29 leases with nonstandard provisions
attached as appendices and form of Termination of Master Lease
entered into as of February 4, 1997 with respect to six Premises
and one distribution center. See appendices.
10R. Sale Agreement between Metropolitan, as Seller and the Company,
as Purchaser dated as of February 3, 1997 for Juneau.
10S. Sale Agreement between Metropolitan, as Seller and the Company,
as Purchaser dated as of February 3, 1997 for Columbia Falls and
Kalispell.
10T. Sale Agreement between Metropolitan, as Seller and the Company,
as Purchaser dated as of February 3, 1997 for Clackamas
Distribution Center.
9
<PAGE>
10U. Sale Agreement between Metropolitan, as Seller and the Company,
as Purchaser dated as of February 3, 1997 for Roseburg.
10V. Sale Agreement between Metropolitan, as Seller and the Company,
as Purchaser dated as of February 3, 1997 for Fourth Plain and
Tacoma Lakewood.
10W. Agreement Concerning Miscellaneous Parcels, dated as of February
4, 1997 between Metropolitan and the Company (Pad Agreements).
11. Computation of earnings per Common Share.
27. Financial Data Schedule.
(b) Reports on Form 8-K
Current Report on Form 8-K of Fred Meyer, Inc., dated May 11,
1997 as filed with the Commission on May 14, 1997.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRED MEYER, INC.
(Registrant)
Dated: June 23, 1997 DAVID R. JESSICK
------------- -------------------------------
David R. Jessick
Senior Vice President - Finance
Chief Financial Officer
11
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Document Description Page Number
- ------ -------------------- -----------
10I. Form of Lease Agreement for substantially identical
leases covering 36 stores and other locations leased by
Fred Meyer, Inc. (or a wholly owned subsidiary) from
Real Estate Properties Limited Partnership (formerly
Fred Meyer Real Estate Properties, Ltd.) including form
of Assignment of Master Lease wherein Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership) assigned its interest to
Metropolitan Life Insurance Company and a First
Amendment to Lease Agreement, dated November 25, 1986,
with appendices containing certain nonstandard
provisions of the Lease Agreement and the First
Amendment; Collateral Matters Agreement and
Indemnification Agreement, each dated November 25, 1986,
between Fred Meyer, Inc. and Metropolitan Life Insurance
Company. Incorporated by reference to Exhibit 10I to the
Company's Annual Report on Form 10-K for the year ended
January 31, 1987 (File No. 0-15023). Memorandum of First
Amendment to Lease Agreement, dated March 6, 1987,
between Metropolitan Life Insurance Company
("Metropolitan"), Landlord and Fred Meyer, Inc., Tenant;
and Assignment of Master Lease, dated March 6, 1987,
between Real Estate Properties Limited Partnership
(formerly Fred Meyer Real Estate Properties, Ltd.)
(Assignor) and Metropolitan (Assignee) for Nampa, Idaho.
Incorporated by reference to Exhibit 10I to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1988 (File No. 0-15023). Form of
Modification to Master Lease Agreement entered into as
of February 4, 1997 between Metropolitan, as Landlord
and the Company, as Tenant/lessee relating to 29 leases
with nonstandard provisions attached as appendices and
form of Termination of Master Lease entered into as of
February 4, 1997 with respect to six Premises and one
distribution center. See appendices.
10R. Sale Agreement between Metropolitan, as Seller and the
Company, as Purchaser dated as of February 3, 1997 for
Juneau.
10S. Sale Agreement between Metropolitan, as Seller and the
Company, as Purchaser dated as of February 3, 1997 for
Columbia Falls and Kalispell.
<PAGE>
10T. Sale Agreement between Metropolitan, as Seller and the
Company, as Purchaser dated as of February 3, 1997 for
Clackamas Distribution Center.
10U. Sale Agreement between Metropolitan, as Seller and the
Company, as Purchaser dated as of February 3, 1997 for
Roseburg.
10V. Sale Agreement between Metropolitan, as Seller and the
Company, as Purchaser dated as of February 3, 1997 for
Fourth Plain and Tacoma Lakewood.
10W. Agreement Concerning Miscellaneous Parcels, dated as of
February 4, 1997 between Metropolitan and the Company
(Pad Agreements).
11. Computation of earnings per Common Share.
27. Financial Data Schedule.
EXHIBIT 10I
Standard form of Lease Agreement, dated October 22, 1986 between Fred
Meyer, Inc., as Lessee (Company) (or a wholly owned subsidiary) and Fred Meyer
Real Estate Properties, Ltd., as Lessor, (FMREP) under which 36 stores and other
locations (Premises) were subleased to the Company (or a wholly owned
subsidiary); an Assignment of Master Lease wherein FMREP assigned its interests
in the Premises to Metropolitan Life Insurance Company, a New York corporation
(MET) was entered into on November 25, 1986; a Collateral Matters Agreement and
an Indemnification Agreement each dated November 25, 1986 between the Company
and the MET; and a First Amendment to Lease Agreement dated November 25, 1986
for the Premises; Modification to Master Lease Agreement entered into as of
February 4, 1997 between the MET, as Landlord and the Company, as Tenant/lessee
relating to 29 leases and Termination of Master Lease entered into as of
February 4, 1997 with respect to six Premises and one distribution center. See
Appendices described below and attached hereto.
Appendix of
Nonstandard
No. Location Provisions
--- -------- ----------
1 (Dimond) Anchorage, AK Appendix 10I (1)
2 Juneau, AK Appendix 10I (2) (T)
3 (Glenwood) Boise, ID Appendix 10I (3)
4 Nampa, ID Appendix 10I (4)
5 Columbia Falls, MT Appendix 10I (5) (T)
6 Kalispell, MT Appendix 10I (6) (T)
7 Albany, OR Appendix 10I (7)
8 Beaverton, OR Appendix 10I (8)
9 Coos Bay, OR Appendix 10I (9)
10 Corvallis, OR Appendix 10I (10)
11 (Division St) - Portland, OR Appendix 10I (11)
12 (East) Salem, OR Appendix 10I (12)
13 Medford, OR Appendix 10I (13)
14 (North) Salem, OR Appendix 10I (14)
15 Oregon City, OR Appendix 10I (15)
16 (New) Roseburg, OR Appendix 10I (16)
17 Roseburg (#2), OR Appendix 10I (17) (T)
18 (Santa Clara), Eugene, OR Appendix 10I (18)
19 Springfield, OR Appendix 10I (19)
20 (South) Salem, OR Appendix 10I (20)
21 The Dalles, OR Appendix 10I (21)
<PAGE>
Appendix of
Nonstandard
No. Location Provisions
--- -------- ----------
22 Tualatin, OR Appendix 10I (22)
23 (West) Eugene, OR Appendix 10I (23)
24 Aurora, WA Appendix 10I (24)
25 Bellingham, WA Appendix 10I (25)
26 Everett, WA Appendix 10I (26)
27 (Fourth Plain) Vancouver, WA Appendix 10I (27) (T)
28 (Lynnwood) Seattle, WA Appendix 10I (28)
29 Longview, WA Appendix 10I (29)
30 (Mill Plain) Vancouver, WA Appendix 10I (30)
31 Puyallup, WA Appendix 10I (31)
32 Richland, WA Appendix 10I (32)
33 (Tacoma) Lakewood, WA Appendix 10I (33) (T)
34 (Tacoma) Pacific, WA Appendix 10I (34)
35 (Tacoma) Stevens, WA Appendix 10I (35)
36 (Distribution Center) Clackamas, OR Appendix 10I (36) (T)
<PAGE>
Appendix 10I (1)
(Dimond) Anchorage, AK
<PAGE>
MODIFICATION TO MASTER LEASE
((Dimond) Anchorage, AK)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER OF ALASKA, INC., an Alaska corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
1. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease. The
"Basic Amount" will not be adjusted for the option price of any pad/parcel which
Landlord conveys to Tenant pursuant to the Pad Agreement (as defined below).
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease). Either party may require that a "short form" lease or modification
instrument be recorded to evidence the terms of this Modification, provided that
the document to be recorded will not state the rental amounts specified in
paragraph 3 above.
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate
Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
------------------------------------
Name: Edward J. Hayes
----------------------------------
Title: Asst. V.P.
---------------------------------
TENANT: FRED MEYER OF ALASKA, INC., an Alaska
corporation
By: SCOTT L. WIPPEL
------------------------------------
Name: Scott L. Wippel
----------------------------------
Title: V.P.
---------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V. P. of FRED MEYER OF ALASKA, INC., an Alaska
corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
DIAMOND, AK
Description of the Real Estate
PARCEL NO. 1:
- ------------
Tract A-Two B (A-2B), LAKEVIEW TERRACE TRACTS, according to Plat 84-353, filed
in the Anchorage Recording District, Third Judicial District, State of Alaska,
EXCEPT that portion described in Declaration of Taking recorded May 6, 1985 in
Book 1261 at pages 944-965.
PARCEL NO. 2:
- ------------
An easement for ingress and egress and incidental purposes across the common
boundary line between Tracts A-2-B and A-2-C according to Plat 84-353, with
no specific location defined, as set forth by instrument recorded January 16,
1984 in Book 1033 at page 270.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $1,120,996.55 per annum. From December 9, 2011 through
December 8, 2016, the Fixed Rent will be $932,465.31 per annum. From December 9,
2016 through December 8, 2021, the Fixed Rent will be $891,701.80 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (2)(T)
Juneau, AK
<PAGE>
Recordation Requested by
and
After recordation return to:
Stoel Rives LLP
Attention: David W. Green
950 Port of Portland Building
700 NE Multnomah
Portland, OR 97232 (Space reserved for recorder's use)
- -------------------------------------------------------------------------------
TERMINATION AGREEMENT AND ASSIGNMENT OF INTERESTS
(Juneau, Alaska)
This Termination Agreement and Assignment of Interests (this "Agreement"),
dated as of the day of February, 1997 between METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation, Real Estate Investments, 101 Lincoln Centre
Drive, 6th Floor, Foster City, California 94404 (hereinafter referred to as
"Landlord"), as landlord/lessor (by assignment) under the Master Lease described
below, and FRED MEYER OF ALASKA, INC., an Alaska corporation, c/o Fred Meyer,
Inc., 3800 SE 22nd Avenue, PO Box 42121, Portland, Oregon 97242-0121(hereinafter
referred to as "Tenant"), as tenant/lessee under such Master Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord, certain
real property described in the attached Exhibit A (the "Premises"), pursuant to
the terms of a Lease Agreement, between Landlord's predecessor in interest, FRED
MEYER REAL ESTATE PROPERTIES, LTD., an Oregon limited partnership, as
landlord/lessor, and Tenant, as tenant/lessee, dated October 22, 1986, as
amended (the "Master Lease"). Such Master Lease was an amended and restated
lease, which modified and restated one or more prior leases of the Premises.
Evidence of such Master Lease and such prior lease or leases is evidenced of
record by certain memoranda of leases and/or other instruments listed on the
attached Exhibit B (the "Memoranda").
Tenant, as lessee of FRED MEYER REAL ESTATE PROPERTIES, LTD. pursuant to a
Lease Agreement dated October 22, 1986 and recorded on December 9, 1986 in the
Official Records of Juneau Recording District, Alaska, in Book 280 at page 149,
holds the lessor's interest under and to existing leases affecting portions of
the Premises (for purposes
- -------------------------------------------------------------------------------
Until a change is requested, all tax statements shall be sent to the following
address: c/o Fred Meyer, Inc., 3800 SE 22nd Avenue, PO Box 42121, Portland,
Oregon 97242-0121
Property tax account No.: 5B1501000020
- -------------------------------------------------------------------------------
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
1
<PAGE>
hereof, the "Subleases"). Tenant's interest in such Subleases was then assigned,
for collateral purposes, to Landlord at the closing of Landlord's purchase of
the Premises, pursuant to the terms of an Assignment of Leases and/or Rents (the
"Assignment"), by Tenant as assignor in favor of Landlord as assignee, which is
more particularly described on the attached Exhibit B.
The parties desire to evidence of record a termination of the Master Lease
and to effect and record a termination of the Memoranda and release and
reconveyance to Tenant of the interest of Landlord under the Assignment, in
connection with the closing of the purchase of the Premises by Tenant, as
evidenced by a deed being recorded on the same date as this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Termination of Master Lease and Memoranda.
The Master Lease and Memoranda listed on the attached Exhibit B are
terminated as of the date of closing by Tenant of its acquisition of the
Premises pursuant to the terms set forth herein, which is being effected
simultaneously herewith (the "Termination Date"). As of the Termination Date,
Landlord releases and assigns to Tenant all right, title and interest of
Landlord pursuant to the Assignment and Tenant assumes all obligations under the
Assignment.
Effective as of the Termination Date, except as provided in paragraph
2 below, the parties shall have no further rights or obligations under the
Master Lease.
2. Nature of Termination; No Release of Accrued Obligations.
The termination hereunder is in the nature of an acceleration of the
original expiration date of the Master Lease in connection with the purchase of
the Premises by Tenant, and neither this Agreement nor the termination of the
Master Lease shall in any way:
(a) be deemed to excuse or release Tenant from any obligation or
liability, including without limitation any obligation or liability under
provisions of the Master Lease to indemnify, defend and hold harmless Landlord
or other parties, or with respect to any breach or breaches of the Master Lease,
which obligation or liability (i) first arises prior to the Termination Date, or
(ii) arises out of or is incurred in connection with events or other matters
which took place prior to the Termination Date, or
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
2
<PAGE>
(b) affect any obligation under the Master Lease which by its
terms is intended to survive the expiration or sooner termination of the Master
Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
TENANT: FRED MEYER OF ALASKA, INC., an Alaska
corporation
By: SCOTT L. WIPPEL
------------------------------------
Title: Vice President
---------------------------------
LANDLORD: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
------------------------------------
Name: Edward J. Hayes
----------------------------------
Title: Ass't. V.P.
---------------------------------
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Vice President of FRED MEYER OF ALASKA, INC., an Alaska
corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
3
<PAGE>
STATE OF OREGON
ss. [NOTARY SEAL]
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by
Edward J. Hayes, as Asst. Vice President of METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation.
RP BUSHNELL
--------------------------------------------
Notary Public for Oregon
My commission expires 9/20/97
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
4
<PAGE>
EXHIBIT A
(Juneau, Alaska)
A tract of land in U.S. Surveys 1195, 1852, and 3800 including accretion
thereto, Juneau Recording District, First Judicial District, State of Alaska,
described as:
BEGIN at the Northwest corner (corner 5) of U.S. Survey 1852, run thence North
82(degree) 57' 30" East, on the North line of U.S. Survey 1852, a distance of
293.76 feet to the Westerly line of the access road conveyed by deed recorded
June 6, 1972 in Book 101 at Page 164, thence South 8(degree) 55' 43" West, on
said Westerly line, 537.19 feet to the Northerly line of Egan Expressway; thence
South 89(degree) 10' 09" West, on said Northerly line, 210.48 feet; thence on a
1,814.61 foot radius curve to the right 858.17 feet, the chord of which bears
North 77(degree) 16' 57" West 850.19 feet; thence North 13(degree) 39' 42" East
360.04 feet to the Southerly line of Glacier Highway; thence Easterly on said
highway line on a 1,973.73 foot radius curve to the left, 585.35 feet, the chord
of which bears South 84(degree) 50' 04" East 583.21 feet; thence North
85(degree) 33' 05" East 100.69 feet to the Westerly line of U.S. Survey 3800;
thence North 85(degree) 16' 51" East 65.59 feet to the point of beginning,
EXCEPT THEREFROM that part conveyed to the State of Alaska by deed recorded May
20, 1986 in Book 270 at Page 895.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
5
<PAGE>
Exhibit B - List of Matters of Record to be Terminated
(Juneau, Alaska)
1. Lease, including terms and provisions thereof:
Lessor: Fred Meyer Real Estate Properties, Ltd.
Lessee: Fred Meyer of Alaska, Inc.
Term: Primary term for 20 years
Dated: October 22, 1986
Recorded: December 9, 1986
Book: 280 Page: 149
Lessor's interest has been assigned and is now held of record by
Metropolitan Life Insurance Company, a New York corporation, by
instrument recorded December 2, 1986, in Book 280 at Page 243.
As modified by Memorandum of First Amendment to Lease Agreement
recorded December 9, 1986, in book 280 at Page 248
2. Lease, including terms and provisions thereof:
Lessor: Fred Meyer Real Estate Properties, Ltd.
Lessee: Fred Meyer of Alaska, Inc.
Term: Up to 7 renewal terms of 5 years each or up to 35 years
Dated: November 25, 1986
Recorded: December 9, 1986
Book: 280 Page: 145
Lessor's interest has been assigned and is now held of record by
Metropolitan Life Insurance Company, a New York corporation, by
instrument recorded December 2, 1986, in Book 280 at Page 243.
As modified by Memorandum of First Amendment to Lease Agreement
recorded December 9, 1986, in book 280 at Page 248
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
6
<PAGE>
Appendix 10I (3)
(Glenwood) Boise, ID
<PAGE>
MODIFICATION TO MASTER LEASE
((Glenwood) Boise, ID)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
3. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
--------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
IDAHO - GLENWOOD, ID
LEGAL DESCRIPTION
A Tract of Ground lcoated in the Northeast quarter of the Northeast quarter and
Northwest quarter, Northeast quarter Section 36, Township 4 North, Range 1 East,
Boise-Meridian, and the Southeast quarter, Southeast quarter and southwest
quarter, Southeast quarter Section 25, Township 4 North, Range 1 East,
Boise-Meridian, Ada County, Idaho, more particularly described below:
Beginning at the Southeast corner of the Northeast quarter, Northeast quarter
Section 36, Township 4 North, Range 1 East, Boise Meridian, Ada County, Idaho,
thence South 89(degree)26'35" West 965.35 feet along the South boundary of said
Northeast quarter of the Northeast quarter of Section 36 to a point on the
Easterly right-of-way of Glenwood Street, thence Northerly along said right of
way the following bearings and distances: North 10(degree)36'55" West 159.72
feet North 7(degree)07'40" East 219.91 feet, North 1(degree)55'56" West 51.43
feet, North 3(degree)44'14" West 117.76 feet, North 11(degree)50'04" West 73.82
feet, North 29(degree)33'52" West 371.18 feet, North 32(degree)09'52" West
159.81 feet, North 57(degree)47'36" East 17.00 feet, North 33(degree)39'55" West
76.00 feet, thence leaving said right-of-way of Glenwood Street North
28(degree)13'23" East 47.31 feet, thence North 62(degree)01'08" West 20.00 feet,
thence South 28(degree)10'03" West 36.61 feet, thence continuing along said
Easterly Glenwood right-of-way North 33(degree)18'36" West 34.60 feet North
26(degree)59'37" West 151.24 feet North 1(degree)16'29" East 25.72 feet North
70(degree)18'03" East 43.74 feet, thence South 54(degree)56'28" East 1,642.91
feet along the Southerly right-of-way of Chinden Boulevard, thence South
0(degree)13'06" East 416.62 feet along the East boundary of said Northeast
quarter, Northeast quarter Section 36, Township 4 North, Range 1 East,
Boise-Meridian, Ada County, Idaho to The Point of Beginning.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $539,276.38 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $448,579.89 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $428,969.84 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (4)
Nampa, ID
<PAGE>
MODIFICATION TO MASTER LEASE
(Nampa, ID)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
4. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease. The
"Basic Amount" will not be adjusted for the option price of any pad/parcel which
Landlord conveys to Tenant pursuant to the Pad Agreement (as defined below).
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
NAMPA, ID
The land referred to is situated in the State of Idaho,
County of Canyon and is described as follows:
A parcel of land in the Northwest one quarter of the Northwest one quarter of
Section 22 and the Northeast one quarter of Section 21 all in Township 3 North,
Range 2 West, Boise Meridian Canyon County, Idaho described as follows:
Commencing at a brass cap monument marking the Northeast corner of said Section
21, Township 3 North, Range 2 West, Boise Meridian; thence South along the
Section Line common to Sections 21 and 22 a distance of 589.56 feet (shown of
record to be South 0(degree)33'59" West) to a steel pin that is 175.0 feet
Southwesterly from the centerline of the mainline tracts of the Oregon Shortline
Railroad Company and The True Point of Beginning; thence South 46(degree)33'36"
East (shown of record to be South 46(degree)16'10" East) 131.77 feet parallel
with said mainline tracts a steel pin; thence South 6(degree)03'02" West (shown
of record to be South 6(degree)20'29" West) 216.06 feet to a steel pin, thence
South 0(degree)33'10" West 208.75 feet (shown of record to be South 0(degree)
50'37" West) to a steel pin; thence along a curve to the right 188.76 feet, said
curve having a radius of 1,362.39 feet, a central angle of 7(degree)56' 18" and
a long chord bearing South 10(degree)01'05" West 188.61 feet to a steel pin on
the Westerly right-of-way boundary of State of Idaho Highway No. 30 Spur,
Project No.U-UG-3281(9) and the Northerly boundary of Phyllis Canal; thence
along the Northerly boundary of Phyllis Canal North 71(degree)10'15" West (shown
of record to be North 71(degree)16' West) 40.24 feet to a steel pin that is
North 49.95 feet from the Southwest corner of the Northwest Quarter of the
Northwest Quarter of said Section 22; thence continuing along the Northerly
right-of-way of Phyllis Canal North 71(degree)10'15" West 1,134.04 feet (shown
of record to be North 71(degree)16' West 1,130.7 feet) to a steel pin; thence
South 63(degree)30'53" West (shown of record to be South 63(degree)11' West
along the Northerly right-of-way of Phyllis Canal 17.61 feet to a steel pin on
the Northeasterly right-of-way of U.S. Highway No. 30 Project No. STS-3281(537)
said steel pin also being the most Easterly corner of that parcel described in
Instrument No. 654426 Record of Canyon County; thence along said right-of-way
boundary along a 950.53 foot radius curve to the right 137.45 feet, said curve
having a central angle of 8(degree)17'06" and a chord bearing North 51(degree)
21'18" West (shown of record to be North 50(degree)25'01" West 137
<PAGE>
feet) 137.33 feet to a steel pin; thence continuing along said Highway
right-of-way North 45(degree)57'02" West (shown of record to be North 46(degree)
16'42" West) 13.28 feet to a steel pin; thence continuing along said Highway
right-of-way North 46(degree)33'36" West (shown of record to be North
45(degree)40'08" West) 127.00 feet to a steel pin, said steel pin being North
45(degree)04'17" East 6.00 feet from a steel pin marking The Real Point of
Beginning for that parcel described in Instrument No. 654426, Records of Canyon
County, Idaho, thence North 45(degree)04'17" East (shown of record to be North
44(degree)50' East) 374.19 feet to a steel pin that is 800.0 feet Southwesterly
from the centerline of the Oregon Shortline Railroad mainline tracks; thence
Southeasterly along a 113.33 feet radius curve to the right 108.16 feet, said
curve having a central angle of 54(degree)40' 46" and a long chord bearing South
88(degree)05' 23" East 104.10 feet (shown of record to have a central angle of
55(degree)32', a radius of 111.0 feet and a chord bearing South 88(degree) 31'
East 104.0 feet) to a steel pin; thence South 60(degree)45'00" East 127.70 feet
to a steel pin; thence East 612.70 feet (shown of record to be East 612.70 feet
to a steel pin); thence South 44(degree)19'06" East (shown of record to be South
44(degree)18'35" East) 293.47 feet to a steel pin on the Section Line common to
said Sections 21 and 22, Township 3 North, Range 2 West, Boise Meridian; thence
North 158.04 feet to The True Point of Beginning.
ALSO
A parcel of land in the Northeast Quarter of Section 21, Township 3 North, Range
2 West, Boise Meridian, Canyon County, Idaho described as follows:
Beginning at the Northeast corner of the Southeast Quarter of the Northeast
Quarter of Section 21, Township 3 North, Range 2 West, Boise Meridian, Canyon
County, Idaho, which point is The True Point of Beginning, thence South along
the East boundary line of said Section 21 a distance of 102.91 feet to a steel
pin on the Northerly boundary line of 2nd Street South Extension Survey, Project
No. STS-3281(537) Highway Survey; thence Northwesterly along a 64.00 foot radius
curve right 24.51 feet, the long chord of which bears North 57(degree)46'33"
West 24.36 feet (shown of record to be North 57(degree)31'32" West 24.92) to a
Highway right-of-way monument; thence continuing along said right-of-way North
46(degree)19'26" West 18.37 feet (shown of record to be North 46(degree)17'24"
West 18.49 feet to a Highway right-of-way monument; thence continuing along said
right-of-way Northwesterly along a 1,008.93 foot radius curve left 179.07 feet,
the long chord of which bears North 53(degree)55'17" West 178.84 feet (shown of
record to be North 53(degree)39'14" West 180.41 feet) to a steel pin; thence
leaving said right-of-way North 43(degree)09'32" East 32.72 feet (shown of
record to be North 43(degree)11' East 32.72 feet) to a steel pin on the
Southerly boundary line of Phyllis Canal; thence along the Southerly boundary
line of Phyllis Canal South 71(degree)35'14" East 164.47 feet (shown of record
to be South 71(degree)16' East 165.40 feet To The True Point of Beginning.
Together with an EASEMENT AGREEMENT dated July 1, 1985, between McDonald's
Corporation, a Delaware corporation and Fred Meyer Real Estate Properties, LTD.,
an Oregon Limited Partnership, recorded November 25, 1985 as Document No.
____________ records of ______________________________.
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $353,322.00 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $293.899.67 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $281,051.59 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (5)(T)
Columbia Falls, MT
<PAGE>
Recordation Requested by
and
After recordation return to:
Stoel Rives LLP
Attention: David W. Green
950 Port of Portland Building
700 NE Multnomah
Portland, OR 97232 (Space reserved for recorder's use)
- -------------------------------------------------------------------------------
TERMINATION AGREEMENT AND ASSIGNMENT OF INTERESTS
(Columbia Falls, Montana)
This Termination Agreement and Assignment of Interests (this "Agreement"),
dated as of the day of February, 1997 between METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation (hereinafter referred to as "Landlord"), as
landlord/lessor (by assignment) under the Master Lease described below, and B &
B STORES, INC., a Montana corporation (hereinafter referred to as "Tenant"), as
tenant/lessee under such Master Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord, certain
real property described in the attached Exhibit A (the "Premises"), pursuant to
the terms of a Lease Agreement, between Landlord's predecessor in interest, FRED
MEYER REAL ESTATE PROPERTIES, LTD., an Oregon limited partnership, as
landlord/lessor, and Tenant, as tenant/lessee, dated October 22, 1986, as
amended (the "Master Lease"). Such Master Lease was an amended and restated
lease, which modified and restated one or more prior leases of the Premises.
Evidence of such Master Lease and such prior lease or leases is evidenced of
record by certain memoranda of leases and/or other instruments listed on the
attached Exhibit B (the "Memoranda").
Tenant, as assignee of FRED MEYER REAL ESTATE PROPERTIES, LTD. pursuant to
an Assignment of Leases and Rents dated October 22, 1986 and recorded on
December 9, 1986 in the Official Records of Flathead County, Montana as Document
No. 86-343-10120 holds the lessor's interest under and to existing leases
affecting portions of the Premises (for purposes hereof, the "Subleases").
Tenant's interest in such Subleases was then assigned, for collateral purposes,
to Landlord at
- -------------------------------------------------------------------------------
Until a change is requested, all tax statements shall be sent to the following
address: c/o Fred Meyer, Inc., 3800 SE 22nd Avenue, PO Box 42121, Portland,
Oregon 97242-0121
Property tax account No.: 7605923000, 760748700, 760748750
- -------------------------------------------------------------------------------
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
1
<PAGE>
the closing of Landlord's purchase of the Premises, pursuant to the terms of an
Assignment of Leases and/or Rents (the "Assignment"), by Tenant as assignor in
favor of Landlord as assignee, which is more particularly described on the
attached Exhibit B.
The parties desire to evidence of record a termination of the Master Lease
and to effect and record a termination of the Memoranda and release and
reconveyance to Tenant of the interest of Landlord under the Assignment, in
connection with the closing of the purchase of the Premises by Tenant, as
evidenced by a deed being recorded on the same date as this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Termination of Master Lease and Memoranda.
The Master Lease and Memoranda listed on the attached Exhibit B are
terminated as of the date of closing by Tenant of its acquisition of the
Premises pursuant to the terms set forth herein, which is being effected
simultaneously herewith (the "Termination Date"). As of the Termination Date,
Landlord releases and assigns to Tenant all right, title and interest of
Landlord pursuant to the Assignment and Tenant assumes all obligations under the
Assignment.
Effective as of the Termination Date, except as provided in paragraph
2 below, the parties shall have no further rights or obligations under the
Master Lease.
2. Nature of Termination; No Release of Accrued Obligations.
The termination hereunder is in the nature of an acceleration of the
original expiration date of the Master Lease in connection with the purchase of
the Premises by Tenant, and neither this Agreement nor the termination of the
Master Lease shall in any way:
(a) be deemed to excuse or release Tenant from any obligation or
liability, including without limitation any obligation or liability under
provisions of the Master Lease to indemnify, defend and hold harmless Landlord
or other parties, or with respect to any breach or breaches of the Master Lease,
which obligation or liability (i) first arises prior to the Termination Date, or
(ii) arises out of or is incurred in connection with events or other matters
which took place prior to the Termination Date, or
(b) affect any obligation under the Master Lease which by its
terms is intended to survive the expiration or sooner termination of the Master
Lease.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
TENANT: B & B STORES, INC.,
a Montana corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Vice President
---------------------------------------
LANDLORD: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Ass't V.P.
--------------------------------------
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by
Scott L. Wippel, as Vice President of B & B STORES, INC., a Montana
corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My commission expires: 6/8/99
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
3
<PAGE>
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by Edward
J. Hayes, as Asst. Vice President of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
RP BUSHNELL
--------------------------------------------
Notary Public for Oregon
My commission expires 9/20/97
[NOTARY SEAL]
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
4
<PAGE>
EXHIBIT A
(Columbia Falls, Montana)
PARCEL 1:
Lots 1 through 15 inclusive in Block 29 of Columbia Falls Townsite, according to
the map or plat thereof on file and of record in the office of the Clerk and
Recorder of Flathead County, Montana.
AND
That portion of vacated alley running through said Block 29 of Columbia Falls
Townsite affixing to the above described property.
AND
Lots 9, 10 and 15 in Block 20 of Columbia Falls Townsite, according to the map
or plat thereof on file and of record in the office of the Clerk and Recorder of
Flathead County, Montana.
AND
Lot 11 in Block 36 of Columbia Falls Townsite, according to the map or plat
thereof on file and of record in the office of the Clerk and Recorder of
Flathead County, Montana.
PARCEL 2:
Lots 1 and 2 in Block 36 of Columbia Falls Townsite, according to the map or
plat thereof on file and of record in the office of the Clerk and Recorder of
Flathead County, Montana.
PARCEL 3:
That portion of Fifth Street East vacated between Nucleus Avenue and First
Avenue East, and further described as being between Block 29 and 36 of Columbia
Falls Townsite, according to the map or plat thereof on file and of record in
the office of the Clerk and Recorder of Flathead County, Montana.
<PAGE>
Exhibit B - List of Matters of Record to be Terminated
(Columbia Falls, Montana)
1. Memorandum of Lease upon the terms, conditions and covenants contained in
the lease:
RECORDED: August 10, 1966 in Book 482, Page 503, as Doc. No. 5553,
records of Flathead County, Montana.
LESSOR: Roundup Properties, Inc.
LESSEE: B & B Food Markets, Inc.
AFFECTS: Parcel 1
2. Assignment of the Lease interest under said lease:
RECORDED: February 8, 1982, in Book 732, Page 616, as Doc. No. 1555,
records of Flathead County, Montana.
ASSIGNOR: Fred Meyer Properties, Inc., formerly Roundup Properties,
Inc.
ASSIGNEE: Fred Meyer Real Estate Properties, Ltd., an Oregon limited
partnership.
AFFECTS: Parcel 1
3. Assignment of the Lease interest under said lease:
RECORDED: February 8, 1982, in Book 732, Page 619, as Doc. No. 1556,
records of Flathead County, Montana.
ASSIGNOR: Roundup Co., successor by merger to B & B Stores, Inc.,
formerly B & B Food Markets, Inc.
ASSIGNEE: B & B Acquisition Corporation, a Montana corporation
AFFECTS: Parcel 1
4. Said lease was restated and amended by Unrecorded Restated and Amended
Lease disclosed by:
Memorandum of Lease upon the terms, conditions and covenants contained
in the lease:
RECORDED: December 9, 1986, as Doc. No. 86-343-10110, records of
Flathead County, Montana.
LESSOR: Fred Meyer Real Estate Properties, Ltd., an Oregon limited
partnership
LESSEE: B & B Stores, Inc., a Montana corporation, (formerly known
as B & B Acquisition Corporation).
AFFECTS: Parcels 1, 2 & 3
5. Assignment of the Lessors interest under said lease:
RECORDED: December 9, 1986, as Doc. No. 86-343-10120, Records of
Flathead County, Montana.
ASSIGNOR: Fred Meyer Real Estate Properties, Ltd., an Oregon limited
partnership
ASSIGNEE: B & B Stores, Inc., a Montana corporation
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
6
<PAGE>
AFFECTS: Parcels 1, 2 & 3
6. Assignment of the Master Lease interest under said lease:
DATED: November 25, 1986
RECORDED: December 9, 1986, As Doc. No. 86-343-10140, records of
Flathead County, Montana.
ASSIGNOR: Fred Meyer Real Estate Properties, Ld., an Oregon limited
partnership
ASSIGNEE: Metropolitan Life Insurance Company, a New York corporation
AFFECTS: Parcels 1, 2 & 3
7. Said Restated and Amended Lease was further amended by an unrecorded First
Amendment to Restated and Amended Lease disclosed by:
Memorandum of First Amendment to Restated and Amended Lease by and between
the parties therein, upon the terms, conditions and covenants contained in
the lease:
DATED: November 25, 1986
RECORDED: December 9, 1986, as Doc. No. 86-343-10150, records of
Flathead County, Montana.
LESSOR: Metropolitan Life Insurance Company, a New York corporation
LESSEE: B & B Stores, Inc., a Montana corporation
AFFECTS: Parcels 1, 2 & 3
8. An Option and Right of First Opportunity to negotiate for the purchase of
said land, by and between the parties thereto, pursuant to the terms,
covenants and conditions provided therein interest under said lease:
DATED: November 25, 1986
RECORDED: December 9, 1986, as Doc. No. 86-343-10150, records of
Flathead County, Montana.
DISCLOSED BY: Memorandum of First Amendment to Restated and Amended
Lease
EXECUTED BY: Metropolitan Life Insurance Company, a New York
corporation
IN FAVOR OF: B & B Stores, Inc., a Montana corporation
AFFECTS: Parcels 1, 2 & 3
9. Assignment of the lessors interest under said lease:
RECORDED: December 9, 1986, as Doc. No. 86-343-10160, records of
Flathead County, Montana.
ASSIGNOR: B & B Stores, Inc., a Montana corporation
ASSIGNEE: Metropolitan Life Insurance Company, a New York corporation
AFFECTS: Parcels 1, 2 & 3
Return to:
Stoel Rives LLP STATE OF MONTANA )
ATTN: David W. Green County of Flathead ) SS
950 Port of Portland Building
700 NE Multnomah Recorded at the request of CTE this 5
Portland, OR 97232 day of Feb 1997 at 3:04 o'clock PM
and recorded in the records of Flathead
County, State of Montana.
Fee $42 Pd. SUSAN W. HAVERFIELD
---------------------------
Flathead County Clerk and
Recorder
MICHELLE M. ROLLEN
---------------------------
Deputy
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
7
<PAGE>
Appendix 10I (6)(T)
Kalispell, MT
<PAGE>
Recordation Requested by
and
After recordation return to:
Stoel Rives LLP
Attention: David W. Green
950 Port of Portland Building
700 NE Multnomah
Portland, OR 97232 (Space reserved for recorder's use)
- -------------------------------------------------------------------------------
TERMINATION AGREEMENT AND ASSIGNMENT OF INTERESTS
(Kalispell, Montana)
This Termination Agreement and Assignment of Interests (this "Agreement"),
dated as of the day of February, 1997 between METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation (hereinafter referred to as "Landlord"), as
landlord/lessor (by assignment) under the Master Lease described below, and B &
B STORES, INC., a Montana corporation (hereinafter referred to as "Tenant"), as
tenant/lessee under such Master Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord, certain
real property described in the attached Exhibit A (the "Premises"), pursuant to
the terms of a Lease Agreement, between Landlord's predecessor in interest, FRED
MEYER REAL ESTATE PROPERTIES, LTD., an Oregon limited partnership, as
landlord/lessor, and Tenant, as tenant/lessee, dated October 22, 1986, as
amended (the "Master Lease"). Such Master Lease was an amended and restated
lease, which modified and restated one or more prior leases of the Premises.
Evidence of such Master Lease and such prior lease or leases is evidenced of
record by certain memoranda of leases and/or other instruments listed on the
attached Exhibit B (the "Memoranda").
Tenant, as assignee of FRED MEYER REAL ESTATE PROPERTIES, LTD. pursuant to
an Assignment of Leases and Rents dated October 22, 1986 and recorded on
December 9, 1986 in the Official Records of Flathead County, Montana as Document
Recording No. 86-343-10180 holds the lessor's interest under and to existing
leases affecting portions of the Premises (for purposes hereof, the
"Subleases"). Tenant's interest in such Subleases was then assigned, for
collateral purposes, to Landlord at the closing of Landlord's purchase of the
Premises, pursuant to the terms of an Assignment of
- -------------------------------------------------------------------------------
Until a change is requested, all tax statements shall be sent to the following
address: c/o Fred Meyer, Inc., 3800 SE 22nd Avenue, PO Box 42121, Portland,
Oregon 97242-0121
Property tax account No.: 75 0267880, 75 0211515, 75 0748602, 75 0748650
- -------------------------------------------------------------------------------
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
Leases and/or Rents (the "Assignment"), by Tenant as assignor in favor of
Landlord as assignee, which is more particularly described on the attached
Exhibit B.
The parties desire to evidence of record a termination of the Master Lease
and to effect and record a termination of the Memoranda and release and
reconveyance to Tenant of the interest of Landlord under the Assignment, in
connection with the closing of the purchase of the Premises by Tenant, as
evidenced by a deed being recorded on the same date as this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Termination of Master Lease and Memoranda.
The Master Lease and Memoranda listed on the attached Exhibit B are
terminated as of the date of closing by Tenant of its acquisition of the
Premises pursuant to the terms set forth herein, which is being effected
simultaneously herewith (the "Termination Date"). As of the Termination Date,
Landlord releases and assigns to Tenant all right, title and interest of
Landlord pursuant to the Assignment and Tenant assumes all obligations under the
Assignment.
Effective as of the Termination Date, except as provided in paragraph
2 below, the parties shall have no further rights or obligations under the
Master Lease.
2. Nature of Termination; No Release of Accrued Obligations.
The termination hereunder is in the nature of an acceleration of the
original expiration date of the Master Lease in connection with the purchase of
the Premises by Tenant, and neither this Agreement nor the termination of the
Master Lease shall in any way:
(a) be deemed to excuse or release Tenant from any obligation or
liability, including without limitation any obligation or liability under
provisions of the Master Lease to indemnify, defend and hold harmless Landlord
or other parties, or with respect to any breach or breaches of the Master Lease,
which obligation or liability (i) first arises prior to the Termination Date, or
(ii) arises out of or is incurred in connection with events or other matters
which took place prior to the Termination Date, or
(b) affect any obligation under the Master Lease which by its
terms is intended to survive the expiration or sooner termination of the Master
Lease.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
TENANT: B & B STORES, INC.,
a Montana corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
LANDLORD: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by
Scott L. Wippel, as V.P. of B & B STORES, INC., a Montana corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My commission expires: 6/8/99
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by Edward
J. Hayes, as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation.
FRANCES FOLEY
--------------------------------------------
Notary Public for Oregon
My commission expires 9/1/98
[NOTARY SEAL]
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
EXHIBIT A
(Kalispell, Montana)
PARCEL 1:
Lots 1 through 8 inclusive and the Southerly 35 feet of Lot 9 in Block 19 of
Kalispell, according to the map or plat thereof on file and of record in the
office of the Clerk and Recorder of Flathead County, Montana.
EXCEPTING THEREFROM the Northerly 4 feet of said Lot 1, Block 19 of Kalispell.
AND
Lots 1 through 5 inclusive and Lots 8 through 12 inclusive in Block 22 of
Kalispell, according to the map or plat thereof on file and of record in the
office of the Clerk and Recorder of Flathead County, Montana.
AND
That portion of vacated alley running through said Block 19 and 22 of Kalispell
affixing to the above described property and that portion of vacated Montana
Street running between said Block 19 and 22 of Kalispell.
PARCEL 2:
Lot 8 in Block 20 of Kalispell, according to the map or plat thereof on file and
of record in the office of the Clerk and Recorder of Flathead County, Montana.
PARCEL 3:
Lots 10, 11 and 12 and the Northerly 15 feet of Lot 9 in Block 19 of Kalispell,
according to the map or plat thereof on file and of record in the office of the
Clerk and Recorder of Flathead County, Montana.
EXCEPTING THEREFROM the Northerly 4 feet of said Lot 12, Block 19 of Kalispell.
AND
That portion of vacated alley running through said Block 19 of Kalispell
affixing to the above described property.
PARCEL 4:
Lots 9, 10, 11 and 12 in Block 20 of Kalispell, according to the map or plat
thereof on file and of record in the office of the Clerk and Recorder of
Flathead County, Montana.
EXCEPTING THEREFROM the North 4 feet of said Lot 12, Block 20 of Kalispell.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
PARCEL 5:
A tract of land situate, lying and being in the Northeast Quarter of the
Southeast Quarter of Section 7, Township 28 North, Range 21 West, P.M.M.,
Flathead County, Montana, and more particularly described as follows:
Beginning at the Southwest corner of Lot 12 of Block 19 of Kalispell, Montana,
according to the map or plat thereof on file and of record in the office of the
County Clerk and Recorder of Flathead County, Montana; thence
Westerly and parallel to the South boundary extended of said Lot 12 a distance
of 6 inches; thence
Northerly parallel to the West boundary of said Lot 12 a distance of 36 feet 2
inches; thence
Easterly parallel to the South boundary of said Lot 12 a distance of 6 inches
more of less to the Westerly boundary of said Lot 12; thence
Southerly along said Westerly boundary of said Lot 12 to the Point of Beginning.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
Exhibit B - List of Matters of Record to be Terminated
(Kalispell, Montana)
1. Memorandum of Lease upon the terms, conditions and covenants contained in
the lease:
RECORDED: December 9, 1986, as Doc. No. 86-343-10170, records of
Flathead County, Montana.
LESSOR: Fred Meyer Real Estate Properties, Ltd., an Oregon limited
partnership
LESSEE: B & B Stores, Inc., a Montana corporation (formerly known as
B & B Acquisition Corporation).
2. Assignment of the Lessors Interest under said lease:
RECORDED: December 9, 1986, as Doc. No. 86-343-10180, records of
Flathead County, Montana.
ASSIGNOR: Fred Meyer Real Estate Properties, Ltd., an Oregon limited
partnership
ASSIGNEE: B & B Stores, Inc., a Montana corporation
3. Assignment of the Master Lease interest under said lease:
DATED: November 25, 1986
RECORDED: December 9, 1986, as Doc. No. 86-343-10200, records of
Flathead County, Montana.
ASSIGNOR: Fred Meyer Real Estate Properties, Ltd., an Oregon limited
partnership
4. Said Restated and Amended Lease was further amended by an unrecorded First
Amendment to Restated and Amended Lease disclosed by:
Memorandum of First Amendment to Restated and Amended Lease by and between
the parties therein, upon the terms, conditions and covenants contained in
the lease:
DATED: November 25, 1986
RECORDED: December 9, 1986, as Doc. No. 86-343-10210, records of
Flathead County, Montana.
LESSOR: Metropolitan Life Insurance Company, a New York corporation
LESSEE: B & B Stores, Inc., a Montana corporation
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
5. An Option and Right of First Opportunity to negotiate for the purchase of
said land, by and between the parties thereto, pursuant to the terms,
covenants and conditions provided therein interest under said lease:
DATED: November 25, 1986
RECORDED: December 9, 1986, as Doc. No. 86-343-10210, records of
Flathead County, Montana.
DISCLOSED BY: Metropolitan Life Insurance Company, a New York
corporation
IN FAVOR OF: B & B Stores, Inc., a Montana corporation
6. Assignment of the lessors interest under said lease:
RECORDED: December 9, 1986, as Doc. No. 86-343-10220, records of
Flathead County, Montana.
ASSIGNOR: B & B Stores, Inc., a Montana corporation
ASSIGNEE: Metropolitan Life Insurance Company, a New York corporation
STATE OF MONTANA )
County of Flathead ) SS
Recorded at the request of CTE this 5 day of Feb 1997 at 3:02 o'clock PM and
recorded in the records of Flathead County, State of Montana.
Fee $48 Pd. SUSAN W. HAVERFIELD
--------------------------------------------
Flathead County Clerk and Recorder
DOCUMENT NO. 1997036/5020 MICHELLE M. ROLLEN
--------------------------------------------
Deputy
Return to:
Stoel Rives LLP
ATTN: David W. Green
950 Port of Portland Building
700 NE Multnomah
Portland, OR 97232
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
Appendix 10I (7)
Albany, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(Albany, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
5. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease. The
"Basic Amount" will not be adjusted for the option price of any pad/parcel which
Landlord conveys to Tenant pursuant to the Pad Agreement (as defined below).
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
ALBANY, OR
The following described real property situated in the County of Linn and State
of Oregon, to-wit:
Beginning at a tack in lead on the Westerly right-of-way line of Waverly Drive,
marking the Northeast corner of that tract of land conveyed to General American
Theaters, Inc.; a recorded in Microfilm Volume 243, page 850, Deed Records for
Linn County, Oregon, which point is recorded as being North 01(degree)24'02"
West 3432.00 feet and North 89(degree)00'47" West 50.05 feet and North
01(degree)24'02" West 415.75 feet from the Southeast corner of the Leander C.
Burkhart Donation Land Claim No. 50 in Township 11 South, Range 3 West of the
Willamette Meridian in Linn County, Oregon; thence South 88(degree)40'52" West
along the North line of said General American Theater Tract and the Westerly
extension thereof, a distance of 542.12 feet to an iron rod; thence South
01(degree) 35'10" East 358.99 feet to an iron road on the Northerly right-of-way
line of 14th Street; thence North 89(degree)01'18" West along said right-of-way
line, 60.13 feet to an iron rod marking the Southeast corner of that tract of
land as described in Microfilm Volume 217, page 230, Deed Records for Linn
County, Oregon; thence North 01(degree)31'00" West along the East line of said
Tract, a distance of 620.91 feet to an iron rod marking the Northeast corner
thereof; thence South 88(degree)37'24" West along the North line of said Tract,
a distance of 364.88 feet to an iron rod on the East right-of-way line of Clay
Street; thence North 01(degree)29'51" West along said right-of-way line, a
distance of 238.44 feet to an iron rod marking an angle point therein; thence
South 85(degree)15'54" West 5.01 feet to a brass screw in lead marking an angle
point in said right-of-way line; thence North 01(degree)29'51" West along said
right-of-way line, a distance of 391.63 feet to an iron rod marking the
Southwest corner of that tract of land described in Volume 317, page 658, Deed
of Records for Linn County, Oregon; thence North 88(degree)30'09" East along the
South line of said Tract, a distance of 164.22 feet to an iron rod marking the
Southeast corner thereof; thence North 01(degree)29'51" West along the East line
of said Tract, a distance of 149.55 feet to an iron rod on the Southerly
right-of-way line of the South Santiam Highway (U.S. 20); thence South
76(degree) 34'51" East along the Southerly right-of-way line of said highway, a
distance of 302.72 feet to an iron rod opposite Engineer's Station 87+45.00;
thence South 39(degree)00'45" East continuing along said right-of-way line, a
distance of 82.01 feet to an iron rod opposite Engineer's Station 88+10.00;
thence North 55(degree)24'23" East along said right-of-way line, a distance of
67.27 feet to an iron rod opposite Engineer's Station 88+55.00; thence South
76(degree) 34'51" East along said right-of-way line, a distance of 253.74 feet
to an iron rod opposite Engineer's Station P.S. 91+08.74; thence Southeasterly
along said right-of-way line on the arc of a spiral curve to the right (the
chord of which bears South 76(degree)11'00" East 153.56 feet) a distance of
153.56 feet, more or less, to a point marking the most Westerly corner of that
tract of land conveyed to the City of Albany for Roadway purposes as described
in Volume 78, page 74, Microfilm
<PAGE>
Records; thence South 59(degree), 47' 36" East along the Southwesterly boundary
line of said City of Albany Tract, 15.06 feet to an angle point therein; thence
South 16(degree)46'49" East continuing along said Boundary line; 15.00 feet to
a point on the West line of said Waverly Drive; thence South 01(degree)24'02"
East along said right-of-way line, a distance of 811.83 feet to the point of
beginning.
And also reciprocal easements for ingress, egress and parking as reserved in
agreement recorded JUNE 1, 1978 in Volume 201, page 462 of Microfilm Records.
And also reciprocal easements for ingress, egress and parking as reserved in
agreement recorded SEPTEMBER 14, 1979, in Volume 243, page 852 of Microfilm
Records.
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $624,525.81 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $519,491.93 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $496,781.90 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (8)
Beaverton, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(Beaverton, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
6. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
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If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease. The
"Basic Amount" will not be adjusted for the option price of any pad/parcel which
Landlord conveys to Tenant pursuant to the Pad Agreement (as defined below).
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
BEAVERTON, OR
The land referred to is described as
PARCEL I:
A tract of land situated in the Northwest quarter of Section 15, Township 1
South, Range 1 West of the Willamette Meridian, in the County of Washington,
State of Oregon, more particularly described as follows:
Commencing at a 5/8 inch iron rod set at the Southwest corner of the William
Lockerman Donation Land Claim as shown in County Survey No. 6984; thence along
the centerline of S.W. Lombard Avenue, North 0(degree)40' 08" West, 203.64
feet; thence South 81(degree)39' 05" East, 221.40 feet to the intersection of
the Northerly right-of-way (40.00 feet from centerline) of S.W. Beaverton
Hillsdale Highway and the Easterly line of that certain tract of land described
in Deed to Beatrice A. Hoaglin as Parcel III, recorded in Book 733, page 269 on
February 14, 1969, Washington County Deed Records, said point being the point of
beginning of the tract herein to be described; thence along the Easterly line of
said Hoaglin Tract, North 8(degree), 20' 55" East, 190.12 feet to an iron pipe
at the Northeasterly corner
<PAGE>
thereof; thence along the Northerly line of said Hoaglin Tract the following
bearings and distances:
North 81(degree)30' 52" West, 99.99 feet, North 7(degree)36' 05" East, 1.26
feet, South 89(degree)14' 36" West, 120.46 feet to the East line of S.W. Lombard
Avenue (30.00 feet from the centerline); thence along said East line, North
0(degree)40' 08" West, 149.10 feet to the South line of that certain tract of
land described in Deed to Kelley Realty, Inc., recorded in Book 417, page 475 on
May 14, 1959, Washington County Deed Records; thence along the South line of
said Kelley Realty Tract, North 89(degree)14' 55" East, 116.10 feet to the
Southeast corner thereof; thence along the Easterly line of said Kelley Realty
Tract, North 2(degree)12' 31" West, 25.07 feet to an angle point; thence
continuing along said Easterly line, North 11(degree)11' 10" West, 45.05 feet to
the Southwesterly corner of that certain tract of land described in Deed to
James Douglas Cameron, recorded in Book 1074, page 364, on March 19, 1976,
Washington County Deed Records; thence along the Southerly line of said Cameron
Tract, North 57(degree)36' 15" East, 74.99 feet to the Southeasterly corner
thereof; thence along Easterly line of said Cameron Tract, North 24(degree)47'
49" West, 88.79 feet to a set 5/8 inch iron rod; thence North 57(degree)33' 45"
East, a distance of 182.01 feet to a point of curvature; thence continuing along
said Southerly line on the arc of a 148.61 foot radius curve to the right,
through a central angle of 31(degree)11' 25" an arc distance of 80.90 feet (the
chord bears North 73(degree)09' 28" East, 79.90 feet) to a point of tangency;
thence continuing along said Southerly line, North 88(degree)45' 10" East,
136.15 feet to a point of curvature; thence continuing along said Southerly line
on the arc of a 235.00 foot radius curve to the left, through a central angle of
82(degree)16' 33", an arc distance of 337.46 feet to the Southerly line of S.W.
Canyon Road; thence along said Southerly line, North 64(degree)40' 33" East,
93.88 feet to the Northwest corner of that certain tract of land described in
Deed to Fred Meyer Properties, Inc., recorded under Film No. 80003624 on January
31, 1980, Washington County, Deed Records; thence along the West line of said
Fred Meyer Tract, South 1(degree) 01' 56" East, 1001.76 feet to the Northerly
line of the S.W. Beaverton-Hillsdale Highway; thence along said Northerly line
on the arc of a 1722.95 foot radius curve to the right, through a central angle
of 2(degree)59' 30" an arc distance of 89.96 feet (the chord bears North
85(degree) 15' 32" West, 89.95 feet) to a point opposite Engineers Centerline
Station L3 138+05.71 P.C.S.; thence continuing along said Northerly line on the
arc of a spiral whose chord bears North 82(degree)21' 09" West, 128.52 feet to a
point opposite Engineers Centerline Station L3 139+35.71 P.T.; thence continuing
along said Northerly line, North 81(degree)39' 05" West, 424.11 feet to the
point of beginning.
<PAGE>
PARCEL II:
A tract of land situated in Section 15, Township 1 South, Range 1 West,
Willamette Meridian, Washington County, Oregon. Said tract of land being
described as follows:
Beginning at a 5/8 inch iron rod with an aluminum cap, said iron rod being North
84.82 feet and East 892.66 feet from the Southwest corner of the William
Lockerman D.L.C. No. 45, said iron rod also being the point of change from
spiral to a 1,722.95 foot radius circular curve to the right on the North right
of way line at Engineer's centerline Station 136+74.12 on the
Beaverton-Hillsdale Highway; thence continuing Westerly along the arc of said
circular curve 38.51 feet (chord equal 38.51 feet and chord bearing equals North
87(degree)53' 28" West); thence North 1(degree) 08' 22" West, 1002.39 feet to
the South right of way line of S.W. Canyon Road; thence North 64(degree)40' 33"
East, 46.17 feet; thence North 70(degree)40' 16" East, 224.49 feet to a point
marking the point of a cusp of a 50.00 foot radius curve, said point being the
most Northerly Northwest corner of that tract of land described in CF 1927,
Washington County Deed Records and County Survey No. 13710, Washington County
Survey Records; thence Southwesterly along the arc of said curve to a found 5/8
inch iron rod at the point of tangency, the long chord bears South 13(degree)
29' 53" West, 52.01 feet; thence South 17(degree)54' 39" East, 78.14 feet to a
found 5/8 inch iron rod marking the most Southerly Southwest corner of said
tract of land; thence North 89(degree)05' 15" East, 154.13 feet to a found 5/8
inch iron rod marking the Southeast corner of said tract of land; thence North
0(degree) 51' 31" West coincident with the Easterly boundary of said tract of
land, 67.945 feet to a found 5/8 inch iron rod; thence North 89(degree)04' 22"
East, 324.84 feet to a found 5/8 inch iron rod on the West line of a 50 foot
ingress and egress easement to Shell Oil, and others recorded in Book 929, and
page 561 of Washington County Deed Records; thence North 0(degree)52' 36" West,
220.43 feet to a found 5/8 inch iron rod on the Southerly right of way line of
Canyon Road; thence continuing along said right of way, North 70(degree)40' 16"
East, 55.55 feet to a 5/8 inch iron rod marking the Northeast corner of that
tract of land described in Book 929, page 561, Washington County Deed Records;
thence along the boundaries of said tract as follows:
South 00(degree)56' 44" East, 286.96 feet to a 5/8 inch iron rod, North 89
(degree) 06' 24" East, 142.00 feet to a found 5/8 inch iron rod and North 00
(degree) 56' 44" West, 309.51 feet to a found 5/8 inch iron rod with aluminum
cap; thence South 53(degree)41' 06" East, 39.39 feet to a found 5/8 inch iron
rod with aluminum cap marking an angle point on the Westerly right-of-way line
of the Beaverton-Tigard Highway at Engineer's centerline Station 174+10; thence
coincident with said Westerly right of way as follows:
South 04(degree)46' 46" East, 286.86 feet to a found 5/8 inch iron rod with
aluminum cap marking the point of curve of a 2,231.83 foot radius curve right at
Engineer's centerline Station 177+00,
<PAGE>
Southwesterly along the arc of said curve right, 584.8 feet to a 5/8 inch iron
rod with aluminum cap marking the point of tangency of Engineer's centerline
Station 183+00 (the long chord bears South 07(degree)00' 58" West, 582.51
feet); South 14(degree)55' 04" West, 224.42 feet to a found 5/8 inch iron rod
with aluminum cap at Engineer's centerline Station 185+30.21; South 20(degree)
17' 08" West, 60.81 feet to a found 5/8 inch iron rod with aluminum cap denoted
as marking the point of curve of a 459.26 foot radius curve left at Engineer's
centerline Station 185+91.04 P.C., and Southwesterly along the arc of said curve
left (the chord bears South 12(degree)40' 42" West, 121.85 feet) to a found 5/8
inch iron rod with aluminum cap at Engineer's centerline Station 187+00, said
monument marks the point of intersection of the Westerly right of way line of
the Beaverton-Tigard Highway and the Northerly right of way of the Beaverton-
Hillsdale Highway; thence along the Northerly right of way line of the
Beaverton-Hillsdale Highway as follows:
South 83(degree)21' 50" West, 187.50 feet to a found 5/8 inch iron rod with
aluminum cap on the West line of Lot 72, STEEL'S ADDITION TO BEAVERTON, 50.00
feet Northerly from the centerline of the Beaverton-Hillsdale Highway; South 89
(degree) 43' 38" West parallel with said centerline, 45.49 feet to a found 5/8
inch iron rod with aluminum cap at Engineer's centerline Station, 131+50; South
86(degree)55' 51" West along said Northerly right of way line, 200.25 feet to a
point at right angles from and 40.00 feet Northerly of said highway centerline
at Engineer's centerline Station 133+50; South 89(degree)47' 36" West parallel
with said highway centerline, 194.12 feet to a point of spiral curve right at
Engineer's centerline Station 135+44.12, said spiral curve defined at highway
centerline as 130.00 feet in length of arc, an "A" value of 2.5 and a central
angle of 2(degree)06' 42" along the arc of said spiral curve right (the long
chord bears North 89(degree)30' 24" West, 128.52 feet) to a found 5/8 inch iron
rod with aluminum cap marking the point of beginning.
PARCEL III:
Being a part of Lot 72 of STEEL'S ADDITION TO BEAVERTON as shown on the duly
recorded plat thereof on file in the office of the Recorder of Conveyances for
Washington County, Oregon, and being more particularly described as follows:
Beginning at an iron pipe at the intersection of the West line of said Lot 72 of
the said STEEL'S ADDITION and the Southerly boundary of the 80 foot wide new
Canyon Road Highway and running thence South 0(degree)52' East along the West
line of said Lot 72, a distance of 138.83 feet to an iron pipe; thence North 89
(degree) 08' East, 135.0 feet to an iron pipe; thence North 0(degree)52' West,
183.87 feet to an iron pipe on the South boundary of the said Canyon Road
Highway; thence along said highway boundary South 70(degree)42' West, 142.31
feet to the place of beginning, all situated in the County of Washington, State
of Oregon.
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $1,771,711.55 per annum. From December 9, 2011 through
December 8, 2016, the Fixed Rent will be $1,473,741.88 per annum. From December
9, 2016 through December 8, 2021, the Fixed Rent will be $1,409,316.01 per
annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (9)
Coos Bay, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(Coos Bay, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
7. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease. The
"Basic Amount" will not be adjusted for the option price of any pad/parcel which
Landlord conveys to Tenant pursuant to the Pad Agreement (as defined below).
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
Coos Bay, OR
Description of the tract of land
PARCEL I: Beginning at the Northwest corner of Block 8, Railroad Addition to
Marshfield, Coos County, Oregon; thence East to the center of vacated Front
Street; thence North to the center of vacated Johnson Avenue; thence East along
the center of said vacated Johnson Avenue to the ordinary high water line of
Coal Bank Slough; thence Southerly along said ordinary high water line to its
intersection with the North line of the relocated U.S. Highway 101 as described
in Stipulated Final Judgment filed April 22, 1986, in Circuit Court Case No.
85-1991, Records of Coos County, Oregon, State of Oregon, by and through its
Department of Transportation vs. Fred Meyer Real Estate Properties, Ltd., an
Oregon limited partnership, et al.; thence Northwesterly along the State Highway
property to a point on the West boundary of said Block 8; thence North along
said West boundary to the point of beginning.
Together with the tidelands fronting and abutting vacated Water Street,
Block 2, the N 1/2 of Block 3, the N 1/2 of vacated Kruse Avenue the S 1/2
of vacated Johnson Avenue of Railroad Addition to Marshfield, Coos County,
Oregon. EXCEPT that portion of the tidelands fronting and abutting the N
1/2 of Block 3, Railroad Addition to Marshfield, Coos County, Oregon, lying
South of the property described in Stipulated Final Judgment filed April
22, 1986, in Circuit Court Case No. 85-1991, Records of Coos County,
Oregon, State of Oregon, by and through its Department of Transportation
vs. Fred Meyer Real Estate Properties, Ltd., an Oregon limited partnership,
et al.
TOGETHER WITH the easement over the N 1/2 of vacated Johnson Avenue lying
East of the East line of Front Street South and West of the low water line
of Coal Bank Slough, as set forth in instrument recorded May 24, 1983,
bearing Microfilm Reel No. 83-2-3255, Records of Coos County, Oregon.
EXCEPTING THEREFROM: Beginning at a point 70 feet East of the Northwest
corner of Block 1, Railroad Addition to Marshfield, Coos County, Oregon;
thence South 50 feet; thence East 40 feet; thence North 50 feet to a point
on the North line of said Block 1; thence West 40 feet along said North
line to the point of beginning.
PARCEL II: Lots 17 through 23, inclusive, the W 1/2 of Lot 24, Block 9, Railroad
Addition to Marshfield, Coos County, Oregon.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $212,651.16 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $176,887.10 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $169,154.33 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (10)
Corvallis, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(Corvallis, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
8. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
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pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
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EXHIBIT A
Corvallis, OR
The land referred to is described as being situated in the
County of Benton and State of Oregon, to-wit:
PARCEL I:
Beginning at the intersection of the North line of Taylor Street in Corvallis,
Oregon, with the East line of Kings Road; thence Northerly on said East line 550
feet to the South line of Buchanan Street; thence East on said South line 490
feet to the intersection of Buchanan Street with the West line of 19th Street;
thence Southerly on the West line of 19th Street 401.5 feet to the Northeast
corner of Block 31, Job's Addition to Corvallis; thence Southerly on the East
line of said Block 89.5 feet to the Northeasterly corner of Lot 4 in said Block;
thence West on the Northerly line of said Lot 4 a distance of 100 feet, more or
less, to the Northeasterly corner of Lot 9 in said Block; thence Southerly on
the Easterly lines of Lots 9, 10, 11 and 12, in said Block 200 feet to the
Southeasterly corner of said Lot 12 a point on the North line of Taylor Street;
thence Westerly on said North line 160 feet, more or less, to the point of
beginning.
EXCEPT that portion conveyed to the City of Corvallis, by deed recorded
September 30, 1969 as Instrument No. 99086, M-15680, Microfilm Records of Benton
County, Oregon.
PARCEL II:
Lot 4, Block 31, JOB'S ADDITION, to the City of Corvallis.
PARCEL III:
Lot 3, Block 31, JOB'S ADDITION, the City of Corvallis.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $335,276.10 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $278,888.76 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $266,696.90 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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Appendix 10I (11)
(Division St.) Portland, OR
<PAGE>
MODIFICATION TO MASTER LEASE
((Division St.) Portland, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
9. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
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If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease. The
"Basic Amount" will not be adjusted for the option price of any pad/parcel which
Landlord conveys to Tenant pursuant to the Pad Agreement (as defined below).
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
DIVISION, OR
The land referred to is described as
A tract of land located in the Northwest quarter of Section 12, Township 1
South, Range 2 East of the Willamette Meridian, in the County of Multnomah and
State of Oregon, described as follows:
Commencing at the Northwest corner of said Section 12; thence South 89(degree)
46' 50" East along the North line of the said Section 12, a distance of 869.63
feet; thence South 00(degree)13' 10" West a distance of 45.00 feet to a point
on the South right of way line of SE Division Street said point being the true
point of beginning of this description; thence South 89(degree)46'50" East
along the South right of way line of SE Division Street, a distance of 718.93
feet to a point of circular curve; thence Southeasterly along the arc of a 28.00
foot radius circular curve to the right through a central angle of 82(degree)
39'35", an arc distance of 40.40 feet (long chord bears South 48(degree)27' 03"
East a distance of 36.98 feet) to a point on the Westerly right of way line of
SE 148th Avenue 40.00 feet Westerly of center line; thence South 07(degree)07'
15" East along the Westerly right of way line of SE 148th Avenue a distance of
63.46 feet to a point of circular curve; thence Southerly along the arc of a
2251.83 foot radius circular curve to the right through a central angle of 08
(degree) 41' 21", an arc distance of 341.50 feet (long chord bears South 02
(degree) 46' 43" East a distance of 341.17 feet) along the above said Westerly
right of way; thence South 01(degree) 34' 10" along the above Westerly right of
way a distance of 135.95 feet to a point of circular curve; thence Southwesterly
along the arc of a 20.00 foot radius circular curve to the right through a
central angle of 90(degree)01' 10", an arc distance of 31.42 feet (long chord
bears South 46(degree)34' 45" West a distance of 31.42 feet) to a point on the
North right of way line of SE Clinton Street 25.00 feet North of center line;
thence North 88(degree)24' 40" West along the North right of way line of SE
Clinton Street, a distance of 760.10 feet to a point of circular curve; thence
Northwesterly along the arc of a 20.00 foot radius circular curve to the right
through a central angle of 89(degree)46' 01", an arc distance of 31.34 feet
(long chord bears North 43(degree)31' 39" West a distance of 28.23 feet) to a
point on the East right of way line of SE 145th Avenue, 30 feet East of the
center line; thence North 01(degree) 21' 21" East along the East right of way
line of SE 145th Avenue a distance of 525.45 feet to a point of circular curve;
thence Northeasterly along the arc of a 20.00 foot radius circular curve to the
right through a central angle of 88(degree)51' 49", an arc distance of 31.02
feet (long chord bears North 45(degree)47' 15" East a distance of 28.00 feet)
to the true point of beginning of this description.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $814,323.60 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $677,369.18 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $647,757.41 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (12)
(East) Salem, OR
<PAGE>
MODIFICATION TO MASTER LEASE
((East) Salem, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
10. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
(EAST) SALEM, OR
The land referred to is described as
TRACT I
Beginning at a point which is North 13.19 chains and South 89(degree) 20'
West 8.37 chains from the Northeast corner of the I. N. Baker Donation Land
Claim No. 81, in Township 7 South, Range 2 West of the Willamette Meridian
in Marion County, Oregon, said point of beginning being the Southwest
corner of that tract of land conveyed to Donald R. Wyant, Sr. and Charles
E. Wyant, Deed Records, Volume 693, page 344, Deed Records for Marion
County, Oregon; thence North 0(degree) 17' West along the Westerly line of
said Wyant tract 394.69 feet to the center line of said Market Street;
thence Easterly along said center line 221.89 feet to the Northeast corner
of that tract of land conveyed to said Donald R. and Charles E. Wyant, Deed
recorded in Volume 704, page 126, Deed Records for Marion County, Oregon;
thence South 0(degree)07' East 392.70 feet to the Southeast corner of said
Wyant tract in Volume 704, page 126, Deed Records; thence South
89(degree)20' West along the Southerly line of said Wyant tract 221.89 feet
to the point of beginning.
TRACT II
Beginning at a point in the center line of Lancaster Drive N.E., which is
13.19 chains North of the Northeast corner of the I. N. Baker Donation Land
Claim #81 in Township 7 South, Range 2 West of the Willamette Meridian, in
Marion County, Oregon, said point of beginning being the most Easterly
Southeast corner of that tract of land conveyed to H. W. Sneed deed
recorded in Volume 633, page 284, Deed Records for Marion County, Oregon;
thence South 89(degree)20' West along the South line of said Sneed property
330.05 feet to the Southwest corner thereof; thence North 0(degree)07' West
along the Westerly line of the said Sneed tract 391.38 feet to the center
line of Market Road No. 21 (Market St.); thence North 89(degree)20' East
along the said center line of Market Street 177.44 feet to the most
Northerly Northeast corner of said Sneed tract; thence South 0(degree)07'
East 180 feet to the Southwest corner of that tract of land conveyed to
Lewis B. Huff deed recorded in Volume 739, page 036, Deed Records for
Marion County, Oregon; thence North 89(degree)20' East along the Southerly
line of said Huff tract 155 feet to the Southeast corner thereof; said
point also lying on the center line of Market Road No. 93, (Lancaster Dr.
N.E.), thence South 0(degree)07' East along the center line of said
Lancaster Drive 208.05 feet, more or less, to the point of beginning.
TRACT III
The South one-half of the following described real property, to-wit:
<PAGE>
Beginning at a point in the County Road and 8.39 chains North 0(degree)04'
East from the Northeast corner of the Donation Land Claim of Isaac Baker in
Township 7 South, Range 2 West of the Willamette Meridian in Marion County,
Oregon; thence South 89(degree)20' West 8.36 chains to the Northwest corner
of a 7.00 acre tract; and West line of Lutisha Wanless land as shown in
Volume 170, page 332, Deed Records for Marion County, Oregon; thence North
0(degree)07' West 4.80 chains, along the West line of said land, thence
North 89(degree)20' East 8.37 chains to the East line of Lutisha Wanless
land, and in the middle of the County Road; thence South 0(degree)04' West
4.80 chains to the place of beginning.
SAVE AND EXCEPT for road purposes a strip 30.0 feet in width off of the
East side of the above described tract of land.
ALSO SAVE AND EXCEPT that portion of the herein described premises taken by
Marion County Resolution No. 1466 for the improvement of Lancaster Drive,
N.E. to an 80.00 foot right of way width.
TRACT IV
Beginning at the Northeast corner of the Donation Land Claim of Isaac Baker
and wife in Township 7 South, Range 2 West of the Willamette Meridian in
Marion County, Oregon, and running thence South 89(degree)29' West 8.34 1/3
chains along the North line of the said Isaac Baker and wife Donation Land
Claim; thence North 0(degree)7' West 8.39 chains; thence North
89(degree)20' East 8.36 chains parallel with the North line of said
Donation Land Claim; thence South 8.39 chains to the place of beginning,
and situated in Marion County, State of Oregon.
SAVE AND EXCEPT therefrom the Southerly 1 1/2 acres of the above described
premises, which are more particularly described in that certain deed of
conveyance executed by Homer J. Conklin and Grace J. Conklin, husband and
wife, to Ralph Adams Jr. and Margaret Adams, husband and wife, dated the
16th day of DECEMBER 1958, and recorded on the 19th day of DECEMBER 1958 in
Volume 518, page 394, of the Deed Records for Marion County, Oregon.
ALSO SAVE AND EXCEPT: Beginning in the center of a County Road at a point
which is 446.24 feet North 0(degree)04' East from the Northeast corner of
the Isaac Baker Donation Land Claim in Township 7 South, Range 2 West of
the Willamette Meridian in Marion County, Oregon; thence North 0(degree)04'
East, along the center of the said County Road, a distance of 107.5 feet to
the Northeast corner of a tract of land conveyed to Homer J. Conklin and
Grace J. Conklin, by deed recorded in Volume 225, page 481, Deed Records
for Marion County, Oregon, thence South 89(degree)20' West along the North
line of said Conklin tract, a distance of 8.36 chains to the Northwest
corner thereof, thence Southerly, along the West line of the said Conklin
tract, a distance of 107.5 feet, thence East to the place of beginning.
<PAGE>
ALSO SAVE AND EXCEPT: Beginning at a 1 inch iron rod marking the point of
intersection of the North line of the Isaac Baker Donation Land Claim No.
91, Township 7 South, Range 2 West, Willamette Meridian, Marion County,
Oregon, and the Westerly boundary line of that tract of land described in
Volume 749, page 779, Deed Records, said point bears South 89(degree)16'09"
West 549.67 feet and North 00(degree)17'17" West 117.90 feet from the
Northeast corner of said Donation Land Claim, and continuing thence North
00(degree)17'17" West 259.13 feet; thence North 89(degree)19'18" East
210.03 feet, more or less, to a point that is perpendicular to and 300.00
feet Westerly of the Westerly right of way line of Lancaster Drive; thence
South 00(degree)02'57" West, parallel with said Westerly right of way line,
259.13 feet to a point on the Westerly projection of the Northerly boundary
line of that tract of land described in Volume 772, page 679, Deed Records;
thence South 89(degree)20'14" West 210.33 feet to the place of beginning.
ALSO SAVE AND EXCEPT the following described tract: Beginning at a 5/8 inch
iron rod with an aluminum cap on the point of intersection of the Westerly
right of way line of Lancaster Drive and the Northerly boundary line of
that tract of land described in Volume 772, page 679, Deed Records, said
point of intersection bears North 00(degree)02'57" East 117.25 feet and
South 89(degree)20'14" West 40.00 feet from the Northeast corner of the
Isaac Baker Donation Land Claim No. 91, Township 7 South, Range 2 West,
Willamette Meridian in Marion County, Oregon, and continuing thence: South
89(degree)20'14" West 300.02 feet, coincident with said Northerly boundary;
thence North 00(degree)02'57" East, parallel with the Westerly right of way
line of Lancaster Drive, 259.13 feet to a point; thence North
89(degree)19'18" East 300.02 feet to the Westerly right of way line of
Lancaster Drive; thence South 00(degree)02'57" West, coincident with said
right of way line, 259.21 feet to the point of beginning.
TRACT V
That tract of land situated in the Southwest quarter of the Northwest
quarter of Section 19, Township 7 South, Range 2 West of the Willamette
Meridian in Marion County, Oregon, beginning at a 1/2 inch iron pipe in the
Northwest corner of the Zielesch property, recorded in Volume 298, page
554, Deed Records for Marion County, Oregon; thence 240 feet South
0(degree)08' East to the true point of beginning of the land to be
described; and running thence from the true point of beginning: South
0(degree)08' East, 328.43 feet; thence South 89(degree)52' West, a distance
of 52.00 feet; thence South 0(degree)08' East, a distance of 245.00 feet;
thence North 89(degree)52' East, a distance of 52.00 feet; thence South
0(degree)08' East, a distance of 456.45 feet; thence South 89(degree)20'45"
West, a distance of 172.26 feet; thence North 0(degree)08' West, a distance
of 1029.88 feet; thence North 89(degree)55' East, 172.26 feet to the true
point of beginning.
SAVE AND EXCEPT the Southerly 377.43 feet more particularly described in
deed to Ernest D. Fish, Inc., recorded DECEMBER 29, 1977, in Reel 107, page
1540, Marion County Records.
<PAGE>
TRACT VI
Beginning at a point marking the Southwest corner of that tract of land
conveyed to Earl Lewis Langenberg, by deed recorded in Volume 353, page
399, Deed Records for Marion County, Oregon, which point is on the East
line of that tract of land conveyed to Landon Bergen, et ux, by deed
recorded in Volume 498, page 513, Deed Records for Marion County, Oregon,
thence South 0(degree)07'15" East, 712.45 feet along the Easterly line of
said Bergen tract to a 5/8 inch iron rod at the Southeast corner thereof;
thence South 89(degree)20'45" West, 345.18 feet along the Southerly
boundary of said Bergen tract and the Westerly extension thereof to the
Southeast corner of that tract of land conveyed to Kenneth D. Coomler,
Trustee, by deed recorded in Volume 635, page 38, Deed Records for Marion
County, Oregon; thence North 0(degree)08' West 456.45 feet along the
Easterly line of said Coomler tract, thence South 89(degree)55' West, a
distance of 52.00 feet; thence North 0(degree)08' West, a distance of
245.00 feet; thence North 89(degree)52' East, a distance of 52.00 feet;
thence North 0(degree)08' West 528.43 feet to a 1/2 inch iron pipe on the
Southerly right of way line of Market Street; thence North 89(degree)55'
East, 345.50 feet along said Southerly right of way line to a 5/8 inch iron
rod with an aluminum cap on the East line of the aforesaid Bergen property;
thence South 0(degree)07'15" East, 512.06 feet to the place of beginning.
SAVE AND EXCEPT the Southerly 377.43 feet more particularly described in
deed to Ernest D. Fish, Inc., recorded DECEMBER 29, 1977, in Reel 107, Page
1540, Marion County Records.
TRACT VII
That tract of land situated in the Southwest quarter of the Northwest
quarter, Section 19, Township 7 South, Range 2 West of the Willamette
Meridian in Marion County, Oregon, which is more particularly described as
follows:
Beginning at a point at the intersection of the Westerly right of way line
of Lancaster Drive and the Southerly boundary line of that parcel of land
conveyed to Earl L. Langenberg, by deed recorded in Volume 353, page 399,
Deed Records for Marion County, Oregon, said point being Northerly along
the center line of Lancaster Drive, 712.14 feet and Westerly 40.00 feet
from the Northeast corner of the Isaac Baker Donation Land Claim No. 91 in
Marion County, Oregon; and running thence from the true point of beginning
South 89(degree)30'24" West 512.09 feet along the Southerly boundary line
of said Langenberg parcel to the Southwesterly corner of same; thence North
0(degree)07'15" West, 158.36 feet along the Westerly boundary line of said
Langenberg parcel to a 3/4 inch iron pipe marking the Northwesterly corner
of same; thence North 89(degree)22'45" East 512.61 feet along the Northerly
boundary line of said Langenberg parcel to a point on the Westerly right of
way line of Lancaster Drive, a one-inch iron pipe bears South
89(degree)22'45" West, a distance of 0.06 feet; thence South
0(degree)03'45" West 159.50 feet along said Westerly right of way line to
the point of beginning, a one inch iron pipe bears North 89(degree)30'24"
East, a distance of 0.07 feet.
TRACT VIII
Beginning in the center of a County Road at a point which is 446.24 feet
North 0(degree)04' East from the Northeast corner of the Isaac Baker
Donation Land Claim in Township 7 South, Range 2 West of the Willamette
Meridian in Marion County, Oregon; thence North 0(degree)04' East, along
the center of said County Road, a distance of 107.5 feet to the Northeast
corner of a tract of land conveyed to Homer J. Conklin and Grace J.
Conklin, by deed recorded in Volume 225, page 481, Deed Records for Marion
County, Oregon; thence South 89(degree)20' West, along the North line of
said Conklin tract, a distance of 551.76 feet to the Northwest corner
thereof, thence Southerly along the West line of said Conklin tract, a
distance of 107.5 feet; thence East to the place of beginning.
SAVE AND EXCEPT for roadway purposes a strip 30.0 feet in width off of the
East side of the above described tract of land.
ALSO SAVE AND EXCEPT that portion of the herein described premises taken by
Marion County Resolution No. 1466 for the improvement of Lancaster Drive
N.E. to an 80.00 foot right of way.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $1,094,441.69 per annum. From December 9, 2011 through
December 8, 2016, the Fixed Rent will be $910,376.49 per annum. From December 9,
2016 through December 8, 2021, the Fixed Rent will be $870,578.61 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (13)
Medford, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(Medford, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
11. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
Medford, OR
The land referred to is described as follows:
Beginning at the southeast corner of Donation Land Claim No. 38 in Township
37 South, Range 1 West of the Willamette Meridian in Jackson County,
Oregon, said point being marked by a Jackson County Brass Cap; thence South
89(degree)53'58" East, along the south line extended of said Donation Land
Claim, a distance of 96.06 feet to a 5/8" iron pin on the westerly boundary
of that tract conveyed to the City of Medford by deed recorded as Document
No. 81-14783 of the Official Records of Jackson County, Oregon; thence,
along said westerly boundary and the arc of a 175.00 foot radius curve to
the right (the long chord to which bears South 04(degree)06'05" East 25.05
feet), a distance of 25.07 feet; thence South 0(degree)00'02" West 478.14
feet to a 5/8" iron pin; thence South 0(degree)00' 02" West 366.34 feet to
a 5/8" iron pin; thence North 89(degree)58'41" West 451.60 feet to a 5/8"
iron pin; thence North 89(degree)58'30" West 177.92 feet to a 5/8" iron
pin; thence North 18(degree)04'50" West 618.09 feet to the southerly right
of way boundary of State Highway No. 62 (Crater Lake Highway), said point
being marked by a P-K nail; thence North 50(degree)58'00" East, along said
right of way, 690.12 feet to a P-K nail with brass washer marked "LS 688"
located in outside edge of curb marking the westerly corner of real
property described in Volume 485 page 463, Jackson County, Oregon, Deed
Records; thence South 36(degree)18'12" East, along the southwesterly line
of said real property, 189.44 feet to a 5/8" iron pin; thence South 89
(degree)53'58" East 75.27 feet to the point of beginning.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $955,938.04 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $795,166.64 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $760,405.26 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (14)
(North) Salem, OR
<PAGE>
MODIFICATION TO MASTER LEASE
((North) Salem, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
12. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
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If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
NORTH SALEM, OR
The land referred is described as
Beginning at a point on the Easterly line of Liberty Street which is 100.04 feet
North 1(degree) 09' West, 150.00 feet South 89(degree)16' East, 100.00 feet
North 4(degree)27' West and 150.00 feet North 89(degree)16' West from the
point of intersection of the Easterly line of said Liberty Street with the North
line of Mapleton Addition, to the City of Salem, Marion County, Oregon; thence
South 89(degree)16' East 150.00 feet; thence South 4(degree)27' East 100.00
feet; thence North 89(degree)16' West 50.00 feet; thence South 0(degree)44'
West 100.00 feet to a point on the North line of said Mapleton Addition; thence
South 89(degree)16' East along the North line of said Mapleton Addition, 676.93
feet to a point on the Westerly line of Broadway Street, said point being the
Northeast corner of Lot 1, Block 3, of said Mapleton Addition; thence North 0
(degree) 23' East along the East line of said Broadway Street 888.19 feet, more
or less, to the Southeast corner of the tract of land conveyed to Northwest
Natural Gas Company by deed recorded in Volume 602, Page 87, Deed Records,
Marion County, Oregon; thence South 89(degree)52' West along the South line of
said Northwest Natural Gas Company Tract 535.79 feet, more or less to the
Northeast corner of the tract of land conveyed to William H. Stovin, et ux, by
deed recorded in Volume 616, Page 570, Deed Records, Marion County, Oregon;
thence South 28(degree)00' West along the East line of said Stovin Tract 83.47
feet to the Southeast corner thereof; thence North 62(degree)00' West along the
South line of said tract 100.00 feet to a point on the Easterly line of North
River Road; thence Southerly along the Easterly line of North River Road and the
Easterly line of Liberty Street to the place of beginning.
ALSO: Beginning on the Easterly line of Liberty Street at a point which is
100.04 feet North 1(degree) 09' West from the point of intersection of the
Easterly line of said Liberty Street with the North line of Mapleton Addition to
the City of Salem, Marion County, Oregon; thence South 89(degree)16' East
parallel with the North line of said Mapleton Addition 150.00 feet; thence North
4(degree)27' West 100.00 feet; thence North 89(degree)16' West, parallel with
the North line of said Mapleton Addition 150.00 feet to a point on the Easterly
line of said Liberty Street; thence Southerly along the arc of a 1735.92 foot
radius curve to the right (the chord of which bears South 4(degree)27' East
100.00 feet) a distance of 100.02 feet to the point of beginning.
SAVE AND EXCEPT: A parcel of land situated in the Northeast quarter of the
Northeast quarter of Section 15, Township 7 South, Range 3 West of the
Willamettte Meridian, Marion County, Oregon, which is more particularly
described as follows:
Beginning at a point on the Westerly right of way line of Broadway,
said Westerly right of way line being also the Easterly boundary line of that
tract of land conveyed to Roundup Properties, Inc., by deed recorded in Volume
637, Page 301 Deed Records, Marion County, Oregon, said point bears South 0
(degree) 17' West 150.00 feet from the Northeasterly corner of said tract; and
running thence South 89(degree)53'45" West 160.00 feet parallel with the
Northerly boundary line of said tract; thence South 0(degree)06'15" East 125.00
feet perpendicular to said Northerly boundary line; thence North 89(degree)
53'45" East 155.14 feet parallel with said Northerly boundary line to a point on
said Westerly right of way line, as described in deed to the City of Salem,
recorded August 27, 1968, in Volume 652, Page 573, Deed Records for Marion
County, thence North 2(degree)37'33" East 118.91 feet along the Westerly right
of way line; thence continue along said Westerly right of way line North 0
(degree) 17' East 6.19 feet to the point of beginning.
<PAGE>
North Salem, Oregon
ALSO SAVE AND EXCEPT: Beginning at a point which is South 0(degree)17' West 150
feet and South 89(degree)53'45" West 160 feet from the Northeasterly corner of
a tract of land conveyed to Roundup Properties, Inc., by deed recorded in Volume
637, Page 301, Deed Records for Marion County, Oregon; and running thence South
0(degree)06'15" East, a distance of 125 feet perpendicular to the Northerly
line of aforesaid tract of land thence South 89(degree)53'45" West, a distance
of 25 feet; thence North 0(degree)06'15"West, a distance of 125 feet to the
aforesaid tract of land; thence North 89(degree)53'45" East, a distance of 25
feet to the place of beginning.
ALSO SAVE AND EXCEPT: Beginning at a point on the Westerly line of Broadway
Street which is the Northeast corner of a tract of land conveyed to Roundup
Properties, Inc., by deed recorded in Volume 637, Page 301, Deed Records for
Marion County, Oregon; thence South 0(degree)17' West, along the Westerly line
of Broadway Street, 150.00 feet to the Northeast corner of a tract of land
conveyed to Landpower Inc., by deed recorded in Volume 670, Page 357, Deed
Records for Marion County, Oregon; thence South 89(degree)53'45" West, 160.00
feet to the Northwest corner of said Landpower Inc., tract; thence North 0
(degree) 17' East, parallel with the Westerly line of Broadway Street, 150.00
feet to a point on the North line of said Roundup Properties, Inc., tract;
thence North 89(degree)52' East, along said North line, 160.00 feet, more or
less, to the place of beginning.
SAVE AND EXCEPT that part conveyed to the City of Salem by Deeds recorded August
27, 1968 in Volume 652, Page 573 and March 12, 1982 in Reel 275, Page 1432,
Records for Marion County, Oregon.
TOGETHER WITH an easement in common with others as set forth in Reciprocal
Easement recorded November 21, 1968, in Volume 657, Page 115, Deed Records for
Marion County, Oregon over the following:
Beginning at a point on the Westerly right of way line of Broadway, said
Westerly right of way line being also the Easterly boundary line of that tract
of land conveyed to Roundup Properties, Inc., by deed recorded in Volume 637,
page 301, Deed Records, Marion County,
<PAGE>
North Salem, Oregon
Oregon, said point bears South 0(degree)17' West 150.00 feet from the
Northeasterly corner of said tract; and running thence South 89(degree)53'45"
West 160.00 feet parallel with the Northerly boundary line of said tract; thence
South 0(degree)06'15" East 125.00 feet perpendicular to said Northerly boundary
line; thence North 89(degree)53'45" East 155.14 feet parallel with said
Northerly boundary line to a point on said Westerly right of way line, as
described in deed to the City of Salem, recorded August 27, 1968, in Volume 652,
page 573, Deed Records for Marion County, Oregon; thence North 2(degree)37'33"
East 118.91 feet along said Westerly right of way line; thence continuing said
Westerly right of way line North 0(degree)17' East 6.19 feet to the point of
beginning.
Beginning at a point which is South 0(degree)17' West 150 feet and South 89
(degree) 53'45" West 160 feet from the Northeasterly corner of a tract of land
conveyed to Roundup Properties, Inc., by deed recorded in Volume 637, Page 301,
Deed Records for Marion County, Oregon; and running thence South 0(degree)
06'15" East, a distance of 125 feet perpendicular to the Northerly line of
aforesaid tract of land; thence South 89(degree)53'45" West, a distance of 25
feet; thence North 0(degree)06'15" West, a distance of 125 feet to the
aforesaid tract of land; thence North 89(degree)53'45" East, a distance of 25
feet to the place of beginning.
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $381,062.11 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $316,974.39 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $303,117.59 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (15)
Oregon City, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(Oregon City, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
13. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
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If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
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If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
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STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
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EXHIBIT A
OREGON CITY, OR
The land referred to is described as
IN THE COUNTY OF CLACKAMAS AND STATE OF OREGON
A tract of land located in the Samuel N. Vance D. L. C. No. 51, located in
Sections 5 and 8, Township 3 South, Range 2 East, of the W. M., being more
particularly described as:
Beginning at a stone marked with an "X" at the northwest corner of the
Washington Williams D. L. C. in Township 3 South, Range 2 East, of the W. M.;
thence South 14(degree)42' 45" West a distance of 190.13 feet to a 3/4 inch
iron pipe set at the beginning point of Parcel 2 of the Hi-Line Construction
Company tract described in that contract of sale recorded in Book 32, page 789,
Fee No. 5427, Miscellaneous Records; thence South 62(degree)07' 37" West along
the southeasterly line of the said Parcel 2 a distance of 922.99 feet to the
northeasterly right-of-way line of State Highway No. 213, said right-of-way line
being 30.00 feet Northeasterly of centerline; thence North 30(degree)47' 20"
West along said northeasterly right-of-way line a distance of 500.59 feet to a
point being 15.00 feet easterly of the northwesterly line of the Bonneville
Power Administration easement recorded June 10, 1942, in Book 294, at page 461,
Clackamas County Deed Records; thence North 44(degree)52' 15" East parallel to
said northwesterly line a distance of 744.62 feet to a point on the
southwesterly line of that tract of land conveyed to Patrick C. Whitmore and
others by that deed recorded in Fee No. 72 19202, Clackamas County Deed Records;
thence North 44(degree)30' 05" West along said southeasterly line a distance of
14.98 feet to the northwesterly line of said Bonneville Power Administration
easement; thence North 44(degree)52' 15" East along said northwesterly line a
distance of 309.05 feet to the south right-of-way line of Beaver Creek Road,
said right-of-way line being 30.00 feet south of centerline; thence South 81
(degree) 27' 54" East along said south right-of-way line a distance of 534.98
feet to a line between a stone marked with an "X" at the northeast corner of the
Vance D. L. C. and a stone marked with an "X" at the northwest corner of the
Washington Williams D. L. C.; thence South 16(degree)01' 30" West along said
line a distance of 512.57 feet to the point of beginning of this description.
EXCEPTING all portions lying within the limits of public roads.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $706,401.07 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $587,597.26 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $561,909.95 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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Appendix 10I (16)
(New) Roseburg, OR
<PAGE>
MODIFICATION TO MASTER LEASE
((New) Roseburg, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
14. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
(NEW) ROSEBURG, OR
PARCEL 1
A parcel of land lying in Sections 11 and 14, Township 27 South, Range 6 West,
Willamette Meridian, Douglas County, Oregon, being more particularly described
as follows: Beginning at a point on the southerly line of Northwest Garden
Valley Boulevard, said point being the most easterly corner of that certain
easement as described in Volume 260, Page 447, Deed Records of Douglas County,
Oregon; thence South 63(degree)56' 06" East along said southerly line, 75.78
feet; thence South 26(degree)00' West 622.23 feet; thence North 75(degree)47'
52" West 254.27 feet to a point on the southeasterly line of the above said
easement; thence along the boundaries of said easement as follows: South 33
(degree) 11' West 149.82 feet, North 22(degree)34' 20" East 467.00 feet, North
63(degree)48' 41" West 27.23 feet, North 26(degree)00' East 356.97 feet to a
point on the above said southerly line of Garden Valley Boulevard; thence South
63(degree)56' 06" East along said southerly line, 247.00 feet to the point of
beginning.
PARCEL 2
Beginning at a brass cap on the southerly right of way line of Garden Valley
Boulevard, from which a brass cap marked Veterans Administration Boundary
Monument on the westerly line of Isaac Jones Donation Land Claim No. 65,
Township 27 South, Range 6 West, Willamette Meridian, bears North 65(degree)00'
West 1315.94 feet; thence South 64(degree)00' East 667.00 feet to a steel tube
with survey cap; thence South 26(degree)00' West 550.00 feet to a steel tube
with survey cap; thence North 75(degree)51' West 606.05 feet to a steel tube
with a survey cap; thence South 33(degree)17' West 149.82 feet to a steel tube
with survey cap; thence North 22(degree)37' East 467.00 feet to a steel tube
with survey cap; thence North 64(degree)00' West 27.35 feet to a brass cap;
thence North 26(degree)00' East 356.97 feet to the place of beginning, all
lying in Sections 11 and 14, Township 27 South, Range 6 West, Willamette
Meridian, Douglas County, Oregon.
EXCEPTING THEREFROM the following: A parcel of land lying in Sections 11 and 14,
Township 27 South, Range 6 West, Willamette Meridian, Douglas County, Oregon,
being more particularly described as follows: Beginning at a point on the
southerly line of Northwest Garden Valley Boulevard, said point being the most
easterly corner of that certain easement as described in Volume 260, Page 447,
Deed Records of Douglas County, Oregon; thence South 63(degree)56' 06" East
along said southerly line, 75.78 feet; thence South 26(degree)00' West 622.23
feet; thence North 75(degree)47' 52" West 254.27 feet to a point on the
southeasterly line of the above said easement; thence along the boundaries of
said easement as follows: South 33(degree)11' West 149.82 feet, North 22
(degree) 34' 20" East 467.00 feet, North 63(degree)48' 41" West 27.23 feet,
North 26(degree)00' East 356.97 feet to a point on the above said southerly
line of Garden Valley Boulevard; thence South 63(degree)56' 06" East along said
southerly line, 247.00 feet to the point of beginning.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $593,869.26 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $493,991.25 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $472,396.00 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (17)(T)
Roseburg (#2), OR
<PAGE>
Recordation Requested by
and
After recordation return to:
Stoel Rives LLP
Attention: David W. Green
950 Port of Portland Building
700 NE Multnomah
Portland, OR 97232 (Space reserved for recorder's use)
- -------------------------------------------------------------------------------
TERMINATION AGREEMENT AND ASSIGNMENT OF INTERESTS
(Roseburg, Oregon)
This Termination Agreement and Assignment of Interests (this "Agreement"),
dated as of the 4th day of February, 1997 between METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation (hereinafter referred to as "Landlord"), as
landlord/lessor (by assignment) under the Master Lease described below, and FRED
MEYER, INC., a Delaware corporation (hereinafter referred to as "Tenant"), as
tenant/lessee under such Master Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord, certain
real property described in the attached Exhibit A (the "Premises"), pursuant to
the terms of a Lease Agreement, between Landlord's predecessor in interest, FRED
MEYER REAL ESTATE PROPERTIES, LTD., an Oregon limited partnership, as
landlord/lessor, and Tenant, as tenant/lessee, dated October 22, 1986, as
amended (the "Master Lease"). Such Master Lease was an amended and restated
lease, which modified and restated one or more prior leases of the Premises.
Evidence of such Master Lease and such prior lease or leases is evidenced of
record by certain memoranda of leases and/or other instruments listed on the
attached Exhibit B (the "Memoranda").
Tenant, as assignee of FRED MEYER REAL ESTATE PROPERTIES, LTD. pursuant to
an Assignment of Master Lease dated November 25, 1986 and recorded on December
9, 1986 in the Official Records of Douglas County, Oregon in Book 968 at page
218, Recorder's No. 86-16629 holds the lessor's interest under and to existing
leases affecting portions of the Premises (for purposes hereof, the
"Subleases"). Tenant's interest in such Subleases was then assigned, for
collateral purposes, to Landlord at the closing of Landlord's
- -------------------------------------------------------------------------------
Until a change is requested, all tax statements shall be sent to the following
address: c/o Fred Meyer, Inc., 3800 SE 22nd Avenue, PO Box 42121, Portland,
Oregon 97242-0121
Property tax account No.: 47648.01
- -------------------------------------------------------------------------------
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
1
<PAGE>
purchase of the Premises, pursuant to the terms of an Assignment of Leases
and/or Rents (the "Assignment"), by Tenant as assignor in favor of Landlord as
assignee, which is more particularly described on the attached Exhibit B.
The parties desire to evidence of record a termination of the Master Lease
and to effect and record a termination of the Memoranda and release and
reconveyance to Tenant of the interest of Landlord under the Assignment, in
connection with the closing of the purchase of the Premises by Tenant, as
evidenced by a deed being recorded on the same date as this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Termination of Master Lease and Memoranda.
The Master Lease and Memoranda listed on the attached Exhibit B are
terminated as of the date of closing by Tenant of its acquisition of the
Premises pursuant to the terms set forth herein, which is being effected
simultaneously herewith (the "Termination Date"). As of the Termination Date,
Landlord releases and assigns to Tenant all right, title and interest of
Landlord pursuant to the Assignment and Tenant assumes all obligations under the
Assignment.
Effective as of the Termination Date, except as provided in paragraph
2 below, the parties shall have no further rights or obligations under the
Master Lease.
2. Nature of Termination; No Release of Accrued Obligations.
The termination hereunder is in the nature of an acceleration of the
original expiration date of the Master Lease in connection with the purchase of
the Premises by Tenant, and neither this Agreement nor the termination of the
Master Lease shall in any way:
(a) be deemed to excuse or release Tenant from any obligation or
liability, including without limitation any obligation or liability under
provisions of the Master Lease to indemnify, defend and hold harmless Landlord
or other parties, or with respect to any breach or breaches of the Master Lease,
which obligation or liability (i) first arises prior to the Termination Date, or
(ii) arises out of or is incurred in connection with events or other matters
which took place prior to the Termination Date, or
(b) affect any obligation under the Master Lease which by its
terms is intended to survive the expiration or sooner termination of the Master
Lease.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
TENANT: FRED MEYER, INC.,
a Delaware corporation
By: SCOTT L. WIPPEL
------------------------------------
Title: Vice President
---------------------------------
LANDLORD: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
------------------------------------
Name: Edward J. Hayes
----------------------------------
Title: Ass't. V.P.
---------------------------------
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER OF ALASKA, INC., an Alaska
corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
3
<PAGE>
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by
Edward J. Hayes, as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
--------------------------------------------
Notary Public for Oregon
My commission expires 9/20/97
[NOTARY PUBLIC]
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
4
<PAGE>
EXHIBIT A
(Roseburg, Oregon)
All that portion of Lot 15, Fruitvale, as filed and recorded in Volume 2, Page
16, Plat Records of Douglas County, Oregon, described as: Beginning at a 5/8
inch iron rod set above a 3/4 inch iron rod in the North right of way line of
Garden Valley Boulevard, from which the Southeast corner of Lot 15 bears South
89(degree)46' 48" East 430.83 feet (a 1/2 inch iron pipe 30.00 feet South 00
(degree) 25' 07" West from the Southeast corner of Lot 15 bears South 85(degree)
47' 46" East 431.77 feet, said pipe being previously referred to as the
Southeast corner of Lot 15); thence along the Northerly right of way line of
Garden Valley Boulevard, North 89(degree)41' 30" West 412.14 feet to a 3/4 inch
iron rod; thence along the Easterly right of way line of Vine Street, North 00
(degree) 42' 48" West 230.60 feet to a 5/8 inch iron rod; thence North
89(degree) 39' 45" East 98.91 feet to a 3/4 inch iron rod; thence North
00(degree)42' 31" West 4.38 feet to a 5/8 inch iron rod on the South line of
J.M. Noyes property as described in Volume 111, Page 546, Deed Records of
Douglas County, Oregon; thence along the South property line of said Noyes
property, South 89(degree) 40' 31" East 312.90 feet to a 5/8 inch iron rod
marking the property line of F. Jenkins and R. G. Harper as described in Volume
313, Page 882, Deed Records of Douglas County, Oregon; thence along said Jenkins
and Harper property line, South 00(degree)47' 24" East 236.01 feet to the point
of beginning.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
5
<PAGE>
Exhibit B - List of Matters of Record to be Terminated
(Roseburg, Oregon)
1. Memorandum of Restated and Amended Lease:
Dated: November 25, 1986
Lessor: Fred Meyer Real Estate Properties, Ltd., an Oregon Limited
Partnership
Lessee: Fred Meyer, Inc., a Delaware corporation
Recorded: December 9, 1986
Book: 968
Page: 203
Recorder's No: 86-16626, and rerecorded in Book 970, Page 760, Recorder's
No. 86-17777, records of Douglas County, Oregon.
2. The Lessor's interest in said lease has been assigned pursuant to an
"Assignment of Master Lease" dated November 25, 1986, by Fred Meyer Real
Estate Properties, Ltd., an Oregon Limited Partnership, to Metropolitan
Life Insurance Company, a New York corporation:
Recorded: December 9, 1986
Book: 968
Page: 218
Recorder's No: 86-16629, and rerecorded in Book 970, Page 775, Recorder's
No. 86-17780, records of Douglas County, Oregon.
3. Said unrecorded Restated and Amended Lease was further amended by an
unrecorded First Amendment to Restated and Amended Lease as disclosed
by a Memorandum of First Amendment to Restated and Amended Lease, by
and between the parties therein, upon the terms, covenants and
conditions contained therein:
Dated: November 25, 1986
Landlord: Metropolitan Life Insurance Company, a New York corporation
Tenant: Fred Meyer, Inc., a Delaware corporation
Recorded: December 9, 1986
Book: 968
Page: 223
Recorder's No: 86-16630, and rerecorded in Book 970, Page 780, Recorder's
No. 86-17781, records of Douglas County, Oregon.
4. An unrecorded Option and Right of First Opportunity to negotiate for the
purchase of said land, by and between the parties thereto, pursuant to the
terms, covenants and conditions provided therein:
Dated: November 25, 1986
Disclosed by: Memorandum of First Amendment to Restated and Amended Lease
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
6
<PAGE>
Executed by: Metropolitan Life Insurance Company, a New York corporation
In Favor of: Fred Meyer, Inc., a Delaware corporation
Recorded: December 9, 1986
Book: 968
Page: 223
Recorder's No: 86-16630, and rerecorded in Book 970, Page 780, Recorder's
No. 86-17781, records of Douglas County, Oregon.
5. The Lessor's interest in said lease has been assigned by an instrument,
upon the terms, covenants and provisions thereof:
Dated: October 22, 1986
From: Fred Meyer Real Estate Properties, Ltd., an Oregon Limited
Partnership
To: Fred Meyer, Inc., a Delaware corporation
Recorded: December 9, 1986
Book: 968
Page: 207
Recorder's No: 86-16627, and rerecorded in book 970, Page 764, Recorder's
No. 86-17778, records of Douglas County, Oregon.
6. The interest of Fred Meyer, Inc., a Delaware corporation, has been
assigned pursuant to an Assignment of Rights and Leases to Metropolitan
Life Insurance Company, a New York corporation, by document recorded
December 9, 1986, in Book 968, Page 227, Recorder's No. 86-16631, and
rerecorded in Book 970, Page 784, Recorder's No. 86- 17782, records of
Douglas County, Oregon.
STATE OF OREGON ]
COUNTY OF D0UGLAS ] SS.
I, ______________, COUNTY CLERK AND RECORDER OF
CONVEYANCES, DO HEREBY CERTIFY THAT THIS
INSTRUMENT WAS RECORED
97 FEB-5 PM 2:45.
DOYLE SHAVER, JR.
DOUGLAS COUNTY CLERK
IN THE OFFICIAL RECORDS OF DOUGLAS COUNTY
BY GLAIN G. BENNETT
-------------------------------------
Deputy
FEE 55.00
5.00
-----
60.00 pd.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
7
<PAGE>
Appendix 10I (18)
(Santa Clara) Eugene, OR
<PAGE>
MODIFICATION TO MASTER LEASE
((Santa Clara) Eugene, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
15. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
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8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
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If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
SANTA CLARA, OR
Tract 1:
Beginning at a 2 inch iron pipe on the Easterly boundary line of that parcel of
land described in Book 381, Page 490, Lane County Oregon Deed Records, said 2
inch iron pipe being also the initial corner of MILTON ADDITION, as platted and
recorded in Book 39, Page 28, Lane County Oregon Plat Records, said 2 inch iron
pipe also being recorded as bearing West 4610.23 feet and South 209.13 feet from
the Northeast corner of Section 13, Township 17 South, Range 4 West of the
Willamette Meridian, and running thence South 82(degree)30' 32" West 278.21
feet to a 5/8 inch iron rod; thence South 74(degree)06' 07" West 28.22 feet to
a 5/8 inch iron rod; thence North 74(degree)17' 09" West 432.95 feet to a 5/8
inch iron rod with an aluminum cap; thence North 3(degree)29' 32" West 201.71
feet to a 5/8 inch iron rod with an aluminum cap; thence South 86(degree)30'
28" West 195.39 feet to a 5/8 inch iron rod with an aluminum cap on the Easterly
right of way line of River Road; thence along said Easterly right of way line
North 21(degree)27' 45" West 70.60 feet to a 5/8 inch iron rod with an aluminum
cap and North 15(degree)00' 45" West 155.25 feet to a 5/8 inch iron rod with an
aluminum cap, which marks the intersection of said Easterly right of way line of
River Road and the Southerly right of way line of Relocated Division Avenue;
thence along said Southerly right of way line of Relocated Division Avenue,
North 88(degree)26' 15" East 684.89 feet to a 5/8 inch iron rod marking the
point of beginning of a 914.93 foot radius curve right; thence Southeasterly
along the arc of said curve to a 5/8 inch iron rod, the long chord of which
bears South 74(degree)50' 32" East 525.06 feet, which iron rod also marks a
point on the Westerly boundary line of that certain tract of land described in
Book 412, Page 182, Lane County Oregon Deed Records; thence South 3(degree)29'
32" East 309.95 feet to a point on the Southerly boundary of said MILTON
ADDITION; thence South 76(degree)54' 53" West 223.00 feet along the Southerly
boundary of said MILTON ADDITION to the place of beginning, in Lane County,
Oregon;
EXCEPT that portion described in deed to Lane County, a political
subdivision of the State of Oregon, recorded November 14, 1981, Reception
No. 8146596, Lane County Oregon Records;
Tract 2:
Beginning at an iron rod with an aluminum cap on the Northerly boundary line of
the Belt Line Freeway, said iron rod being located South 82(degree)30' 32" West
278.21 feet and South 74(degree)06' 07" West 28.22 feet and North 74(degree)
17' 09" West 432.95 feet from the 2 inch iron pipe which marks the initial
corner of the MILTON ADDITION, as platted and recorded in Book 39, Page 28, Lane
County Oregon Plat Records, which 2 inch iron pipe is also described as being
located West 4610.23 feet and South 209.13 feet from the Northeast corner of
Section 13, Township 17 South, Range 4 West of the Willamette Meridian, Lane
County, Oregon; thence along said Northerly boundary of the Belt Line Freeway,
North 74(degree)17' 09" West 76.14 feet to a 5/8 inch iron rod with and
<PAGE>
aluminum cap and South 82(degree)55' West 65.00 feet to a 5/8 inch iron rod with
an aluminum cap, which marks the intersection of the Northerly boundary of the
Belt Line Freeway and the Easterly boundary of River Road; thence North 21
(degree) 27' 45" West 190.00 feet along the Easterly boundary line of River
Road, to a 5/8 inch iron rod with an aluminum cap; thence North 86(degree)30'
28" East 195.39 feet to a 5/8 inch iron rod with an aluminum cap; thence South 3
(degree) 29' 32" East 201.71 feet to the place of beginning, in Lane County,
Oregon;
EXCEPT that portion described in deeds to Lane County, a political
subdivision of the State of Oregon, recorded November 4, 1981, Reception
No. 8146672 and Reception No. 8146596, Lane County Oregon Records.
Tract 3:
A parcel of land located in the Southwest quarter of Section 12 and the
Northwest quarter of Section 13, Township 17 South, Range 4 West of the
Willamette Meridian, Lane County, Oregon, described as follows: Beginning at a
point on the Northerly line of that certain parcel of land described in deed to
the City of Eugene, a municipal corporation, recorded June 22, 1966, Reception
No. 51763, Lane County Oregon Deed Records; North 76(degree)54' 53" East 222.90
feet of the initial corner of MILTON ADDITION, as platted and recorded in Book
39, Page 28, Lane County Oregon Plat Records, said initial corner being recorded
as bearing South 209.13 feet and West 4610.23 feet from the Northeast corner of
Section 13 in said Township and Range; thence North 3(degree)29' 32" West
310.52 feet more or less to a point on curve on the Southerly right of way line
of Division Avenue; thence along said Southerly right of way line along the arc
of a 914.93 foot radius curve right (the long chord of which bears South 53
(degree) 42' 23" East 144.36 feet, record South 53(degree)51' 05" East 143.93
feet), 144.51 feet to a point of tangency; thence along said Southerly right of
way line South 49(degree)10' 54" East 243.32 feet (record 237.42 feet) to a
point on the Northerly line described in said deed recorded June 22, 1966,
Reception No. 51763, Lane County Oregon Deed Records; thence South 76(degree)
54' 53" West 289.08 feet more or less to the point of beginning, in Lane County,
Oregon.
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $462,532.06 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $384,742.58 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $367,923.23 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (19)
Springfield, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(Springfield, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
16. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
SPRINGFIELD, OR
The land referred to is described as
Beginning at a point on the Northerly right of way line of "Q" Street, said
point being South 0(degree)12' 00" West 75.35 feet from the Southwest corner of
the William Spencer Donation Land Claim No. 50, Township 17 South, Range 3 West
of the Willamette Meridian, said point also being North 0(degree)12' 00" East
70.85 feet from the Southeast corner of the Jacob Halstead Donation Land Claim
No. 47, said Township and Range; thence along said Northerly line South 85
(degree) 54' 00" West 269.30 feet to the Easterly line of that certain parcel
described in Reception No. 8332793, Lane County Oregon Records; thence along the
Easterly and Northerly lines of said parcel the following courses: North 125.0
feet; West 124.68 feet to the Easterly line of that certain parcel described in
Reception No. 8345284, Lane County Oregon Records; thence along the Easterly and
Northerly lines of said parcel the following courses: North 3.55 feet; West
166.60 feet to the Easterly right of way line of 5th Street; thence along said
Easterly line the following courses: North 0(degree)04' 06" East 425.02 feet;
West 8.00 feet; North 0(degree)04' 06" East 230.51 feet to the Southerly line
of that certain parcel described in Reception No. 7894832, Lane County Oregon
Records; thence along the Southerly line of said parcel and the Southerly lines
of the parcels described in Reception Nos. 8518892, 67436 (October 7, 1971) and
71751 (November 5, 1971), Lane County Oregon Records, East 566.56 feet to the
Westerly line of McWILLAMA ADDITION, as platted and recorded in Book 4, Page 34,
Lane County Oregon Plat Records; thence along said Westerly line South 0(degree)
04' 02" East 122.52 feet to the Northwest corner of Lot 14, Block 10 of said
plat; thence along the Northerly line of said Lot 14 South 89(degree)55' 05"
East 131.71 feet to the Northeast corner of said Lot, said corner also being on
the Westerly line of 7th Street; thence on said Westerly line, also being the
Easterly line of said Block 10 and its prolongation Southerly South 0(degree)
04' 02" East 624.11 feet to the Northerly line of "Q" Street; thence along said
Northerly line South 82(degree)14' 00" West 133.26 feet to the point of
beginning, in Lane County, Oregon;
EXCEPTING that portion of the above described tract of land conveyed to the
City of Springfield, by deed recorded January 19, 1977, in Reel No. 830,
Reception No. 7703531, Lane County Oregon Records, being more particularly
described as follows: Beginning at the Southeast corner of the Jacob
Halstead Donation Land Claim No. 47, Township 17 South, Range 3 West of the
Willamette Meridian; running thence North 70.85 feet to an angle point on
the South boundary of the Fred Meyer property; thence North 82(degree)14'
East 132.45 feet to the True Point of Beginning; thence North 0(degree)01'
West 15 feet to a point; thence South 41(degree)06' 30" West 22.60 feet to
a point, thence North 82(degree)14' East 15 feet to the True Point of
Beginning, in Lane County, Oregon.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $548,717.42 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $456,433.13 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $436,479.77 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
<PAGE>
Appendix 10I (20)
(South) Salem, OR
<PAGE>
MODIFICATION TO MASTER LEASE
((South) Salem, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
17. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
SOUTH SALEM, OR
TRACT I
That tract of land situated in Lots 7, 8, 11, 12 and 14 of Smith's Fruit Farms,
Southwest Quarter of the Northeast Quarter of Section 3, Township 8 South, Range
8 West of the Willamette Meridian, Marion County, Oregon, which is more
particularly described as follows:
Beginning at a two-inch iron pipe marking the initial corner of Willa Acres as
recorded in Volume 15, Page 39, Marion County Book of Town Plats and running
thence from this the true point of beginning; South 89(degree)45' West 135.04
feet; thence South 0(degree)15' East 105.00 feet; thence Southwesterly 100
feet, more or less, to a point on the Easterly right of way line of U.S. 99
East, which bears Southeasterly 170.00 feet from the intersection of said
Easterly Highway right of way line and the Northerly boundary line of that tract
of land conveyed to R. R. and N. A. Ritchie by deed recorded in Volume 279, Page
201; thence Southeasterly along said Easterly highway right of way line 622
feet, more or less, to the Northerly right-of-way line of Relocated Madrona
Avenue, more particularly described in deed to the City of Salem, recorded in
Volume 656, page 83, Deed Records for Marion County, Oregon; thence Easterly
along said relocated Northerly right-of-way line as described in said City of
Salem deed to a point on the Southerly extension of the Easterly boundary line
of said Ritchie tract; thence North 0(degree)37' East 680 feet, more or less,
along said Easterly boundary line of said Ritchie tract described in Volume 279,
page 201 to a five-eighths inch iron rod with an aluminum cap on the Southerly
boundary line of the tract of land conveyed to R. R. and N. A. Ritchie by deed
recorded in Volume 468, page 14, Marion County Record of Deeds; thence North 89
(degree) 45' East 25.00 feet along said Southerly boundary line of said Ritchie
tract described in Volume 468, page 14, to a five- eighths inch iron rod with an
aluminum cap marking the Southeasterly corner of same; thence North 0(degree)
25'30" East 165.00 feet along the Easterly boundary line of said Ritchie tract
described in Volume 468, page 14, to a five-eighths inch iron rod with an
aluminum cap, thence South 89(degree)45' West 522.79 feet to a five-eighths
inch iron rod with an aluminum cap on the Westerly boundary line of that tract
of land conveyed to R. R. and N. A. Ritchie by deed recorded in Volume 224, page
174, Marion County Record of Deeds; said Westerly boundary line being also the
Easterly boundary line of Willa Acres; thence South 0(degree)09' East 165.00
feet along said Easterly subdivision boundary line to the point of beginning.
TRACT II
Beginning at a point on the South line of Lot 14, Smith's Fruit Farms in
Township 8 South, Range 3 West of the Willamette Meridian in Marion County,
Oregon, said point being South 89(degree)38'13" West 386.12 feet from the
Southeast corner of said Lot; thence South 89(degree)38'13" West along the
South line of said Lot, 173.00 feet to an iron pipe on the Easterly right of way
line of U.S. Highway 99E; thence Northerly along said right of way line on the
arc of a 5779.58 foot radius curve to the left (the chord of which bears North
25(degree)48'54" West 57.20 feet) a distance of 57.20 feet to the Southwesterly
corner of a
<PAGE>
tract of land conveyed to Robert W. and Dorothy A. Delk by deed recorded in
Volume 666, page 275, Deed Records for Marion County, Oregon; thence North 89
(degree) 38'13" East along the South line of said tract, 60.00 feet to an iron
rod marking the Southeasterly corner thereof; thence North 21(degree)33'23"
East along the Easterly line of said Delk Tract, 147.23 feet to an iron rod
marking an angle corner in said Easterly line; thence North 0(degree)26'12"
East continuing along the Easterly line of said Delk tract, 100.16 feet to an
iron pipe on the Southerly right of way line of relocated Madrona Avenue; thence
Easterly along said Southerly right of way line on the arc of a 1175.92 foot
radius curve to the left (the chord of which bears North 80(degree)22'10" East
14.62 feet), a distance of 14.62 feet; thence South 11(degree)12'47" East
272.62 feet; thence North 89(degree)38'13" East 15.47 feet; thence South 0
(degree) 21'47" East 23.00 feet to the point of beginning.
TOGETHER WITH a non-exclusive easement for ingress, egress and parking over
Tract III herein.
TRACT III Beginning at a point on the South line of Lot 14, Smith's Fruit Farms
in Township 8 South, Range 3 West of the Willimette Meridian in Marion County,
Oregon, said point being South 89(degree)38'13" West 2207.34 feet from the
Southeast corner of said Lot; thence South 89(degree)38'13" West along the South
line of said Lot, 178.78 feet; thence North 0(degree)21'47" West 23.00 feet;
thence South 89(degree)38'13" West 15.47 feet; thence North 11(degree) 12'47"
West 272.62 feet to a point on the Southerly right of way line of relocated
Madrona Avenue; thence Easterly along said right of way line as follows: Along
the arc of a 1175.92 foot radius curve to the left (the chord of which bears
North 76(degree)57'57" East 125.04 feet), a distance of 125.10 feet to an iron
pipe marking a point of tangent and North 73(degree)55'05" East 29.64 feet to an
iron pipe marking a point of curve, and along the arc of a 1115.92 foot radius
curve to the right (the chord of which bears North 74 (degree) 43'54" East 31.69
feet), a distance of 31.69 feet; thence South 11 (degree) 16'10" East, leaving
said right of way line, 340.50 feet to the place of beginning.
TRACT IV
The North 30.00 feet of the south 195.0 feet of Lot Eight (8), Smith Fruit
Farms, Marion County, Oregon, and the North 30.00 feet of the South 195.00 feet
of the West 190.00 feet of Lot Seven (7), Smith Fruit Farms, Marion County,
Oregon.
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $782,639.07 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $651,013.41 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $622,553.80 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
<PAGE>
Appendix 10I (21)
The Dalles, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(The Dalles, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
18. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
THE DALLES, OR
PARCEL I
Lots 1 and 2, GRIGG'S ADDITION TO CITY OF THE DALLES, in City of The Dalles,
County of Wasco and State of Oregon, according to the duly recorded plat
thereof, filed December 26, 1972, Plat Book 7, Page 20.
PARCEL II
A parcel of land lying in the Methodist Mission Donation Land Claim, Township 2
North, Range 13 East of the Willamette Meridian, Wasco County, Oregon and being
a portion of that property designated as Parcel 2 and described in that deed to
the State of Oregon, by and through its State Highway Commission, recorded in
Book 129, Page 750 of Wasco County Record of Deeds; the said parcel being that
portion of said property lying southerly of that property described in that
easement to Dalles City, recorded July 18, 1962, Micro-Film No.
62-0158, records of Wasco County, Oregon.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $513,685.56 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $427,292.99 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $408,613.51 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (22)
Tualatin, OR
<PAGE>
MODIFICATION TO MASTER LEASE
(Tualatin, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
19. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
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If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
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pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
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EXHIBIT A
TUALATIN, OR
The land referred to is described as
The following described portion of Section 24, Township 2 South, Range 1 West,
Willamette Meridian, Washington County, Oregon:
Beginning at a point on the West line of that tract of land conveyed to Fred
Meyer Properties, Inc., Book 1005, page 224, Deed Records, County of Washington,
State of Oregon, said point being South 88(degree)59' 01" East, 1399.20 feet
and South 01(degree) 37' 27" West, 470.75 feet from the West one-quarter corner
of Section 24, Township 2 South, Range 1 West, Willamette Meridian, said point
being the true point of beginning; thence Northeasterly along the arc of a
869.51 foot radius curve to the left (chord bears North 54(degree)41' 15" East,
269.84 feet), and along the South line of that tract conveyed to the City of
Tualatin, as evidenced by a Deed recorded July 24, 1979, fee number 79029149,
Records of Washington County, Oregon, a distance of 270.94 feet; thence
continuing along the South line of said City of Tualatin Tract, North 45(degree)
45' 38" East, 54.61 feet; thence continuing along the South line of said City of
Tualatin Tract, Northeasterly along the arc of a 767.51 foot radius curve to the
right (chord bears North 64(degree)33' 18" East, 494.55 feet), a distance of
503.53 feet, more or less, to the North line of said Fred Meyer Properties;
thence along said North line, South 79(degree)33' 27" East, 232.60 feet, more
or less, to the East line of said Fred Meyer Properties; thence along the East
line, South 1(degree), 37' 21" West, 656.92 feet, more or less, to the center of
said ditch, South 76(degree)00' 23" West, 21.28 feet, more or less; thence
continuing along the center of said ditch, South 11(degree)08' 45" West, 95.66
feet, more or less; thence continuing along the center of said ditch, South 56
(degree) 16' 55" West, 258.02 feet, more or less; thence continuing along the
center of said ditch, South 89(degree)09' 17" West, 354.44 feet, more or less;
thence continuing along the center of said ditch, South 81(degree)20' 00" West,
93.00 feet, more or less; thence continuing along the center of said ditch,
North 74(degree)02' 00" West, 239.00 feet, more or less, to a point on the West
line of said Fred Meyer Properties; thence along the said West line, North 1
degree 37' 21" East, 488.16 feet to the true point of beginning.
EXCEPTING THEREFROM that portion described in a Deed to the City of Tualatin, by
instrument, recorded July 24, 1979, fee number 79029149.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $996,384.69 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $828,810.90 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $792,578.73 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (23)
(West) Eugene, OR
<PAGE>
MODIFICATION TO MASTER LEASE
((West) Eugene, OR)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of
February 4, 1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation (hereinafter referred to as "Landlord"), as landlord/lessor under
the Lease described below, and FRED MEYER, INC., a Delaware corporation
(hereinafter referred to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
20. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Sr. V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as Sr. V.P. of FRED MEYER, INC., a Delaware corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
(West) Eugene, Oregon
Beginning at a found 2 inch diameter iron pipe being the Initial Point of MOYER
THEATRES, as platted and recorded in Book 57, Page 1, Lane County, Oregon Plat
Records; thence North 87(degree)29'58" West along the Westerly prolongation of
the Southerly boundary of said Plat, 180.00 feet to a set 5/8 inch diameter iron
rod, being the True Point of Beginning; thence North 2(degree)12'22" East
parallel with the Westerly boundary of said Plat 420.00 feet to a set 5/8 inch
diameter iron rod; thence South 87(degree)29'58" East parallel with the
Southerly boundary of said Plat 180.00 feet to a set 5/8 inch diameter iron rod
on the Westerly boundary of said Plat; thence North 2(degree)12'22" East along
the Westerly boundary of said Plat 20.00 feet to a set 5/8 inch diameter iron
rod; thence South 87(degree)29'58" East parallel with the Southerly boundary of
said Plat 890.23 feet to a set 5/8 inch diameter iron rod being 40.00 feet
Westerly of, when measured at right angles to, the centerline of Seneca Road as
monumented by the City of Eugene; thence South 2(degree)11'58" West parallel
with and 40.00 feet distant from the monumented centerline of Seneca Road 440.00
feet to a set 5/8 inch diameter iron rod on the Southerly boundary of said Plat;
thence North 87(degree)29'58" West along the Southerly boundary of said Plat
223.49 feet to a set 5/8 inch diameter iron rod; thence South 2(degree)11'58"
West parallel with the monumented centerline of Seneca Road 341.44 feet to a set
5/8 inch diameter iron rod being 40.00 feet Northerly of, when measured at right
angles to, the centerline of West 11th Avenue as monumented by the City of
Eugene; thence North 87(degree)24'11" West parallel with and 40.00 feet distant
from the last mentioned centerline 846.84 feet to a set 5/8 inch diameter iron
rod; thence North 2(degree)12'22" East parallel with the Westerly boundary of
said Plat, 340.01 feet to the true point of beginning, in Lane County, Oregon.
EXCEPT that portion deeded to the City of Eugene by Street Deed recorded April
21, 1983, Reception No. 8312849, Lane County, Oregon Records.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $942,850.49 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $784,280.18 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $749,994.72 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (24)
Aurora, WA
<PAGE>
MODIFICATION TO MASTER LEASE
(Aurora, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
21. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
AURORA, WA
The land referred to ________________ is located in the County of King, State of
Washington, and described as follows:
PARCEL A:
LOT 2, EXCEPT IN THE SOUTH 20 FEET THEREOF; AND ALL LOTS 6 THROUGH 12, INCLUSIVE
ALL IN BLOCK 1 OF RICHMOND TRACTS, ACCORDING TO THE PLAT RECORDED IN VOLUME 25
OF PLATS, PAGE 10, IN KING COUNTY, WASHINGTON; EXCEPT THE NORTH 10 FEET OF SAID
LOTS 9, 10, 11 AND 12 CONVEYED TO KING COUNTY FOR ROAD BY DEED RECORDED UNDER
AUDITOR'S FILE NO. 5350960; AND EXCEPT PORTION OF SAID LOT 9 CONVEYED TO KING
COUNTY BY DEED RECORDED UNDER AUDITOR'S FILE NO. 6309861; ALSO LOTS 1, 2, 3, 4,
5 AND 6 IN BLOCK 1 OF RICHMOND TRACTS DIVISION NO. TWO, ACCORDING TO THE PLAT
RECORDED IN VOLUME 25 OF PLATS, PAGE 38, IN KING COUNTY, WASHINGTON; ALSO LOTS 4
AND 5 AND THE NORTH 60 FEET OF LOT 6 IN BLOCK 1 OF RICHMOND TRACTS DIVISION 4,
ACCORDING TO THE PLAT RECORDED IN VOLUME 27 OF PLATS, PAGE 40, IN KING COUNTY,
WASHINGTON;
TOGETHER WITH THAT PORTION OF VACATED NORTH 184TH STREET LYING BETWEEN BLOCK 1
OF SAID RICHMOND TRACTS AND BLOCK 1 OF SAID RICHMOND TRACTS DIVISION TWO AND
BETWEEN AURORA AVE. AND LINDEN AVENUE; EXCEPT THE NORTH HALF OF SAID STREET
ADJOINING LOTS 4 AND 5 IN BLOCK 1 OF SAID RICHMOND TRACTS;
TOGETHER WITH VACATED 10 FOOT ALLEY LYING SOUTH OF BLOCK 1 OF
RICHMOND TRACTS DIVISION NO. 2 AND NORTH OF BLOCK 1, RICHMOND
TRACTS DIVISION NO. 4 AS SET FORTH UNDER AUDITOR'S FILE NO. 7708040736.
PARCEL B:
LOT 6 IN BLOCK 1 OF RICHMOND TRACTS, DIVISION 4, ACCORDING TO THE PLAT RECORDED
IN VOLUME 27 OF PLATS, PAGE 40, IN KING COUNTY, WASHINGTON, EXCEPT THE NORTH 60
FEET;
PARCEL C:
LOTS 1, 2 AND 3, BLOCK 1, RICHMOND TRACTS DIVISION 4, ACCORDING TO THE PLAT
RECORDED IN VOLUME 27 OF PLATS, PAGE 40, IN KING COUNTY, WASHINGTON; EXCEPT THE
EAST 100 FEET OF LOTS 2 AND 3, BLOCK 1, RICHMOND TRACTS, DIVISION 4, ACCORDING
TO THE PLAT RECORDED IN VOLUME 27 OF PLATS, PAGE 40, IN KING COUNTY, WASHINGTON.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $921,579.99 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $766,586.99 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $733,074.99 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (25)
Bellingham, WA
<PAGE>
MODIFICATION TO MASTER LEASE
(Bellingham, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
22. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
BELLINGHAM, WA
THAT PART OF "CEDAR ADDITION TO NEW WHATCOM, "TOGETHER WITH THE VACATED PORTION
THEREOF, NOW A PART OF THE CONSOLIDATED CITY OF BELLINGHAM, WHATCOM COUNTY,
WASHINGTON, AS PER THE MAP THEREOF, RECORDED IN BOOK 4 OF PLATS, PAGE 20, IN THE
AUDITOR'S OFFICE OF SAID COUNTY AND STATE; ALSO THAT PART OF "PLAT OF CEDAR
ADDITION SUPPLEMENTAL TO THE CITY OF BELLINGHAM, WASHINGTON," TOGETHER WITH
VACATED PORTION THEREOF, AS PER THE MAP THEREOF, RECORDED IN BOOK 6 OF PLATS,
PAGE 3, IN SAID AUDITOR'S OFFICE; ALSO THAT PART OF "YORK ADDITION TO THE TOWN
OF NEW WHATCOM," TOGETHER WITH VACATED PORTION THEREOF NOW A PART OF THE
CONSOLIDATED CITY OF BELLINGHAM, WHATCOM COUNTY, WASHINGTON, AS PER THE MAP
THEREOF, RECORDED IN BOOK 1 OF PLATS, PAGE 52, IN THE AUDITOR'S OFFICE OF SAID
COUNTY AND STATE, DESCRIBED AS FOLLOWS:
BEGINNING AT AN INTERSECTION OF THE SOUTH 40 FOOT RIGHT OF WAY LINE OF LAKEWAY
DRIVE WITH THE WEST 40 FOOT RIGHT OF WAY LINE OF LINCOLN STREET; THENCE SOUTH 00
DEGREES 23'35" WEST ALONG SAID WEST RIGHT OF WAY LINE, 317.14 FEET; THENCE ALONG
AN ARC CURVE TO THE RIGHT WITH A RADIUS OF 460 FEET THROUGH A CENTRAL ANGLE OF
16 DEGREES 11'00", AN ARC DISTANCE OF 129.93 FEET; THENCE SOUTH 16 DEGREES
34'35" WEST, 568.62 FEET; THENCE NORTH 89 DEGREES 38'19" west, 461.59 FEET;
THENCE NORTH 00 DEGREES 23'35" EAST, A DISTANCE OF 986.40 FEET; THENCE SOUTH 89
DEGREES 39'01" EAST, 40 FEET TO THE CENTERLINE OF VACATED JAMES STREET; THENCE
NORTH 00 DEGREES 23'35" EAST ALONG SAID CENTERLINE 5.00 FEET TO THE SOUTHERLY
RIGHT OF WAY LINE OF LAKEWAY DRIVE; THENCE EASTERLY ALONG SAID RIGHT OF WAY LINE
THE FOLLOWING 2 COURSES AND DISTANCES: SOUTH 89 DEGREES 37'42" EAST, 319.49
FEET; SOUTH 89 DEGREES 38'06" EAST, 278.81 FEET TO THE POINT OF BEGINNING.
SITUATE IN WHATCOM COUNTY, WASHINGTON.
The above described parcel is also known as Lot 1, Fred Meyer Short Plat, as per
the map thereof, recorded in Volume 10 of Short Plats, Pages 76 & 77, under
Auditors File Number 148224 Records of the Auditors office of Whatcom County,
WA.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $810,876.55 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $674,501.85 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $645,015.43 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (26)
Everett, WA
<PAGE>
MODIFICATION TO MASTER LEASE
(Everett, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
23. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
ET-EVERETT
That portion of the Northeast quarter of Northeast quarter of Section 13,
Township 28 North, Range 4 East, W.M. and of Lot 1, Beverly Garden Tracts,
Division 1, according to the plat recorded in Volume 10 of Plats, Page 1,
Records of Snohomish County, Washington, described as follows:
Commencing at the Northeast corner of said Section 13; thence South 0(degree)
08'16" west along east line thereof 30.00 feet; thence south 89(degree)49'36"
west parallel to north line of said Section 342.10 feet; thence south 0(degree)
08'16" west 10.00 feet to the true point of beginning; thence south 89(degree)
49'36" west 475.00 feet; thence south 1(degree) 10'45" west 79.82 feet; thence
south 32(degree)29'10" west 642.53 feet; thence south 0(degree)08'16" west
661.99 feet to south line of said Northeast quarter of Northeast quarter; thence
north 89(degree)52'40" east along said south line 96.47 feet to northwest
corner of said Lot 1, Beverly Garden Tracts Division No. 1; thence south 85
(degree) 30'01" East 67.07 feet; thence north 10(degree)21'02" east 47.72 feet;
thence north 3(degree)26'31" west 60.58 feet; thence south 57(degree)37'12"
east 185.29 feet to westerly right of way line of Evergreen Way; thence along
said westerly right of way line north 32(degree)33'29" east 942.88 feet; thence
north 0(degree)08'16" east 150.00 feet; thence south 89(degree)49'36" west
10.00 feet; thence north 0(degree)08'16" east 337.42 feet to the true point of
beginning:
EXCEPT portion thereof conveyed to the City of Everett for Beverly Park-
Mukilteo Road by warranty deed recorded April 23, 1983 under Auditor's File No.
8304250289.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $1,227,075.36 per annum. From December 9, 2011 through
December 8, 2016, the Fixed Rent will be $1,020,703.60 per annum. From December
9, 2016 through December 8, 2021, the Fixed Rent will be $976,082.68 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (27)(T)
(Fourth Plan) Vancouver, Washington
<PAGE>
Recordation Requested by FIRST AMERICAN TITLE CO.
and FILED FOR RECORD
After recordation return to: CLARK CO. WASH
Stoel Rives LLP 97 FEB-5 PM12:19
Attention: David W. Green
950 Port of Portland Building AUDITOR
700 NE Multnomah ELIZABETH A. LUCE
Portland, OR 97232 (Space reserved for recorder's use)
- -------------------------------------------------------------------------------
TERMINATION AGREEMENT AND ASSIGNMENT OF INTERESTS
(FP, Fourth Plain, Washington)
This Termination Agreement and Assignment of Interests (this "Agreement"),
dated as of the 4th day of February, 1997 between METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation (hereinafter referred to as "Landlord"), as
landlord/lessor (by assignment) under the Master Lease described below, and
ROUNDUP CO., a Washington corporation (hereinafter referred to as "Tenant"), as
tenant/lessee under such Master Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord, certain
real property described in the attached Exhibit A (the "Premises"), pursuant to
the terms of a Lease Agreement, between Landlord's predecessor in interest, FRED
MEYER REAL ESTATE PROPERTIES, LTD., an Oregon limited partnership, as
landlord/lessor, and Tenant, as tenant/lessee, dated October 22, 1986, as
amended (the "Master Lease"). Such Master Lease was an amended and restated
lease, which modified and restated one or more prior leases of the Premises.
Evidence of such Master Lease and such prior lease or leases is evidenced of
record by certain memoranda of leases and/or other instruments listed on the
attached Exhibit B (the "Memoranda").
Tenant, as Lessee of FRED MEYER REAL ESTATE PROPERTIES, LTD. pursuant to an
Agreement of Lease dated October 22, 1986 and recorded on December 9, 1986 in
the Official Records of Clark County, Oregon Auditor's File No. 8612090003 holds
the lessor's interest under and to existing leases affecting portions of the
Premises (for purposes hereof, the "Subleases"). Tenant's interest in such
Subleases was then
- -------------------------------------------------------------------------------
Until a change is requested, all tax statements shall be sent to the following
address: c/o Fred Meyer, Inc., 3800 SE 22nd Avenue, PO Box 42121, Portland,
Oregon 97242-0121
Property tax account No.: 029721-000, 029763-000, C-52431
- -------------------------------------------------------------------------------
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
assigned for collateral purposes, to Landlord at the closing of Landlord's
purchase of the Premises, pursuant to the terms of an Assignment of Leases
and/or Rents (the "Assignment"), by Tenant as assignor in favor of Landlord as
assignee, which is more particularly described on the attached Exhibit B.
The parties desire to evidence of record a termination of the Master Lease
and to effect and record a termination of the Memoranda and release and
reconveyance to Tenant of the interest of Landlord under the Assignment, in
connection with the closing of the purchase of the Premises by Tenant, as
evidenced by a deed being recorded on the same date as this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Termination of Master Lease and Memoranda.
The Master Lease and Memoranda listed on the attached Exhibit B are
terminated as of the date of closing by Tenant of its acquisition of the
Premises pursuant to the terms set forth herein, which is being effected
simultaneously herewith (the "Termination Date"). As of the Termination Date,
Landlord releases and assigns to Tenant all right, title and interest of
Landlord pursuant to the Assignment and Tenant assumes all obligations under the
Assignment.
Effective as of the Termination Date, except as provided in paragraph
2 below, the parties shall have no further rights or obligations under the
Master Lease.
2. Nature of Termination; No Release of Accrued Obligations.
The termination hereunder is in the nature of an acceleration of the
original expiration date of the Master Lease in connection with the purchase of
the Premises by Tenant, and neither this Agreement nor the termination of the
Master Lease shall in any way:
(a) be deemed to excuse or release Tenant from any obligation or
liability, including without limitation any obligation or liability under
provisions of the Master Lease to indemnify, defend and hold harmless Landlord
or other parties, or with respect to any breach or breaches of the Master Lease,
which obligation or liability (i) first arises prior to the Termination Date, or
(ii) arises out of or is incurred in connection with events or other matters
which took place prior to the Termination Date, or
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
(b) affect any obligation under the Master Lease which by its
terms is intended to survive the expiration or sooner termination of the Master
Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
TENANT: ROUNDUP CO.,
a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Vice President
--------------------------------------
LANDLORD: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by Scott L.
Wippel, as Vice President of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
--------------------------------------------
Notary Public for Oregon
My commission expires: 6/8/99
[NOTARY SEAL]
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by Edward
J. Hayes, as Asst. Vice President of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
RP BUSHNELL
--------------------------------------------
Notary Public for Oregon
My commission expires 9/20/97
[NOTARY SEAL]
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
EXHIBIT A
(FP, Fourth Plain, Washington)
PARCEL A
The West 20.08 feet of Lot 2, the West 83.17 feet of Lot 8; the West 87.5 feet
of Lot 9, and all of Lots 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19,
20, 21, 22, 23, 24, 25, 26, 27 and 28, all in Block "A", GARDEN ACRES REPLAT,
according to the plat thereof, recorded in Volume "E" of Plats, Page 12, records
of Clark County, Washington.
EXCEPT that portion of said Lots 2, 3, 4, and 5, lying in Fourth Plain Boulevard
on the North and Grand Avenue on the West.
PARCEL B
Lots 8, 9, 10, 11, 12, 13, 14, 15, 16, 17 and 18, Block "E", GARDEN ACRES
REPLAT, according to the plat thereof, recorded in Volume "E" of Plats, Page 12,
records of Clark County, Washington.
EXCEPTING THEREFROM the above described Parcels A and B that portion conveyed to
the CITY OF VANCOUVER, a municipal corporation by deed recorded May 14, 1991
under Auditor's File No. 9105140073.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
Exhibit B - List of Matters of Record to be Terminated
(FP, Fourth Plain, Washington)
1. MEMORANDUM OF LEASE AND THE TERMS AND CONDITIONS THEREOF:
Lessor: FRED MEYER REAL ESTATE PROPERTIES, LTD., an Oregon
limited partnership
Lessee: ROUNDUP CO., a Washington corporation
Term: October 22, 1986 to October 31, 2006
Dated: November 25, 1986
Recorded: December 9, 1986
Auditor's File No.: 8612090003
Lessor's interest is now held of record by METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation, pursuant to instrument recorded December
9, 1986 under Auditor's File No. 8612090006.
SAID LEASE WAS AMENDED BY INSTRUMENT, INCLUDING THE TERMS AND PROVISIONS
THEREOF:
Dated: November 25, 1986
Recorded: December 9, 1986
Auditor's File No: 8612090007
SAID LEASE WAS AMENDED BY INSTRUMENT, INCLUDING THE TERMS AND PROVISIONS
THEREOF:
Dated: April 22, 1991
Recorded: May 14, 1991
Auditor's File No.: 9105140082
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
Appendix 10I (28)
(Lynnwood) Seattle, WA
<PAGE>
MODIFICATION TO MASTER LEASE
((Lynnwood) Seattle, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
24. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
LYNNWOOD (SEATTLE, WA)
The land referred to __________ is located in the County of Snohomish, State of
Washington, and described as follows:
Lots 2 through 23, inclusive, Block 3, Lynn Crest Division No. 2, according
to the plat recorded in Volume 13 of Plats, Page 12, Records of Snohomish
County, Washington;
Except the Southerly 150 feet of Lot 11; and
Except the Southerly 150 feet of the Westerly 50 feet of Lot 12; and
Except that portion of Lots 11 through 20, inclusive, and that portion of
Lot 23 conveyed to the State of Washington for Sr. No. 524 (196th Street
Southwest) by deeds recorded under Recording Nos. 1928600 and 1928601; and
Except the east 8 feet of Lots 2, 3, 21, 22 and 23, conveyed to the City of
Lynnwood by deed recorded under Recording No. 7801170170.
Situate in the County of Snohomish, State of Washington.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $1,378,651.23 per annum. From December 9, 2011 through
December 8, 2016, the Fixed Rent will be $1,146,787.16 per annum. From December
9, 2016 through December 8, 2021, the Fixed Rent will be $1,096,654.39 per
annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (29)
Longview, WA
<PAGE>
MODIFICATION TO MASTER LEASE
(Longview, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
2. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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EXHIBIT A
LONGVIEW, WA
IN THE COUNTY OF COWLITZ, STATE OF WASHINGTON
PARCEL A:
Lots 14, 15, 16, 17, and 18, Block 7, Columbia Valley Gardens No. 1, according
to the plat thereof recorded in Volume 6 of Plats, Page 5, records of said
county, ALSO: Beginning at the intersection of the East line of Lot 5, Block 7,
Columbia Valley Gardens No. 1, according to the plat thereof recorded in Volume
6 of Plats, Page 5, of said county, with the Southerly right of way line of the
C. & C. Railroad; thence Westerly and Southerly along said railroad right of way
to an intersection with the East line of 32nd Avenue; thence Southwesterly along
the East line of 32nd Avenue 101 feet; thence North 89(degree)10'34" East 600
feet more or less to an intersection with the East line of Lot 5, Block 7, (said
intersection being 176.6 feet Northeast from Southeast corner of Lot 5); thence
North 34(degree)56'04" East 176.6 feet, more or less, to the place of
beginning. ALSO: That portion of Lots 4, 5, 19 and 20 in Block 7, Columbia
Valley Gardens No. 1 according to the recorded plat thereof recorded in Volume 6
of Plats, Page 5, records of said county, described as follows: Beginning at the
Southeasterly corner of Lot 5, Block 7, Columbia Valley Gardens No. 1; thence
running Westerly along the Southerly line of said Lot 5, extended to the
Northwesterly corner of Lot 18 in said Block 7, said corner being on the
Easterly line of 32nd Avenue; thence Northeasterly along the said Easterly line
of 32nd Avenue 100.8 feet; thence North 89(degree)10'34" East 600 feet more or
less to an intersection with the Easterly line of said Lot 5, Block 7; thence
South 34(degree)56'04" West along said Easterly line of Lot 5, a distance of
176.6 feet to the place of beginning.
PARCEL B:
Lots 6, 7, and 8, Block 7, Columbia Valley Gardens No. 1 according to the plat
thereof recorded in Volume 6, of Plats, Page 5, records of said county. EXCEPT
that portion of Lot 6 which may be a part of Columbia and Cowlitz Railway.
PARCEL C:
Beginning at the Southwest corner of Lot 13, Block 7, Columbia Valley Gardens
No. 1 according to the plat thereof recorded in Volume 6 of Plats, Page 5,
records of said county, said point also being a point on the North line of Ocean
Beach Highway; thence along the North line of Ocean Beach Highway and the South
line of Lot 13 on a curve to the left having a radius of 11,409.93 feet, which
bears North 9(degree)02'12" East an arc distance of 101.19 feet to the
Southeast corner of Lot 13; thence across Lot 12, North 4(degree)24' East a
distance of 275.98 feet to a point on the North line of Lot 12;
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thence along the North line of Lots 12 and 13 North 85(degree)36' West a
distance of 121.48 feet to the Northwest corner of Lot 13; thence along the West
line of Lot 13 due South a distance of 269.07 feet to the point of beginning.
PARCEL D:
All that portion of Olympia Way as shown on plat of Columbia Valley Gardens No.
1 lying between the South line of the Columbia and Cowlitz Railroad right of
way, and a line 15 feet Northwesterly of and parallel to the Westerly right of
way of 30th Avenue, as shown on said plat; EXCEPT: Reservations and easements of
record as provided in City of Longview Ordinance No. 1982.
PARCEL E:
All that portion of Lot 16, Block 6, Columbia Valley Gardens No. 1, according to
the recorded plat thereof in Volume 6 of the plats, page 5, records of Cowlitz
County, Washington, lying Southerly of the Columbia and Cowlitz Railway Company
right of way.
PARCEL F:
Reciprocal easement for ingress, egress, parking as reserved in agreement
recorded March 18, 1971, as Auditor's File No. 711096.
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Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $491,259.24 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $408,638.37 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $390,774.39 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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Appendix 10I (30)
Mill Plain, WA
<PAGE>
MODIFICATION TO MASTER LEASE
(Mill Plain, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
25. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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EXHIBIT A
MILL PLAIN, WA
In the County of Clark, State of Washington
That portion of the Northwest quarter of Section 34, Township 2 North, Range 2
East of the Willamette Meridian, described as follows:
BEGINNING at the Northwest corner of said Section 34; thence South
88(degree)46'58" East 169.85 feet; thence South 1(degree) 13'02" West 65.00 feet
to the true point of beginning, said point being the intersection of the
Easterly line of Interstate 205 and the Southerly line of Mill Plain Road, said
point also being 70.00 feet right of Washington State Highway Department Station
WE 4 51+69.79; thence South 88(degree)46'58" East 275.11 feet; thence along the
arc of a curve to the right, having a radius of 3,130.00 feet, through a central
angle of 3(degree) 13'29", an arc distance of 176.16 feet, the last two courses
being parallel with and 70.00 feet distant from the centerline of Mill Plain
Road; thence South 31 (degree) 59'36" East 48.58 feet to a point 40 feet left of
Washington State Highway Department Station AR 4 22+75, said point also being on
the Westerly line of Chkalov Drive; thence along said Westerly line, South
01(degree)42'15" West, 999.05 feet to the South line of Alexander Davis Donation
Land Claim; thence along said South line North 87(degree)58'47" West 424.79 feet
to the Easterly line of Interstate 205; thence along said Easterly line North 29
(degree) 39'56" West 80.27 feet to a point 191.23 feet right of Washington State
Highway Department Station LR 187+34.20; thence continuing along said Easterly
line North 1(degree)01'09" East 969.78 feet to the true point of beginning.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $932,702.37 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $775,838.79 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $741,922.34 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
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Appendix 10I (31)
Puyallup, WA
<PAGE>
MODIFICATION TO MASTER LEASE
(Puyallup, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
26. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
PUYALLUP, WA
The land referred to is located in the County of Pierce, State of Washington,
and described as follows:
PARCEL A:
That part of Government Lot 7, Section 21, Township 20 North, Range 4, East of
the W.M. 14, in Pierce County, Washington, lying Southerly of the inter county
river improvement and Northerly of State Highway No. 5, as deed to the State of
Washington by instrument recorded under Auditor's No. 1066356.
EXCEPT that part in Meridian Street.
EXCEPT the following described tract of land:
Beginning at a point 30 feet West of the Southeast corner of said Section 21;
thence North 158.32 feet along West line of Meridian Street; thence West 416
feet; thence South 158.32 feet; thence East 416 feet to place of beginning.
EXCEPT the following described tract of land:
Beginning at a point 715 feet North and 30 feet West of the monument at the
center of 2nd Street and 7th Avenue N.W., thence North along West line of said
2nd Street extended a distance of 150 feet; thence west parallel with said 7th
Avenue N.W., a distance of 120 feet; thence South parallel with West line
extended of said 2nd Street a distance of 150 feet; thence East to place of
beginning.
EXCEPT the following described tract of land:
Commencing at a point the East line of said Section 21, 168.61 feet North of
Southeast corner thereof; thence North 89(degree)58' West 30 feet to West line
of Meridian Street; thence on said line of street North 426.51 feet; thence
South 89(degree)54' West 722 feet; thence South 0(degree) 38' West 80.05 feet;
thence North 69(degree)21' West 31.92 feet to true point of beginning for this
description; thence South 0(degree)38' West 262.45 feet; thence South 20
(degree) 39' West 83.40 feet to Northerly line of primary State Highway No. 5;
thence on said Northerly line of highway North 69(degree)21' West 255 feet;
thence North 20(degree)49'51" East 330 feet; thence South 69(degree)21' East
164.10 feet to point of beginning.
EXCEPT the tracts of land conveyed to this State of Washington by instruments
recorded under Auditor's Nos. 2364530 and 2364531;
<PAGE>
EXCEPT that portion, if any, lying within the following described property:
Beginning at the intersection of Meridian Street and Union Avenue, now 5th
Avenue N.W.; thence West 30 feet; thence North 01(degree) 03' West along West
boundary line of said Meridian Street a distance of 1555 feet; thence South 89
(degree) 15' West 416 feet; thence South 1(degree) 03' East 122.5 feet to a
point on the North boundary of State Highway No. 5; thence South 70(degree)09'
East along said North boundary line of State Highway No. 5 a distance of 431.23
feet to beginning of a curve on said North boundary at a radius of 37.9 feet to
West line of Meridian Street; thence Northeasterly along said curve 32.5 feet to
West right of way line of Meridian Street; thence North 01(degree) 03" West
245.5 feet to point of beginning, and
EXCEPT the following described tract of land:
Beginning at the intersection of the centerline of S.R. #410 (River Road) with
the centerline of 2nd Street N.W. located in the Southeast quarter of Section
21, Township 20 North, Range 4 East of the W.M.; thence Northwesterly along the
centerline of said S.R. #410 40.27 feet; thence Northeasterly at right angles to
said centerline 50 feet to the north right-of-way line of said S.R. #410 and
true point of beginning; thence continue Northeasterly at right angles to the
North right-of-way line of said S.R. #410 4 feet; thence Northwesterly parallel
to and 4 feet Northerly of said North right-of-way 276 feet; thence
Southwesterly at right angles 4 feet to the North right-of-way line of said S.R.
#410; thence Southeasterly along said North right-of-way line 276 feet to true
point of beginning.
PARCEL B:
All the rights and interests in land appurtenant to Parcel A described herein,
set forth in Exhibit A attached to and made a part of Deed recorded under
Auditor's No. 2049384, Records of Pierce County, Washington, including but not
limited to the right of free ingress and egress for parking purposes to portions
of Parcels #1 and #4 as described in said instrument, being a part of the
following described property:
Commencing on the East line of Section 21, Township 20 North, Range 4 East of
the W.M., 168.61 feet North of Southeast corner thereof; thence North 89(degree)
58' West 30 feet to West line of Meridian Street; thence on said line of street
North 426.51 feet; thence South 89(degree)54' West 722 feet; thence South 0
degree 38' West 80.05 feet; thence North 69(degree)21' West 31.92 feet to true
point of beginning for this description; thence south 0(degree)38' West 262.45
feet; thence South 20(degree)39' West 83.40 feet to Northerly line of primary
State Highway No. 5; thence on said Northerly line of Highway North 69(degree)
21' West 255 feet; thence North 20(degree)49'51" East 330 feet; thence South 69
(degree) 21' East 164.10 feet to point of beginning. Particularly described in
Exhibit "A" attached to and made a part of this deed.
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $650,738.02 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $541,295.71 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $517,632.51 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (32)
Richland, WA
<PAGE>
MODIFICATION TO MASTER LEASE
(Richland, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
11. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
RICHLAND, WA
That portion of Lot 11, Block 400, Plat of Richland, according to the plat
thereof recorded in Volumes 6 and 7 of Plats, records of Benton, County,
Washington, described as follows:
Beginning at the intersection of Wellsian Way and Elliot Street as shown on said
Plat of Richland; thence S 00(degree)51'13" East along the centerline of said
Wellsian Way, 2,555.00 feet; thence S 89(degree)08'47" West 40.00 feet to the
West margin of said Wellsian Way and the True Point of Beginning; thence S
00(degree)51'13" E along the said margin, 1,396.00 feet to the Southeast corner
of said Lot 11, Block 400; thence S 88(degree)04'02" W along the Southerly line
of said Lot 11, 27.38 feet to a point of curve; thence continuing along said
Southerly line, along the arc of a curve to the right having a radius of 900.62
feet, 80.37 feet through a central angle of 05(degree) 06'47"; thence N
16(degree)55'58" W, 58.99 feet to the point of curve; thence Northwesterly along
said curve to the left, having a radius of 255.00 feet, 320.16 feet through a
central angle of 71(degree)56'15" to the point of tangency; thence N
88(degree)52'13" W 95.00 feet; thence N 19 (degree) 03'45" W 463.46 feet to a
point which lies 600 feet West, as measured at right angles to the East line of
said Lot 11; thence N 00(degree)51'13" W parallel to said East line of Lot 11,
785.08 feet; thence Southeasterly along the arc of a curve to the left, having a
radius of 230 feet, 191.31 feet through a central angle of 47(degree)39'27" to a
point of tangency; thence N 89(degree)08'47" E, 430 feet to the True Point of
Beginning.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $360,464.16 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $299,840.64 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $286,732.85 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (33)(T)
(Tacoma) Lakewood, WA
<PAGE>
Stoel Rives LLP 97 FEB-5 PM1:20
Attention: David W. Green RECORDED
950 Port of Portland Building CATHYBEARSALL-STIPEK
700 NE Multnomah ___________ CO. WASH
Portland, OR 97232
TERMINATION AGREEMENT AND ASSIGNMENT OF INTERESTS
(TL, Tacoma Lakewood, Washington)
This Termination Agreement and Assignment of Interests (this "Agreement"),
dated as of the day of February, 1997 between METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation (hereinafter referred to as "Landlord"), as
landlord/lessor (by assignment) under the Master Lease described below, and
ROUNDUP CO., a Washington corporation (hereinafter referred to as "Tenant"), as
tenant/lessee under such Master Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord, certain
real property described in the attached Exhibit A (the "Premises"), pursuant to
the terms of a Lease Agreement, between Landlord's predecessor in interest, FRED
MEYER REAL ESTATE PROPERTIES, LTD., an Oregon limited partnership, as
landlord/lessor, and Tenant, as tenant/lessee, dated October 22, 1986, as
amended (the "Master Lease"). Such Master Lease was an amended and restated
lease, which modified and restated one or more prior leases of the Premises.
Evidence of such Master Lease and such prior lease or leases is evidenced of
record by certain memoranda of leases and/or other instruments listed on the
attached Exhibit B (the "Memoranda").
Tenant, as assignee of FRED MEYER REAL ESTATE PROPERTIES, LTD. pursuant to
an Assignment of Leases and Rents dated October 22, 1986 and recorded on
December 9, 1986 in the Official Records of Pierce County, Washington as
Auditor's No. 8612090165 holds the lessor's interest under and to existing
leases affecting portions of
- -------------------------------------------------------------------------------
Until a change is requested, all tax statements shall be sent to the following
address: c/o Fred Meyer, Inc., 3800 SE 22nd Avenue, PO Box 42121, Portland,
Oregon 97242-0121
Property tax account No.: 0219021039 Portion Sec 1 Township 19 North Range 2
East
- -------------------------------------------------------------------------------
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
the Premises (for purposes hereof, the "Subleases"). Tenant's interest in such
Subleases was then assigned, for collateral purposes, to Landlord at the closing
of Landlord's purchase of the Premises, pursuant to the terms of an Assignment
of Leases and/or Rents (the "Assignment"), by Tenant as assignor in favor of
Landlord as assignee, which is more particularly described on the attached
Exhibit B.
The parties desire to evidence of record a termination of the Master Lease
and to effect and record a termination of the Memoranda and release and
reconveyance to Tenant of the interest of Landlord under the Assignment, in
connection with the closing of the purchase of the Premises by Tenant as
evidenced by a deed being recorded on the same date as this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Termination of Master Lease and Memoranda.
The Master Lease and Memoranda listed on the attached Exhibit B are
terminated as of the date of closing by Tenant of its acquisition of the
Premises pursuant to the terms set forth herein, which is being effected
simultaneously herewith (the "Termination Date"). As of the Termination Date,
Landlord releases and assigns to Tenant all right, title and interest of
Landlord pursuant to the Assignment and Tenant assumes all obligations under the
Assignment.
Effective as of the Termination Date, except as provided in paragraph
2 below, the parties shall have no further rights or obligations under the
Master Lease.
2. Nature of Termination; No Release of Accrued Obligations.
The termination hereunder is in the nature of an acceleration of the
original expiration date of the Master Lease in connection with the purchase of
the Premises by Tenant, and neither this Agreement nor the termination of the
Master Lease shall in any way:
(a) be deemed to excuse or release Tenant from any obligation or
liability, including without limitation any obligation or liability under
provisions of the Master Lease to indemnify, defend and hold harmless Landlord
or other parties, or with
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
respect to any breach or breaches of the Master Lease, which obligation or
liability (i) first arises prior to the Termination Date, or (ii) arises out of
or is incurred in connection with events or other matters which took place prior
to the Termination Date, or
(b) affect any obligation under the Master Lease which by its
terms is intended to survive the expiration or sooner termination of the Master
Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
TENANT: ROUNDUP CO.,
a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Vice President
--------------------------------------
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by Scott L.
Wippel, as Vice President of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My commission expires: 6/8/99
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
STATE OF OREGON
ss. [NOTARY SEAL]
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by Edward
J. Hayes, as Asst. Vice President of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
RP BUSHNELL
--------------------------------------------
Notary Public for Oregon
My commission expires 9/20/97
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
EXHIBIT A
(TL, Tacoma Lakewood, Washington)
A parcel of land lying within the Northeast quarter of Section 2, Township 19
North, Range 2 East of the Willamette Meridian, and the Northwest quarter of
Section 1, Township 19 North, Range 2 East of the Willamette Meridian, North of
100th Street Southwest and East of 54th Avenue Southwest, described as follows:
Commencing at the center of the Northeast quarter of Section 2, Township 19
North, Range 2 East of the Willamette Meridian; thence North 89(degree)54'11"
East 655.41 feet to a point on the centerline of 54th Avenue Southwest; thence
along said centerline North 0(degree)44'30" West 59.05 feet; thence North 89
(degree) 15'30" East 35.00 feet to a point on the Easterly line of 54th Avenue
Southwest, being a strip of land appropriated by Pierce County in Decree of
Appropriation entered October 31, 1972 in Pierce County Superior Court Cause No.
209287, recorded under Auditor's No. 2481393, and the true point of beginning;
thence along said Easterly line North 0(degree)44'30" West 72.45 feet; thence
on a curve to the right having a radius of 681.20 feet and a central angle of 40
(degree) 42'18" an arc distance of 483.95 feet; thence North 39(degree)57'50"
East 57.84 feet; thence leaving said Easterly line of 54th Avenue Southwest,
South 89(degree)47'14" East 960.74 feet; thence South 0(degree)26'15" East
623.51 feet; thence North 89(degree)23'38" West 526.66 feet to a point on a
line between said Sections 1 and 2; thence North 01(degree)02'45" West along
said Section line 10.00 feet; thence South 89(degree)54'11" West 583.85 feet;
thence on a curve to the right having a radius of 50.00 feet and a central angle
of 89(degree)21'19" an arc distance of 77.98 feet to the true point of
beginning, in Lakewood, Pierce County, Washington.
EXCEPT that portion conveyed to Pierce County by Deed recorded under
Auditor's No. 2605304.
ALSO EXCEPT Lot 1 of PIERCE COUNTY SHORT PLAT NO. 76-459, according to Map
recorded in Volume 11 of Short Plats at Page 29.
(Being balance of original Tract of Short Plat No. 76-459, according to Plat
recorded September 7, 1976 in Volume 11 of Short Plats at Page 29.)
TOGETHER WITH those appurtenant easements set forth in that mutual utility
easement agreement dated April 11, 1974 and recorded May 3, 1974 under Auditor's
No. 2551063.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
Exhibit B - List of Matters of Record to be Terminated
(TL, Tacoma Lakewood, Washington)
1. Memorandum of Lease.
Lessor: Fred Meyer Real Estate Properties, Ltd., an Oregon
Limited Partnership
Lessee: Roundup Co.
Term: November 1, 1982 until October 31, 1997 lessee shall
have the option to extend lease for an additional 10
years
Dated: December 18, 1985
Recorded: December 20, 1985
Auditor's No.: 8512200348
Said Memorandum refers to Unrecorded Master Lease including the terms and
conditions thereof between the Lessor and the Lessee, dated November 1,
1982.
2. Memorandum of Restated and Amended Lease, and the terms and conditions
thereof:
Lessor: Fred Meyer Real Estate Properties, ltd., an Oregon
Limited Partnership
Lessee: Roundup Co., a Washington corporation
Term: 20 years with the option to renew a total of seven
renewal terms of five years each, after the end of the
primary term from October 22, 1986 and ending October
31, 2006
Dated: November 25, 1986
Recorded: December 9, 1986
Auditor's No.: 8612090164
Said Lease being subordinate to the Deed of Trust recorded December 20,
1985 under Auditor's No. 8512200346, said subordination is subject however
to the provisions of Paragraph 24 (subordination) under said unrecorded
Lease and the provision of Paragraph 12 in that certain Lease Amendment
Agreement recorded December 20, 1985 under Auditor's No. 8512200349.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
3. Assignment of Master Leases:
Assignor: Fred Meyer Real Estate Properties, Ltd., an Oregon
Limited Partnership
Assignee: Metropolitan Life Insurance Company, a New York
corporation
Dated: November 25, 1986
Recorded: December 9, 1986
Auditor's No.: 8612090167
4. Memorandum of First Amendment to Lease Agreement, and the terms and
conditions thereof:
Lessor: Metropolitan Life Insurance Company, a New York
corporation
Lessee: Roundup Co., a Washington corporation
Term: 20 years with the option to renew with seven renewal
terms of five years each, after the end of the primary
term from October 22, 1986 and ending October 31, 2006
Dated: November 25, 1986
Recorded: December 9, 1986
Auditor's No.: 8612090168
5. Agreement and the terms and conditions thereof:
Between: Fred Meyer Real Estate Properties, Ltd., an Oregon
Limited Partnership
And: Roundup Co., a Washington corporation
Recorded: December 20, 1985
Auditor's No.: 851220349
Regarding: terms of lease
6. Assignment of Leases and/or Rents and the terms and conditions thereof:
Assignor: Fred Meyer Real Estate Properties, Ltd., an Oregon
Limited Partnership
Assignee: Roundup Co., a Washington corporation
Dated: October 22, 1986
Recorded: December 9, 1986
Auditor's No.: 8612090165
Said instrument assigns the rights of Fred Meyer Real Estate Properties,
Ltd., an Oregon Limited Partnership to Roundup Co., a Washington
Corporation any subsequent leases after the Master Lease dated November 1,
1982.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
7. Assignment of Leases and/or Rents and the terms and conditions thereof:
Assignor: Roundup Co., a Washington corporation
Assignee: Metropolitan Life Insurance Company, a New York
corporation
Dated: November 25, 1986
Recorded: December 9, 1986
Auditor's No.: 8612090169
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
<PAGE>
Appendix 10I (34)
(Tacoma) Pacific, WA
<PAGE>
MODIFICATION TO MASTER LEASE
((Tacoma) Pacific, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
28. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
both parties as a modification of the Lease, the Lease continues in full force
and effect in accordance with its terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Modification
or any exhibits or amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
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<PAGE>
incurred in enforcing the terms of this Agreement prior to or separate from such
trial or appeal or other action or proceeding. As used herein, "attorneys' fees"
will include (without limitation) both attorney's and paralegals' fees and
expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
TACOMA-PACIFIC, WA
The land referred to is located in the County of Pierce, State of
Washington, and described as follows:
PARCEL A:
A tract of land containing a portion of Lot 2 and all of Lots 3 and 6 of
T.J. Spooner's five acre lots, in Section 28, Township 20 North, Range 3
East of the Willamette Meridian, according to plat recorded in Book 1 of
Plats at Page 65, records of Pierce County Auditor, lying within the
Northeast quarter of the Southwest quarter of Section 28, Township 20
North, Range 3 East of the Willamette Meridian described as follows:
Commencing at the Northwest corner of the Northeast quarter of the
Southwest quarter of Section 28, Township 20 North, Range 3 East of the
Willamette Meridian, said point being a monument at the intersection of
South 72nd Street and South D Street; thence South 0(degree)12'15" East
40.00 feet; thence North 89(degree)47'45" East 30.00 feet to a point which
is the intersection of the East line of South D Street and the South line
of South 72nd Street, said point being the true point of beginning; thence
continuing along the said South line of South 72nd Street North 89(degree)
32'59" East 448.02 feet to a point 135.00 feet West of the West line of
Pacific Avenue; thence South 0(degree)10'37" East and parallel with the
said West line of Pacific Avenue 295.41 feet to a point on the North line
of Lot 3 of said recorded plat; thence South 89(degree)59'30" East 135.00
feet along said North line of Lot 3 to a point on the West line of Pacific
Avenue; thence along the West line of Pacific Avenue South 0(degree)10'37"
East 663.60 feet to the Southeast corner of Lot 6 of said recorded plat;
thence along the South line of said Lot 6, South 89(degree)59'29" West
582.49 feet to a point 30 feet East of the Southwest corner of said Lot 6,
said point being on the East line of South D Street; thence along the East
line of South D Street North 0(degree)12'15" West 955.60 feet to the true
point of beginning, in Tacoma, Pierce County, Washington.
Except that portion thereof within the South 50 feet of the West 336.00
feet of Lot 6 of said plat, as conveyed to the City of Tacoma for street
purposes by deed recorded under Auditor's No. 2442155.
Together with the North 25 feet of the South 50 feet of the West 336.00
feet of said Lot 6 vacated by Ordinance No. 20553 of the City of Tacoma,
recorded under Auditor's No. 2627212.
<PAGE>
PARCEL B:
A tract of land containing a portion of Lot 2 of T.J. Spooner's five-acre
lots Section 28, Township 20 North, Range 3 East, according to plat
recorded in Book 1 of Plats at Page 65, lying within the Northeast quarter
of the Southwest quarter of Section 28, Township 20 North, Range 3 East of
the Willamette Meridian, in Pierce County, Washington, described as
follows:
Commencing at the Northwest corner of the Northeast quarter of the
Southwest quarter of Section 28, Township 20 North, Range 3 East of the
Willamette Meridian, said point being a monument at the intersection of
South 72nd Street and South D Street; thence South 0(degree)12'15" East
40.00 feet; thence North 89(degree)47'45" East 30.00 feet to a point which
is the intersection of the East line of South D Street and South line of
South 72nd Street; thence continuing along the said South line of South
72nd Street North 89(degree)32'59" East 448.02 feet to a point 135.00 feet
West of the West line of Pacific Avenue; thence South 0(degree)10'37" East
and parallel with the said West line of Pacific Avenue 65 feet to a point,
said point being the true point of beginning; thence continuing South
0(degree)10'37" East and parallel with the said West line of Pacific Avenue
230.41 feet to a point on the North line of Lot 3 of said recorded plat;
thence South 89(degree)59'30" East 135.00 feet along said North line of Lot
3 to a point on the West line of Pacific Avenue; thence along the West line
of Pacific Avenue North 0(degree)10'37" West 230.41 feet; thence North
89(degree)59'30" West 135.00 feet to the point of beginning, in Tacoma,
Pierce County, Washington.
PARCEL C:
Lots 1 through 4, inclusive, Block 2, replat of West portion of Lot 7 of
T.J. Spooner's five-acre lots, according to plat recorded in Book 14 of
Plats at Page 47, in Tacoma, Pierce County, Washington.
Together with the West 15 feet of "C" Street adjoining, vacated by
Ordinance No. 20553 of the City of Tacoma, recorded under Auditor's No.
2627212 and
Also together with that portion of the South 25 feet of the West 336.10
feet of Lot 6 of T.J. Spooner's five acre lots Section 28, Township 2
North, Range 3 East, according to plat recorded in Book 1 of Plats at Page
65, being an unnamed street, lying West of the centerline of "C" Street
extended North vacated by Ordinance No. 20553 of the City of Tacoma
recorded under Auditor's No. 2627212.
<PAGE>
PARCEL D:
That portion of the North 132.75 feet of Lot 7, T.J. Spooner's five acre
lots in Section 28, Township 20 North, Range 3 East of the W.M. according
to plat recorded in Book 1 of Plats at Page 65, lying East of C Street
dedicated in the replat of West portion of Lot 7 of T.J. Spooner's five
acre lots, according to plat recorded in Book 14 of Plats at Page 47, in
Tacoma, Pierce County, Washington.
Together with the East 15 feet of C Street adjoining vacated by Ordinance
No. 20553 of the City of Tacoma recorded under Auditor's No. 2627212.
Together with the adjoining portion of the South 25 feet of the West 336.14
feet of Lot 6 of T.J. Spooner's five acre lots Section 28, Township 20
North, Range 3 East, according to plat recorded in Book 1 of Plats at Page
65, being an unnamed street, lying East of the centerline of "C" Street
extended North vacated by Ordinance No. 20553 of the City of Tacoma
recorded under Auditor's No. 2627212.
PARCEL E:
Commencing at the Southeast corner of Lot 7, T.J. Spooner's five acre lots
in Section 28, Township 20 North, Range 3 East of the W.M., according to
plat recorded in Book 1 of Plats at Page 65, thence West along South line
of said Lot 7 to the Southeast corner of that certain tract of land
conveyed by Louis M. Jezek to Louis Barrett and wife by deed recorded
August 2, 1963 under Auditor's No. 2019716; thence North along East line of
said tract, 99.45 feet; thence East parallel to South line of said Lot 7,
to the West line of Pacific Avenue; thence South along said West line of
Pacific Avenue to the point of beginning, in Tacoma, Pierce County,
Washington.
Except the South 30 feet thereof conveyed to City of Tacoma by deed
recorded under Auditor's No. 2652868 which is a correction of deed recorded
under Auditor's No. 2639802.
PARCEL F:
Commencing at the Southeast corner of Lot 7 of the plat of T.J. Spooner's
five acre lots Section 28, Township 20 North, Range 3 East, according to
plat recorded in Book 1 of Plats at Page 65, thence running North along
East line of said Lot 7, 99.45 feet to the true point of beginning; thence
North along said East line of said lot, 99.45 feet; thence West parallel
with the South line of said Lot 7, 177 feet; thence South parallel with the
East line of said Lot 7, 99.45 feet;
<PAGE>
thence East parallel with the South line of said lot, 177 feet to the true
place of beginning, in Tacoma, Pierce County, Washington.
PARCEL G:
Commencing at the Southeast corner of Lot 7, T.J. Spooner's five acre lots
in Section 28, Township 20 North, Range 3 East of W.M., according to plat
recorded in Book 1 of Plats at Page 65, running thence North along the East
line of said Lot 7, 99.45 feet; thence West parallel with the South line of
said Lot 7, 177 feet to the true point of beginning; thence North parallel
with the East line of said Lot 7, 99.45 feet to a point; thence West
parallel with the South line of Lot 7, 140 feet to a point; thence South
parallel with the East line of said Lot 7, 99.45 feet to a point; thence
East parallel with the South line of said Lot 7, 140 feet to the true point
of beginning, in Tacoma, Pierce County, Washington.
Together with the portion of "C" Street adjoining, vacated by Ordinance No.
20553 of the City of Tacoma, recorded under Auditor's No. 2627212.
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $875,112.49 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $727,934.48 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $696,112.21 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (35)
(Tacoma) Stevens, WA
<PAGE>
MODIFICATION TO MASTER LEASE
((Tacoma) Stevens, WA)
THIS MODIFICATION TO MASTER LEASE ("Modification"), dated as of February 4,
1997, by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as "Landlord"), as landlord/lessor under the Lease
described below, and ROUNDUP CO., a Washington corporation (hereinafter referred
to as "Tenant"), as tenant/lessee under such Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord,
for the lease term specified below, certain real property described in the
attached Exhibit A (the "Premises"), pursuant to the terms of a Lease Agreement,
between Landlord's predecessor in interest (Fred Meyer Real Estate Properties,
Ltd.) and Tenant, dated October 22, 1986, as amended (the "Lease"), the
landlord's/lessor's interest in which was assigned to Landlord pursuant to an
Assignment of Master Lease dated November 25, 1986. The Lease currently includes
seven successive renewal option terms after the end of the original lease term,
which ends on December 8, 2006, at certain fixed rental amounts stated in the
Lease. Each capitalized term not otherwise defined in this Modification will
have the meaning stated in the Lease.
FOR VALUE RECEIVED, Landlord and Tenant do hereby covenant and agree
as follows:
29. Exercise of First Three Renewal Options. Tenant hereby exercises its
first three renewal options contained in the Lease. As a result, the current
term of the Lease ("Current Term") will end on December 8, 2021, unless the
Current Term is extended or earlier terminated in accordance with the provisions
of the Lease. Subject to the conditions stated in the Lease, Tenant will
continue to have four (4) additional successive options to extend the term
thereafter for additional option terms of five (5) years each (each of which
terms, if the respective option is exercised, is a "renewal term").
2. Establishment of Revised Rent for Initial Renewal Terms. The Fixed Rent
under this Lease will be as set forth in the attached Exhibit B, incorporated by
this reference. Such Fixed Rent amounts are modifications to the Fixed Rent
amounts stated in the Lease. Fixed Rent will be paid in equal monthly
installments and otherwise in accordance with the terms of the Lease (as
modified hereby).
3. Revised Rent for Remaining Renewal Option Terms. During each renewal
option term, the first of which commences December 9, 2021, the annual Fixed
Rent shall be the greater of (i) the annual fair market rental value of the
Premises for the five (5) year renewal term in question, paid in sixty (60)
equal monthly payments over the renewal term, based on the highest and best
retail use of the Premises in its "as is" condition assuming a
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
lease of the Premises at arm's length to a non-captive tenant ("Fair Market
Rent"), or (ii) one hundred and ten percent (110%) of the Fixed Rent payable at
the end of the immediately preceding lease term, or renewal option term, as
applicable (the "Rent Minimum"). (For example, if the annual Fixed Rent payable
for the year immediately preceding the renewal term in question was $1,800,000,
or $150,000 monthly, the Rent Minimum would be $1,980,000 or $165,000 monthly,
each month, for the five year renewal term in question. The annual Fixed Rent
for the renewal term in question would be the greater of the annual Fair Market
Rent paid in equal monthly installments, or $1,980,000 paid $165,000 monthly).
Landlord shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant's obligations
to pay rent for the renewal term.
If at the commencement of the renewal term in question the Fair Market Rent
has not been determined pursuant to paragraphs 3 or 4, the Fixed Rent shall be
paid in the amount of the Rent Minimum and a retroactive adjustment shall be
made as a lump-sum paid within 30 days after such a determination is made, but
only if the Fair Market Rent is higher ("Retroactive Adjustment").
On the date Tenant gives Landlord written notice of its exercising an
option to renew this Lease for a renewal term, but no earlier than twelve (12)
calendar months prior to the commencement of the renewal term in question (the
"Initial Determination Date"), the parties shall discuss and attempt to
determine the Fair Market Rent by mutual agreement pursuant to the following
procedure. On the Initial Determination Date, Tenant will notify Landlord as to
Tenant's opinion of such Fair Market Rent. Landlord will notify Tenant, within
sixty (60) days after the Initial Determination Date, as to Landlord's opinion
of the Fair Market Rent. If the Landlord's opinion is higher than the Rent
Minimum and the parties are unable to reach agreement within ninety (90) days
after the Initial Determination Date and Landlord's opinion of such Fair Market
Rent, if rendered by Landlord, is greater than the Rent Minimum, then either
party may initiate the appraisal procedure in paragraph 4 below. If Landlord's
opinion of such Fair Market Rent is equal to or less than the Rent Minimum, than
the Rent Minimum shall be the Fixed Rent for such renewal term.
4. Appraisal Procedure. A party may initiate the appraisal procedure for
determining such Fair Market Rent, pursuant to paragraph 3, by giving written
notice to the other of its election to require that the Fair Market Rent be
determined by appraisal. In such event, each party within thirty (30) days
thereafter shall appoint an appraiser having the qualifications stated below and
notify the other party as to the name and address of its appraiser. If a party
fails to appoint an appraiser within the 30-day period, the single appraiser
appointed shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rent. Each appraiser will be instructed to attempt to
reach a consensus with the other appraiser (if applicable) as to the Fair Market
Rent of the Premises.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
2
<PAGE>
If such consensus is not reached within sixty (60) days of the appointment
of the first appraiser, then each appraiser shall, by the end of the sixtieth
(60th) day separately provide a written statement of its determination of the
Fair Market Rent (which may be in letter form and state only the appraiser's
summary opinion of the Fair Market Rent), to be delivered to the other appraiser
and each party. The Fair Market Rent shall then be determined by averaging the
opinion of the two appraisers, unless the higher of the two appraisals exceeds
the lesser by ten percent (10%), in which case a third appraisal shall be
selected within twenty (20) days of such determination by the two appraisers.
The third appraiser shall render an appraisal of the Fair Market Rent within
thirty (30) days of the appointment of the third appraiser. The Fair Market Rent
shall be determined by averaging the two of the three appraisals that are the
closest to each other. If the two appraisers appointed by the parties fail to
appoint a third appraiser (if required) within the required time period, either
party may apply to the US District Court for the judicial district in which the
Premises is located, for the appointment of the third appraiser. The date that
the Fair Market Rent is finally determined and communicated to the parties in
writing pursuant to this paragraph 4 is the "Final Determination Date".
All appraisers shall be independent third parties not affiliated with the
parties and members in good standing of the American Institute of Real Estate
Appraisers, or successor organization, and shall have, immediately preceding
their appointment, at least five (5) years' continuous experience in appraising
commercial real property, including three (3) years' experience in appraising
retail real property, in the state in which the Premises are located.
Tenant and Landlord shall each bear the cost of its own appraiser and shall
share equally the cost of the third appraiser, if any. Each party will bear its
own costs and attorneys' fees in connection with any proceeding related to the
appointment of the appraisers which is not attributable to the other party's
failure to appoint an appraiser with qualifications herein provided with the
time periods provided above.
5. Option To Terminate. If Fair Market Rent is determined pursuant to
paragraph 4 and if the annual Fair Market Rent is: (a) with respect to the
renewal option term commencing December 9, 2021, greater than one hundred and
seventy five percent (175%) of the annual Fixed Rent for the lease year
immediately preceding the option term which commences December 9, 2021, or (b)
with respect to all subsequent renewal option terms, greater than one hundred
and twenty five percent (125%) of the annual Fixed Rent for the last year of the
immediately preceding renewal option term, then Tenant will have the following
option to terminate the Lease (the "Option to Terminate") by (i) notifying
Landlord of its exercise of the Option to Terminate within thirty (30) days
after the Final Determination Date (the date of delivery to Landlord of such
notice is the "Notice Date"), (b) paying to Landlord on the Notice Date that
portion of the Retroactive Adjustment, if any, then accrued, and (iii) paying to
Landlord on the Notice Date a termination fee equal to the Fixed Rent for the
last three (3) full months of the term, as it may be extended
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
3
<PAGE>
pursuant to this paragraph 5. If Tenant timely exercises the Option to
Terminate, the Lease shall terminate on the later of (i) six (6) calendar months
after notice of the Option to Terminate is given, or (ii) the end of the Lease
term as if tenant had not exercised its option to extend.
6. Other Modifications to Lease. For purposes of calculating the purchase
price for the Premises in the event the purchase option set forth in Section 22
in the Lease is exercised, the definition of Fixed Rent for purposes of such
purchase options will be treated as follows:
(i) if the purchase option is exercised pursuant to Section 22.1 of
the Lease, the Fair Market Value will be determined by assuming that "Fixed
Rent" would be the amounts which would have been fixed rent as if this Lease not
been modified by this Modification, and as such fixed rent would have been
adjusted by the "Renewal Terms" as if this Lease had not been modified by this
Modification. The purchase price under Section 22.1 will include the Additional
Premium as set forth in such Section (i.e., a 20% Additional Premium at the end
of the Current Term, a 15% Additional Premium at the end of the first Renewal
Term hereunder, and with such Additional Premium thereafter declining 5
percentage points for each successive Renewal Term, cumulatively, until the last
Renewal Term hereunder, in which no Additional Premium is due).
(ii) if the purchase option under conditions of economic disutility is
exercised pursuant to Section 22.6 of the Lease, the Fair Market Value will be
determined at the revised Fixed Rent established pursuant to the provisions of
this Modification, and not the amounts stated in paragraph 4.1 of the Lease.
Other than as provided above, all provisions of Section 22 of the Lease
will continue to be applicable, and the parties will follow the procedures set
forth therein.
7. Concurrent Leases. From and after the closing date of the purchase of
six shopping centers by Fred Meyer and the Clackamas Distribution Center by Fred
Meyer's designee, the "Concurrent Leases" (as defined in the Lease and its
attached Exhibit C) will exclude such shopping centers and distribution center.
Pursuant to an Agreement concerning Miscellaneous Parcels of even date
herewith (the "Pad Agreement", Tenant is acquiring the right to acquire a
portion of the Premises from Landlord on certain terms and conditions. The
Parcel(s) being purchased pursuant to such Agreement will be deemed to be
excluded from the "Premises" as of the date of closing of the purchase.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
4
<PAGE>
8. Modifications to this Agreement. This Modification cannot be changed
orally, and no executory agreement shall be effective to waive, change, modify
or discharge it in whole or in part unless such executory agreement is in
writing and is signed by the parties against whom enforcement of any waiver,
change, modification or discharge is sought.
9. Non-Impairment of the Lease. This Modification constitutes a
modification of certain provisions of the Lease but is not a novation of the
Lease. Except as specifically modified hereby or as the parties otherwise agree
in a written instrument duly executed by both parties as a modification of the
Lease, the Lease continues in full force and effect in accordance with its
terms.
10. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action as may be reasonably requested
by the other party to consummate the transaction contemplated by this
Modification.
11. Counterparts. This Modification may be executed in counterparts, all
such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
12. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Modification. The parties intend to be bound by the signatures on the
telecopied documents, are aware that the other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Modification based on the forms of signature.
13. Severability. If any provision of this Modification is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Modification shall nonetheless remain in full force and effect; provided
that the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
14. Applicable Law. This Modification shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
15. Captions. The section headings appearing in this Modification are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
16. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Modification and that the normal rule of
construction to the effect
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
5
<PAGE>
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Modification or any exhibits or
amendments hereto.
17. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
18. Waiver. Any failure by a party at any time to require performance of
any provision of this Modification shall not limit the party's right to enforce
the provision in the future. Any waiver of any breach of any provision shall not
be a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Modification.
19. Recordation. This Modification may not be recorded to any party hereto
without the prior written consent of the other party hereto. The parties will,
however, co-operate with each other concerning the execution and recordation of
a Memorandum of Lease in substantially the same form as attached to the Lease as
an exhibit, with modifications to evidence the exercise of the renewal options
hereunder (but without a statement of the rental provisions herein or in the
Lease).
20. Notices. Any notice pursuant to this Modification shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United Sates Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Modification shall be as follows:
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
6
<PAGE>
If to Metropolitan: If to Fred Meyer:
Metropolitan Life Insurance Company Fred Meyer, Inc.
Real Estate Investments Real Estate Division
101 Lincoln Centre Drive, 6th Floor 3800 SE 22nd Avenue
Foster City, California 94404 Portland, Oregon 97202
Attention: Assistant Vice President Attention: Senior Vice President,
Telephone No. (415) 574-8181 Director of Real Estate
Telecopy No. (415) 349-4615 Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
With a copy to:
If any notice to Fred Meyer is mailed,
Metropolitan Life Insurance Company the address for notices will not be the
Real Estate Investments street address shown herein but will be:
200 Park Avenue PO Box 42121, Portland, Oregon 97242.
New York, New York 10166
Attention: Senior Vice President - With a copy to:
Real Estate Investments
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LANDLORD: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
TENANT: ROUNDUP CO., a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: V.P.
--------------------------------------
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
7
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Scott L. Wippel as V.P. of ROUNDUP CO., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 6/8/99
STATE OF OREGON )
) ss.
County of Multnomah )
This instrument was acknowledged before me this 4th day of February, 1997,
by Edward J. Hayes as Asst. V.P. of METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation.
FRANCES FOLEY
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My Commission Expires: 9/1/98
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
8
<PAGE>
EXHIBIT A
TACOMA-STEVENS, WA
Located in the County of Pierce, State of Washington, and described as follows:
A parcel of land lying within the South half of the Southwest quarter of Section
1, Township 20 North, Range 2 East of the Willamette Meridian, in Pierce County,
Washington, described as follows:
Commencing at the Southeast corner of the Southwest quarter of Section 1,
Township 20 North, Range 2 East of the Willamette Meridian, said point being a
monument at the intersection of South 19th Street and Mason Avenue; thence along
the South line of said Section 1, Township 20 North, Range 2 East of the W.M.,
said line being the centerline of South 19th Street North 89(degree)50'09" West
328.60 feet; thence North 0(degree)09'51" East 45.00 feet to the true point of
beginning; thence along the North line of South 19th Street North 89(degree)
50'09" West 54.36 feet; thence North 0(degree)09'51" East 5.00 feet; thence
North 89(degree)50'09" West 280.00 feet to a point on the West line of the
Southeast quarter of the Southeast quarter of the Southwest quarter of said
Section 1, Township 20 North, Range 2 East of the Willamette Meridian; thence
continuing North 89(degree)50'09" West 104.00 feet; thence South 63(degree)
28'42" West 22.27 feet to a point which is North 89(degree)50'09" West 124.00
feet from said East line of said subdivision; thence North 89(degree)50'09" West
537.15 feet to a point on the West line of the Southeast quarter of the
Southwest quarter of said Section 1, Township 20 North, Range 2 East of the
Willamette Meridian; thence along the said West line North 0(degree)21'28" West
40.00 feet; thence North 89(degree)50'09" West 54.75 feet to a point on the West
line of Gove Street (formerly Page Street) produced North in the plat of West
Park Addition to Tacoma, Wash., according to plat recorded in Book 6 of Plats at
Page 9, Records of Pierce County Auditor; thence leaving the North line of South
19th Street, North 0(degree)42'12" East 581.16 feet along the West line of said
Gove Street produced North; thence South 89(degree)54'31" East 43.99 feet to the
Northwest corner of the Southwest quarter of the Southeast quarter of the
Southwest quarter of said Section 1, Township 20 North, Range 2 East of the
Willamette Meridian; thence along the North subdivision line South
89(degree)54'31" East 479.93 feet; thence South 0(degree)59'29" West 10.0 feet;
thence South 89(degree)54'31" East 180.36 feet; thence North 0(degree) 26'36"
West 10.00 feet to a point on the South line of South 18th Street; thence South
89(degree)54'31" East 322.54 feet along said South line of South 18th Street to
a point on the westerly line of Stevens Street; thence along the westerly line
of Stevens Street as conveyed to the City of Tacoma by deeds recorded under
Auditor's Nos. 1842953, 2469185 and 1842960, on a curve to the left having an
arc distance of 275.64 feet having a radius of 1957.00 feet and a central angle
of 08(degree)04'12"; thence South 22(degree)55'46" East 77.88 feet; thence South
22(degree)53'13" East 39.34 feet; thence South 89(degree) 50'09" East 2.17 feet;
thence South 22(degree)53'13" East 74.99 feet; thence leaving said Westerly line
of Steven Street North 89(degree)50'09" West and parallel with the centerline of
South 19th Street 148.86 feet; thence South 0 (degree) 09'51" West 180.00 feet
to the true point of beginning.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Exhibit B - Fixed Rent
The Fixed Rent under this Lease through the end of the Primary Term stated
therein on December 8, 2006. From December 9, 2006 through December 8, 2011, the
Fixed Rent will be $600,935.98 per annum. From December 9, 2011 through December
8, 2016, the Fixed Rent will be $499,869.47 per annum. From December 9, 2016
through December 8, 2021, the Fixed Rent will be $478,017.26 per annum.
Fred Meyer - Metropolitan Life
Lease Modification Agreement
February 4, 1997
1
<PAGE>
Appendix 10I (36)(T)
(Distribution Center) Clackamas, OR
<PAGE>
Recordation Requested by
and
After recordation return to:
Stoel Rives LLP
Attention: David W. Green
950 Port of Portland Building
700 NE Multnomah
Portland, OR 97232 (Space reserved for recorder's use)
- -------------------------------------------------------------------------------
TERMINATION AGREEMENT AND ASSIGNMENT OF INTERESTS
(CL-DC Clackamas Distribution Center, Oregon)
This Termination Agreement and Assignment of Interests (this "Agreement"),
dated as of the day of February, 1997 between METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation (hereinafter referred to as "Landlord"), as
landlord/lessor (by assignment) under the Master Lease described below, and
ROUNDUP CO., a Washington corporation (hereinafter referred to as "Tenant"), as
tenant/lessee under such Master Lease.
Landlord has leased to Tenant, and Tenant has leased from Landlord, certain
real property described in the attached Exhibit A (the "Premises"), pursuant to
the terms of a Lease Agreement, between Landlord's predecessor in interest, FRED
MEYER REAL ESTATE PROPERTIES, LTD., an Oregon limited partnership, as
landlord/lessor, and Tenant, as tenant/lessee, dated October 22, 1986, as
amended (the "Master Lease"). Such Master Lease was an amended and restated
lease, which modified and restated one or more prior leases of the Premises.
Evidence of such Master Lease and such prior lease or leases is evidenced of
record by certain memoranda of leases and/or other instruments listed on the
attached Exhibit B (the "Memoranda").
Tenant, as lessee of FRED MEYER REAL ESTATE PROPERTIES, LTD. pursuant to a
Restated and Amended Lease dated November 25, 1986 and recorded on December 9,
1986 in the Official Records of Clackamas County, Oregon as Fee No. 86 49140
holds the lessor's interest under and to existing leases affecting portions of
the Premises (for purposes hereof, the "Subleases"). Tenant's interest in such
Subleases was then assigned, for collateral purposes, to Landlord at the closing
of Landlord's purchase of the Premises, pursuant to the terms of
- -------------------------------------------------------------------------------
Until a change is requested, all tax statements shall be sent to the following
address: c/o Fred Meyer, Inc., 3800 SE 22nd Avenue, PO Box 42121, Portland,
Oregon 97242-0121
Property tax account No.:
- -------------------------------------------------------------------------------
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
<PAGE>
an Assignment of Leases and/or Rents (the "Assignment"), by Tenant as assignor
in favor of Landlord as assignee, which is more particularly described on the
attached Exhibit B.
The parties desire to evidence of record a termination of the Master Lease
and to effect and record a termination of the Memoranda and release and
reconveyance to Tenant of the interest of Landlord under the Assignment, in
connection with the closing of the purchase of the Premises by First Security
Bank, National Association, as Owner Trustee ("Bank"), as evidenced by a deed
being recorded on the same date as this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Termination of Master Lease and Memoranda.
The Master Lease and Memoranda listed on the attached Exhibit B are
terminated as of the date of closing by Bank of its acquisition of the Premises
pursuant to the terms set forth herein, which is being effected simultaneously
herewith (the "Termination Date"). As of the Termination Date, Landlord releases
and assigns to Tenant all right, title and interest of Landlord pursuant to the
Assignment and Tenant assumes all obligations under the Assignment.
Effective as of the Termination Date, except as provided in paragraph
2 below, the parties shall have no further rights or obligations under the
Master Lease.
2. Nature of Termination; No Release of Accrued Obligations.
The termination hereunder is in the nature of an acceleration of the
original expiration date of the Master Lease in connection with the purchase of
the Premises by Bank, and neither this Agreement nor the termination of the
Master Lease shall in any way:
(a) be deemed to excuse or release Tenant from any obligation or
liability, including without limitation any obligation or liability under
provisions of the Master Lease to indemnify, defend and hold harmless Landlord
or other parties, or with respect to any breach or breaches of the Master Lease,
which obligation or liability (i) first arises prior to the Termination Date, or
(ii) arises out of or is incurred in connection with events or other matters
which took place prior to the Termination Date, or
(b) affect any obligation under the Master Lease which by its
terms is intended to survive the expiration or sooner termination of the Master
Lease.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
TENANT: ROUNDUP CO.,
a Washington corporation
By: SCOTT L. WIPPEL
-----------------------------------------
Name: Scott L. Wippel
---------------------------------------
Title: Vice President
--------------------------------------
LANDLORD: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------------
Name: Edward J. Hayes
---------------------------------------
Title: Asst. V.P.
--------------------------------------
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by Scott L.
Wippel, as Vice President of ROUNDUP CO.., a Washington corporation.
LUDELL E. CORNILSEN
[NOTARY SEAL] --------------------------------------------
Notary Public for Oregon
My commission expires: 6/8/99
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
<PAGE>
STATE OF OREGON
ss.
County of Multnomah
- ------------------------------
This instrument was acknowledged before me on February 4, 1997, by Edward
J. Hayes, as Assistant Vice President of METROPOLITAN LIFE COMPANY, a New York
corporation.
LUDELL E. CORNILSEN
--------------------------------------------
Notary Public for Oregon
My commission expires 6/8/99
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
<PAGE>
EXHIBIT A
(CL-DC Clackamas Distribution Center, Oregon)
A tract of land located in the South one-half of Section 10, Township 2 South,
Range 2 East, of the Willamette Meridian, in the County of Clackamas and State
of Oregon, more particularly described as follows:
Commencing at the Southeast corner of said Section 10; thence North along the
East line of said Section 10, a distance of 512.43 feet; thence North 89(degree)
43'10" West a distance of 28.88 feet to a point which is 30.00 feet Westerly of,
when measured at right angles to, the center line of a road known as SE 122nd
Avenue, said point also being the true point of beginning of the tract herein to
be described; thence continuing North 89(degree)43'10" West, a distance of
3575.08 feet to a point in the West line of that certain tract of land conveyed
to Southern Pacific Company by Bargain and Sale Deed recorded April 4, 1962 in
Volume 601, page 302, Deed Records; thence North 0(degree)05'10" East along the
West line of said Southern Pacific Company tract, a distance of 759.89 feet to
the most Southerly Northwest corner thereof; thence North 89(degree)40'00"
East, along the North line of said Southern Pacific Company tract, a distance of
115.00 feet; thence North 01(degree)05'10" East, along the West line of said
Southern Pacific Company tract, a distance of 157.00 feet to the most Northerly
Northwest corner thereof; thence North 89(degree)40'00" East, along the North
line of said Southern Pacific Company tract, a distance of 192.80 feet (Volume
601, page 302 calls 182 feet) to the Northeast corner thereof said corner also
being in the West line of that certain tract of land conveyed to Southern
Pacific Company by Bargain and Sale Deed recorded April 4,1962 in Volume 601,
page 296, Deed Records: thence North 0(degree)29'10" West, along the West line
of last said Southern Pacific Company tract, a distance of 220.00 feet to a
point in the Southerly line of Clackamas Highway (State Highway No. 212) said
point being 60 feet Southerly of, when measured at right angles to, the center
line of said Clackamas Highway (1900 relocation as noted in Warranty Deed Fee
No. 82 6071); thence North 89(degree)40'00" East, along the South line of said
Clackamas Highway, a distance of 3022.10 feet to a point in the East line of
that certain tract of land conveyed to Southern Pacific Company by Bargain and
Sale Deed recorded April 4, 1962 in Volume 601, page 288, Deed Records; thence
South along said East line and the Southerly extension thereof, a distance of
780.38 feet to a point in the North line of that certain tract of land conveyed
to Southern Pacific Company by Bargain and Sale Deed recorded April 4, 1962 in
Volume 601, page 290, Deed Records; thence East along the North line of last
said Southern Pacific Company tract, a distance of 245.68 feet to a point in the
West line of SE 122nd Avenue, said point being 30 feet Westerly of, when
measured at right angles to, the center line of said SE 122nd Avenue; thence
South along the West line of said SE 122nd Avenue, a distance of 393.37 feet to
the point of beginning.
EXCEPTING THEREFROM that portion of said property lying below a depth of 500
feet measured vertically from the contour of the surface thereof.
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 4, 1997
<PAGE>
Exhibit B - List of Matters of Record to be Terminated
(CL-DC Clackamas Distribution Center, Oregon)
1. Lease, including the terms and provisions thereof
Dated : September 19, 1977
Recorded : September 19, 1977 as Fee No. 77 37740
Lessor : Fred Meyer Properties, Inc., an Oregon corporation
Lessee : Roundup Co., a Washington corporation
2. Lease, including the terms and provisions thereof
Dated : November 13, 1978
Recorded : November 13, 1978 as Fee No. 78 48611
Lessor : Fred Meyer Properties, Inc., an Oregon corporation
Lessee : Roundup Co., a Washington corporation
3. The Lessor's interest in said Lease was assigned by instrument
Dated : December 11, 1981
Recorded : February 4, 1982 as Fee No. 82 3404
From : Fred Meyer Properties, Inc., an Oregon corporation
To : Fred Meyer Real Estate Properties, Ltd., an Oregon
limited partnership
4. The Lessee's interest in said Lease was assigned by instrument
Dated : December 11, 1981
Recorded : February 4, 1982 as Fee No. 82 3405
From : Roundup Co., a Washington corporation
To : RU Acquisition Corporation, a Washington corporation
5. Memorandum of Restated and Amended Lease, including the terms and
provisions thereof
Dated : November 25, 1986
Recorded : December 9, 1986 as Fee No. 86 49140
Lessor : Fred Meyer Real Estate Properties, Ltd., an Oregon
limited partnership
Lessee : Roundup Co., a Washington corporation
6. The Lessor's interest in said Lease was assigned by various assignments
the last of which was
Dated : November 25, 1986
Recorded : December 9, 1986 as Fee No. 86 49145
From : Roundup Co., a Washington corporation
To : Metropolitan Life Insurance Company, a New York
corporation
The terms and provisions of the above Memorandum of Lease were amended by
instrument
Recorded : December 9, 1986 as Fee No. 86 49144
Fred Meyer - Metropolitan
Termination of Lease and Recorded Interests
February 3, 1997
SALE OF
FRED MEYER RETAIL STORE
JUNEAU
SALE AGREEMENT
BETWEEN
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation,
AS SELLER
AND
FRED MEYER, INC.,
a Delaware corporation,
AS PURCHASER
As of February 3, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE...................................................1
Section 1.1 Agreement of Purchase and Sale...............................1
Section 1.2 Property Defined.............................................2
Section 1.3 Purchase Price...............................................2
Section 1.4 Payment of Purchase Price....................................2
ARTICLE II TITLE..............................................................2
Section 2.1 Title........................................................2
Section 2.2 Conveyance of Title..........................................2
ARTICLE III REVIEW OF PROPERTY................................................3
Section 3.1 Physical and Documentary Inspection..........................3
Section 3.2 Environmental Reports........................................3
ARTICLE IV CLOSING............................................................3
Section 4.1 Time and Place...............................................3
Section 4.2 Seller's Obligations at Closing..............................3
Section 4.3 Purchaser's Obligations at Closing...........................5
Section 4.4 Credits and Prorations.......................................5
Section 4.5 Transaction Taxes and Closing Costs..........................6
Section 4.6 Conditions Precedent to Obligation of Purchaser..............7
Section 4.7 Conditions Precedent to Obligation of Seller.................8
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS...........................8
Section 5.1 Representations and Warranties of Seller.....................8
Section 5.2 Knowledge Defined............................................9
Section 5.3 Survival of Seller's Representations and Warranties..........9
Section 5.4 Representations and Warranties of Purchaser.................10
Section 5.5 Survival of Purchaser's Representations and Warranties......11
ARTICLE VI [INTENTIONALLY OMITTED]...........................................11
ARTICLE VII [INTENTIONALLY OMITTED]..........................................11
ARTICLE VIII COMMISSIONS.....................................................11
Section 8.1 Brokerage Commissions.......................................11
ARTICLE IX DISCLAIMERS AND WAIVERS...........................................12
Section 9.1 No Reliance on Documents....................................12
i
<PAGE>
Section 9.2 AS-IS SALE; DISCLAIMERS.....................................12
Section 9.3 Survival of Disclaimers.....................................13
ARTICLE X MISCELLANEOUS......................................................13
Section 10.1 Confidentiality.............................................13
Section 10.2 Public Disclosure...........................................14
Section 10.3 Assignment..................................................14
Section 10.4 Notices.....................................................14
Section 10.5 Modifications...............................................15
Section 10.6 Entire Agreement............................................15
Section 10.7 Further Assurances..........................................15
Section 10.8 Counterparts................................................15
Section 10.9 Facsimile Signatures........................................15
Section 10.10 Severability................................................15
Section 10.11 Applicable Law..............................................16
Section 10.12 No Third-Party Beneficiary..................................16
Section 10.13 Captions....................................................16
Section 10.14 Construction................................................16
Section 10.15 Recordation.................................................16
Section 10.16 Seller Approval.............................................16
Section 10.17 Concurrent Closing of Related Transactions..................16
A [A-1] DESCRIPTION OF LAND
B [INTENTIONALLY OMITTED]
C LIST OF OPERATING AGREEMENTS
D LIST OF ENVIRONMENTAL REPORTS
E [INTENTIONALLY OMITTED]
F [INTENTIONALLY OMITTED]
G [G-1] FORM OF DEED
H FORM OF BILL OF SALE
I [I-1] FORM OF ASSIGNMENT OF LEASES
J FORM OF ASSIGNMENT OF CONTRACTS
K FORM OF LEASE TERMINATION
L FORM OF FIRPTA CERTIFICATE
M [INTENTIONALLY OMITTED]
N LIST OF BROKERAGE AGREEMENTS
O LIST OF SPECIFIED LITIGATION AND PENDING ACTIONS
P LIST OF VIOLATION NOTICES
Q RENT ROLL
R [INTENTIONALLY OMITTED]
S FIRST AMENDMENT TO AND ASSIGNMENT AND ASSUMPTION
OF SALE AGREEMENT
ii
<PAGE>
SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as of February 3, 1997 (the
"Effective Date"), by and between METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation ("Seller"), and FRED MEYER, INC., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Seller, the following:
(a) all, and not less than all, of those certain tracts or parcels of land
more particularly described in Exhibit A attached hereto and made a part hereof,
together with all rights and appurtenances pertaining to such property,
including any right, title and interest of Seller in and to adjacent streets,
alleys or rights-of-way (the property described in clause (a) of this Section
1.1 being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other improvements affixed to
or located on the Land, excluding fixtures owned by tenants (the property
described in clause (b) of this Section 1.1 being herein referred to
collectively as the "Improvements");
(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the Improvements
(the property described in clause (c) of this Section 1.1 being herein referred
to collectively as the "Personal Property");
(d) any and all of Seller's right, title and interest in and to the leases,
including the Lease Agreement[s] (as hereinafter defined) covering all or any
portion of the Real Property, to the extent they are in effect on the date of
the Closing (as such term is defined in Section 4.1 hereof) (the property
described in clause (d) of this Section 1.1 being herein referred to
collectively as the "Leases"), together with all rents and other sums due
thereunder (the "Rents") and any and all security deposits in Seller's
possession in connection therewith (the "Security Deposits"); and
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(e) any and all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements (collectively, the "Operating Agreements")
listed and described on Exhibit C attached hereto and made a part hereof,
relating to the upkeep, repair, maintenance or operation of the Land,
Improvements or Personal Property, and (ii) all assignable existing warranties
and guaranties (express or implied) issued to Seller in connection with the
Improvements or the Personal Property, and (iii) all assignable existing
permits, licenses, approvals and authorizations issued by any governmental
authority in connection with the Property (the property described in clause (e)
of this Section 1.1 being sometimes herein referred to collectively as the
"Intangibles").
Section 1.2 Property Defined. The Land and the Improvements are hereinafter
sometimes referred to collectively as the "Real Property." The Land, the
Improvements, the Personal Property, the Leases and the Intangibles are
hereinafter sometimes referred to collectively as the "Property." Each parcel
thereof separately identified on Exhibit A is hereinafter referred to separately
as a "Parcel"; more than one Parcel are referred to as "Parcels."
Section 1.3 Purchase Price. Seller is to sell and Purchaser is to purchase
the Property for the amount of ___________________________________ DOLLARS
($_____________) (the "Purchase Price").
Section 1.4 Payment of Purchase Price. The Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, shall be payable in
full at Closing in cash by wire transfer of immediately available funds to a
bank account designated by Seller in writing to Purchaser prior to the Closing.
ARTICLE II
TITLE
Section 2.1 Title. Purchaser has reviewed, approved and accepted the state
of title of the Property.
Section 2.2 Conveyance of Title. At Closing, Seller shall convey and
transfer to Purchaser fee simple title to the Land and Improvements, by
execution and delivery of the Deed [Deeds] (as defined in Section 4.2(a)
hereof). Evidence of delivery of such title shall be the issuance by First
American Title Insurance Company (the "Title Company"), or another national
title company, of CLTA (or state specific equivalent) Owner's Policies of Title
Insurance (the "Title Policies"; each such shall be known herein as a "Title
Policy") covering each Parcel of the Real Property, in the aggregate amount of
the Purchase Price, subject only to the exceptions set forth in Exhibit B
attached to the Deed ("Permitted Exceptions").
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ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Physical and Documentary Inspection. Purchaser has inspected,
approved and accepted the physical aspects of the Property, including the
environmental condition thereof. Purchaser has examined, approved and accepted
documents and files relating to Seller's leasing, maintenance and operation of
the Property.
Section 3.2 Environmental Reports. PURCHASER ACKNOWLEDGES THAT (1)
PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL REPORTS LISTED ON EXHIBIT D
ATTACHED HERETO, (2) IF SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL REPORTS TO
PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH
REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY ENVIRONMENTAL REPORTS
DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER
ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE
RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY.
PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER
FOR ANY INACCURACY IN OR OMISSION FROM ANY ENVIRONMENTAL REPORT. PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS
OWN INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO THE EXTENT
PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the transaction
contemplated hereby (the "Closing") shall be held at the offices of Seller on
February 3, 1997. At the Closing, Seller and Purchaser shall perform the
obligations set forth in, respectively, Section 4.2 and Section 4.3 hereof, the
performance of which obligations shall be concurrent conditions; provided that
the Deed shall not be recorded until Seller receives confirmation that Seller
has received the full amount of the Purchase Price, adjusted by prorations as
set forth herein. At Seller's option, the Closing shall be consummated through
an escrow administered by First American Title Insurance of Oregon ("Escrow
Agent"). In such event, the Purchase Price and all documents shall be deposited
with the Escrow Agent as escrowee.
Section 4.2 Seller's Obligations at Closing. At Closing, Seller shall:
(a) deliver to Purchaser a duly executed deed (the "Deed") in the form
attached hereto as Exhibit G, conveying the Land and Improvements, subject only
to the Permitted Exceptions; the
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warranty of title in the Deed will be only as to claims made by, through or
under Seller and not otherwise;
(b) deliver to Purchaser a duly executed bill of sale (the "Bill of Sale")
conveying the Personal Property without warranty of title or use and without
warranty, express or implied, as to merchantability and fitness for any purpose
and in the form attached hereto as Exhibit H;
(c) assign to Purchaser, and Purchaser shall assume, the landlord/lessor
interest in and to the Leases, Rents and Security Deposits, and any and all
obligations to pay leasing commissions and finder's fees with respect to the
Leases and amendments, renewals and expansions thereof, to the extent provided
in Section 4.4(b)(v) hereof, by duly executed assignment and assumption
agreements (the "Assignment of Leases") in the form attached hereto as Exhibit
I;
(d) to the extent assignable, assign to Purchaser, and Purchaser shall
assume, Seller's interest in the Operating Agreements and the other Intangibles
by duly executed assignment and assumption agreement (the "Assignment of
Contracts") in the form attached hereto as Exhibit J pursuant to which (i)
Seller shall indemnify Purchaser and hold Purchaser harmless from and against
any and all claims pertaining thereto arising prior to Closing and (ii)
Purchaser shall indemnify Seller and hold Seller harmless from and against any
and all claims pertaining thereto arising from and after the Closing;
(e) join with Purchaser to execute a lease termination agreement (the
"Lease Termination") in the form attached hereto as Exhibit K, terminating that
certain "Lease Agreement" dated October 22, 1986, by and between Fred Meyer Real
Estate Properties, Ltd., as landlord, and Purchaser, as tenant, as such lease
has been amended and assigned ("Lease Agreement");
(f) deliver to Purchaser a certificate in the form attached hereto as
Exhibit L duly executed by Seller stating that Seller is not a "foreign person"
as defined in the Federal Foreign Investment in Real Property Tax Act of 1980
and any similar form required by applicable state law;
(g) deliver to Purchaser the Leases and the Operating Agreements, together
with such leasing and property files and records located at the Property or the
property manager's office which are material in connection with the continued
operation, leasing and maintenance of the Property, but excluding any
Confidential Documents. For a period of three (3) years after the Closing,
Purchaser shall allow Seller and its agents and representatives access without
charge to all files, records and documents delivered to Purchaser at the
Closing, upon reasonable advance notice and at all reasonable times, to examine
and make copies of any and all such files, records and documents, which right
shall survive the Closing;
(h) deliver to Purchaser possession and occupancy of the Property, subject
to the Permitted Exceptions;
(i) execute a closing statement acceptable to Seller;
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(j) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement; and
(k) a legal opinion from Seller's in-house counsel with respect to the
authorization of this transaction.
Section 4.3 Purchaser's Obligations at Closing. At Closing, Purchaser
shall:
(a) pay to Seller the full amount of the Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, in immediately
available wire transferred funds pursuant to Section 1.4 hereof;
(b) join Seller in execution of the Assignment of Leases, Assignment of
Contracts and Lease Termination;
(c) deliver to Seller such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Purchaser;
(d) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Purchaser;
(e) execute a closing statement acceptable to Purchaser; and
(f) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
Section 4.4 Credits and Prorations.
(a) Subject to the rights and obligations of the parties under the Lease
Agreement, all income and expenses of the Property between Seller and Purchaser
shall be apportioned as of 12:01 a.m., on the day of Closing, as if Purchaser
were vested with title to the Property during the entire day upon which Closing
occurs. Such prorated items shall include without limitation the following:
(i) all rents under the Lease Agreement, if any (to the extent any
rent under the Lease Agreement has accrued but is unpaid at Closing, Seller
shall receive a credit from Purchaser for such amount);
(ii) taxes and assessments (including personal property taxes on the
Personal Property) levied against the Property;
(iii) utility charges for which Seller is liable, if any, such charges
to be apportioned at Closing on the basis of the most recent meter reading
occurring prior to Closing (dated not more than fifteen (15) days prior to
Closing) or, if unmetered, on the basis of a current bill for each such utility;
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(iv) all amounts payable under Operating Agreements, pursuant to the
terms of this Agreement; and
(v) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser and a seller in the
county in which the Property is located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof, at
Closing, (A) Seller shall, at Seller's option, either deliver to Purchaser any
Security Deposits actually held by Seller pursuant to the Leases or credit to
the account of Purchaser the amount of such Security Deposits (to the extent
such Security Deposits have not been applied against delinquent Rents or
otherwise as provided in the Leases), and (B) Purchaser shall credit to the
account of Seller all refundable cash or other deposits posted with utility
companies serving the Property, but only to the extent paid by Seller.
(c) At Closing, Seller will assign to Purchaser pursuant to the Assignment
of Contracts, without warranty or recourse, all pending real property tax
appeals relating to tax years in which Purchaser, as tenant under the Lease
Agreements, paid all real property taxes with respect to the Property.
(d) Except as otherwise provided herein, any revenue or expense amount
which cannot be ascertained with certainty as of Closing shall be prorated on
the basis of the parties' reasonable estimates of such amount, and shall be the
subject of a final proration ninety (90) days after Closing, or as soon
thereafter as the precise amounts can be ascertained. Purchaser shall promptly
notify Seller when it becomes aware that any such estimated amount has been
ascertained. Once all revenue and expense amounts have been ascertained,
Purchaser shall prepare, and certify as correct, a final proration statement
which shall be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser, such statement
shall be conclusively deemed to be accurate and final.
(e) Subject to the final sentence of Section 4.4(d) hereof, the provisions
of this Section 4.4 shall survive Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns, questionnaires and
other documents as shall be required with regard to all applicable real property
transaction taxes imposed by applicable federal, state or local law or
ordinance;
(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction and Seller's state and federal income tax
incurred by the sale of the Property. Except as provided herein, Seller shall be
responsible for no other costs.
(c) Purchaser shall pay the fees of any counsel representing Purchaser in
connection with this transaction. Purchaser shall also pay the following costs
and expenses:
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(i) all escrow fees which may be charged by the Title Company or
escrow agent;
(ii) the fee for the title examination and the title commitment and
the premium for the Owner's Policies of Title Insurance to be issued to
Purchaser by the Title Company at Closing, and all endorsements thereto;
(iii) the cost of any surveys;
(iv) the fees for recording the Deed[s];
(v) any transfer tax, sales tax, documentary stamp tax or similar tax
which becomes payable by reason of the transfer of the Property (including,
without limitation, any taxes relating to a merger, if any, of the Leases with
the fee ownership of the Real Property occurring as a result of this
transaction);
(vi) the fees for Seller's Broker and Purchaser's Broker;
(vii) any other costs occasioned by this transaction (other than
Seller's federal and state income tax incurred by the sale of the Property and
fees of any counsel representing Seller in connection with this transaction);
(d) The Personal Property is included in this sale without charge, except
that Purchaser shall pay to Seller the amount of any and all sales or similar
taxes payable in connection with the transfer of the Personal Property and
Purchaser shall execute and deliver any tax returns required of it in connection
therewith; and
(e) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 Conditions Precedent to Obligation of Purchaser. The obligation
of Purchaser to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole discretion:
(a) Seller shall have delivered to Purchaser all of the items required to
be delivered to Purchaser pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.2 hereof;
(b) All of the representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the date of
Closing (with appropriate modifications permitted under this Agreement);
(c) Seller shall have performed and observed, in all material respects, all
covenants and agreements of this Agreement to be performed and observed by
Seller as of the date of Closing; and
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(d) Seller shall have accepted the evidence with respect to the Act (as
hereinafter defined) that Purchaser is required to produce pursuant to Section
4.7(e).
Section 4.7 Conditions Precedent to Obligation of Seller. The obligation of
Seller to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Seller in its sole discretion:
(a) Seller shall have received the Purchase Price as adjusted as provided
herein, pursuant to and payable in the manner provided for in this Agreement;
(b) Purchaser shall have delivered to Seller all of the items required to
be delivered to Seller pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.3 hereof;
(c) All of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement);
(d) Purchaser shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
Purchaser as of the date of Closing; and
(e) Purchaser's providing to Seller (i) evidence reasonably satisfactory to
Seller that the notification and reporting requirements of the Hart-Scott Rodino
Antitrust Improvement Act of 1976, as amended (15 U.S.C. ss. 18a) (the "Act") do
not apply to the transaction contemplated hereby, or (ii) in the event the
notification and reporting requirements of the Act shall be applicable to the
contemplated transaction, evidence reasonably satisfactory to Seller that all
applicable notification and reporting requirements of the Act have been timely
and completely fulfilled. Purchaser acknowledges that in the event the
contemplated transaction is not approved by the Federal Trade Commission, Seller
shall be under no obligation to close the transaction contemplated. Seller and
Purchaser agree to cooperate in effecting compliance with the Act to the extent
required under applicable law.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller. Seller hereby makes
the following representations and warranties to Purchaser as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller has been duly organized and is
validly existing under the laws of the State of New York. Seller has the full
right and authority to enter into this Agreement and to transfer all of the
Property and to consummate or cause to be consummated the
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transaction contemplated by this Agreement. The person signing this Agreement on
behalf of Seller is authorized to do so.
(b) Pending Actions. Except as indicated on Exhibit O, to Seller's
knowledge, Seller has not received written notice of any action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Seller or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) Operating Agreements. To Seller's knowledge, the Operating Agreements
listed on Exhibit C are all of the agreements concerning the operation and
maintenance of the Property entered into by Seller and affecting the Property,
except those operating agreements that are not assignable and are to be
terminated by Seller within thirty (30) days after the Closing, and except any
agreement with Seller's property manager, which shall be terminated by Seller.
(d) Lease Brokerage. To Seller's knowledge, there are no agreements with
brokers providing for the payment from and after the Closing by Seller or
Seller's successor-in-interest of leasing commissions or fees for procuring
tenants with respect to the Property or related to this transaction, except as
disclosed in Exhibit N hereto;
(e) Condemnation. To Seller's knowledge, Seller has received no written
notice of any condemnation proceedings relating to the Property.
(f) Litigation. To Seller's knowledge, except as set forth on Exhibit O
attached hereto, Seller has not received written notice of any litigation which
has been filed against Seller that arises out of the ownership of the Property
and would materially affect the Property or use thereof, or Seller's ability to
perform hereunder;
(g) Violations. To Seller's knowledge, except as set forth on Exhibit P
attached hereto, Seller has not received written notice of any uncured violation
of any federal, state or local law relating to the use or operation of the
Property which would materially adversely affect the Property or use thereof;
and
(h) Leases. To Seller's knowledge, Seller has not entered into any leases
currently affecting the Real Property other than as shown on Exhibit Q.
Section 5.2 Knowledge Defined. References to the "knowledge" of Seller
shall refer only to the current actual knowledge of the Designated Employees (as
hereinafter defined) of Seller, and shall not be construed, by imputation or
otherwise, to refer to the knowledge of Seller or any affiliate of Seller, to
any property manager, or to any other officer, agent, manager, representative or
employee of Seller or any affiliate thereof or to impose upon such Designated
Employees any duty to investigate the matter to which such actual knowledge, or
the absence thereof, pertains. As used herein, the term "Designated Employees"
shall refer to the following person(s): Jim Hills, Senior Investment Analyst.
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Section 5.3 Survival of Seller's Representations and Warranties. The
representations and warranties of Seller set forth in Section 5.1 hereof shall
survive Closing for a period of one (1) year. No claim for a breach of any
representation or warranty of Seller shall be actionable or payable if the
breach in question results from or is based on a condition, state of facts or
other matter which was known to Purchaser prior to Closing. Seller shall have no
liability to Purchaser for a breach of any representation or warranty (a) unless
the valid claims for all such breaches with respect to this Property and the
Columbia Falls (MT), Kalispell (MT), Fourth Plain (WA), Tacoma Lakewood (WA),
Roseburg (OR) and Clackamas Distribution Center (OR) properties which are to be
conveyed from Seller to Purchaser contemporaneously with the Property pursuant
to purchase and sale agreements of even date, collectively aggregate more than
Five Hundred Thousand Dollars ($500,000), in which event the full amount of such
valid claims shall be actionable, up to the Cap (as defined in this Section),
and (b) unless written notice containing a description of the specific nature of
such breach shall have been given by Purchaser to Seller prior to the expiration
of said one (1) year period and an action shall have been commenced by Purchaser
against Seller within one (1) year and ninety (90) days of Closing. Purchaser
agrees to first seek recovery under any insurance policies, service contracts
and Leases prior to seeking recovery from Seller, and Seller shall not be liable
to Purchaser if Purchaser's claim is satisfied from such insurance policies,
service contracts or Leases. As used herein, the term "Cap" shall mean the total
aggregate amount of One Million Dollars ($1,000,000) with respect to any and all
claims relating to this Property and to the Columbia Falls (MT), Kalispell (MT),
Fourth Plain (WA), Tacoma Lakewood (WA), Roseburg (OR) and Clackamas
Distribution Center (OR) properties which are to be conveyed from Seller to
Purchaser contemporaneously with the Property pursuant to purchase and sale
agreements of even date. This Section 5.3 shall have no application to any
claims of Purchaser with respect to warranties of title conveyed by the Deed.
Section 5.4 Representations and Warranties of Purchaser. Purchaser hereby
makes the following representations and warranties to Seller as of the Closing,
subject to Section 4.3(c) hereof:
(a) Organization and Authority. Purchaser has been duly organized and is
validly existing under the laws of Oregon. Purchaser has the full right and
authority to enter into this Agreement and to consummate or cause to be
consummated the transaction contemplated by this Agreement. The person signing
this Agreement on behalf of Purchaser is authorized to do so;
(b) Pending Actions. To Purchaser's knowledge, there is no action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Purchaser or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will not be an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is subject to Title I of ERISA, nor a plan
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (each of the foregoing hereinafter referred to collectively as "Plan"),
and (2) the assets of the Purchaser will not constitute "plan assets" of one or
more such Plans within the meaning of Department of Labor ("DOL") Regulation
Section 2510.3-101.
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As of the Closing, if Purchaser is a "governmental plan" as defined in
Section 3(32) of ERISA, the closing of the sale of the Property will not
constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own behalf and not on
account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the Property to any entity,
person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this contract of sale to any
entity, person, or Plan which will cause a violation of ERISA.
Section 5.5 Survival of Purchaser's Representations and Warranties. The
representations and warranties of Purchaser set forth in Section 5.5 hereof
shall survive Closing for a period of one (1) year. Purchaser shall have no
liability to Seller for a breach of any representation or warranty unless
written notice containing a description of the specific nature of such breach
shall have been given by Seller to Purchaser prior to the expiration of said one
(1) year period and an action shall have been commenced by Seller against
Purchaser within one (1) year and ninety (90) days of Closing.
ARTICLE VI
[INTENTIONALLY OMITTED]
ARTICLE VII
[INTENTIONALLY OMITTED]
ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to the transaction
contemplated by this Agreement, Seller represents that its sole broker is None
("Seller's Broker"), and Purchaser represents that its sole broker is None
("Purchaser's Broker"). Each party hereto agrees that if any person or entity,
other than the Seller's Broker or the Purchaser's Broker, makes a claim for
brokerage commissions or finder's fees related to the sale of the Property by
Seller to Purchaser, and such claim is made by, through or on account of any
acts or alleged acts of said party or its representatives, said party will
protect, indemnify, defend and hold the other party free and harmless from and
against any and all loss, liability, cost, damage and expense (including
reasonable attorneys' fees) in connection therewith. The provisions of this
paragraph shall survive Closing or any termination of this Agreement.
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ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents. Except as expressly stated herein,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any materials, data or information delivered by or conversations
with Seller or its brokers or agents to Purchaser in connection with the
Property and the conveyance contemplated hereby. Purchaser acknowledges and
agrees that all materials, data and information delivered by Seller to Purchaser
and conversations with Seller or its brokers or agents in connection with the
transaction contemplated hereby are provided to Purchaser as a convenience only
and that any reliance on or use of such materials, data or information by
Purchaser shall be at the sole risk of Purchaser, except as otherwise expressly
stated herein. Neither Seller, nor any affiliate of Seller, nor the person or
entity which prepared any report or reports delivered by Seller to Purchaser
shall have any liability to Purchaser for any inaccuracy in or omission from any
such reports.
Section 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT
ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND
CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS,
WITH ALL FAULTS," EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT. PURCHASER ACKNOWLEDGES THAT (I) IT OR AN ENTITY AFFILIATED WITH
PURCHASER OWNED THE PROPERTY PRIOR TO SELLER, (II) PURCHASER HAS CONTINUOUSLY
OCCUPIED AND OPERATED THE PROPERTY ON A DAY-TO-DAY BASIS SINCE THE CLOSING OF
PURCHASER'S EARLIER SALE OF THE PROPERTY TO SELLER PURSUANT TO A SALE-LEASEBACK
TRANSACTION AND IS VERY FAMILIAR WITH THE PROPERTY. PURCHASER HAS NOT RELIED AND
WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR
IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT
LIMITATION, OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
FURNISHED BY SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR
AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND
TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
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PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER
DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY,
AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON
BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN
SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET
FORTH IN THIS AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED HEREIN, UPON CLOSING,
PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED
TO, CONSTRUCTION DEFECTS, SOIL CONDITIONS AND ANY OTHER ADVERSE PHYSICAL AND/OR
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S
INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY
AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF
ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF
ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES
OR MATTERS REGARDING THE PROPERTY, EXCEPT AS MAY BE EXPRESSLY PROVIDED TO THE
CONTRARY IN THE REPRESENTATIONS OF SELLER CONTAINED HEREIN.
Section 9.3 Survival of Disclaimers. The provisions of this Article IX
shall survive Closing or any termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Seller, Purchaser and their respective
representatives shall hold in strictest confidence all data and information
obtained with respect to the other or the other's business, whether obtained
before or after the execution and delivery of this Agreement, and shall not
disclose the same to third parties; provided, however, that it is understood and
agreed that each may disclose such data and information to its employees,
lenders, consultants, accountants and attorneys provided that such persons agree
in writing to treat such data and information confidentially. In the event this
Agreement is terminated, each shall promptly return to the other any statements,
documents,
13
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schedules, exhibits or other written information obtained from the other in
connection with this Agreement or the transaction contemplated herein. In the
event of a breach or threatened breach by Purchaser, Seller or their respective
representatives of this Section 10.1, the other shall be entitled to an
injunction restraining Purchaser, Seller or their respective representatives
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting the parties from pursuing any other
available remedy at law or in equity for such breach or threatened breach. The
provisions of this Section 10.1 shall survive Closing or any termination of this
Agreement.
Section 10.2 Public Disclosure. Prior to and after the Closing, any release
to the public of information with respect to the sale contemplated herein or any
matters set forth in this Agreement will be made only in the form approved by
Purchaser and Seller. The provisions of this Section 10.2 shall survive the
Closing or any termination of this Agreement.
Section 10.3 Assignment. Subject to the provisions of this Section 10.3,
the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Purchaser may not assign
its rights under this Agreement except to Fred Meyer of Alaska, Inc., an Alaska
corporation, a wholly-owned subsidiary or affiliate of Purchaser, pursuant to
the terms of the First Amendment to and Assignment and Assumption of Sale
Agreement attached hereto as Exhibit S. Notwithstanding the foregoing, under no
circumstances shall Purchaser have the right to assign this Agreement to any
person or entity owned or controlled by an employee benefit plan if Seller's
sale of the Property to such person or entity would, in the reasonable opinion
of Seller's ERISA advisor, create or otherwise cause a "prohibited transaction"
under ERISA. Any transfer, directly or indirectly, of any stock, partnership
interest or other ownership interest in Purchaser shall constitute an assignment
of this Agreement. The provisions of this Section 10.3 shall survive the Closing
or any termination of this Agreement.
Section 10.4 Notices. Any notice pursuant to this Agreement shall be given
in writing by (a) personal delivery, (b) reputable overnight delivery service
with proof of delivery, (c) United States Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or, in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in accordance
with the preceding sentence, the addresses for notices given pursuant to this
Agreement shall be as follows:
If to Seller: Metropolitan Life Insurance Company
Real Estate Investments
101 Lincoln Centre Drive, 6th Floor
Foster City, California 94404
Attention: Edward J. Hayes, Assistant Vice President
Telephone No. (415) 574-8181
Telecopy No. (415) 349-4615
14
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If to Purchaser: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Sr. V.P./CFD
Telephone No. (503) 232-8844
Telecopy No. (503) 797-5623
with a copy to: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Attorney/CLD
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
Section 10.5 Modifications. This Agreement cannot be changed orally, and no
executory agreement shall be effective to waive, change, modify or discharge it
in whole or in part unless such executory agreement is in writing and is signed
by the parties against whom enforcement of any waiver, change, modification or
discharge is sought.
Section 10.6 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the parties pertaining to such
subject matter, other than any confidentiality agreement executed by Purchaser
in connection with the Property.
Section 10.7 Further Assurances. Each party agrees that it will execute and
deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
Section 10.8 Counterparts. This Agreement may be executed in counterparts,
all such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
Section 10.9 Facsimile Signatures. In order to expedite the transaction
contemplated herein, telecopied signatures may be used in place of original
signatures on this Agreement. Seller and Purchaser intend to be bound by the
signatures on the telecopied document, are aware that the other party will rely
on the telecopied signatures, and hereby waive any defenses to the enforcement
of the terms of this Agreement based on the form of signature.
Section 10.10 Severability. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall nonetheless remain in full force and
effect; provided that the invalidity or unenforceability of such provision does
not materially adversely affect the benefits accruing to any party hereunder.
15
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Section 10.11 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon. Purchaser and
Seller agree that the provisions of this Section 10.11 shall survive the Closing
or any termination of this Agreement.
Section 10.12 No Third-Party Beneficiary. The provisions of this Agreement
and of the documents to be executed and delivered at Closing are and will be for
the benefit of Seller and Purchaser only and are not for the benefit of any
third party, and accordingly, no third party shall have the right to enforce the
provisions of this Agreement or of the documents to be executed and delivered at
Closing.
Section 10.13 Captions. The section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 10.14 Construction. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
Section 10.15 Recordation. This Agreement may not be recorded by any party
hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.15 shall survive the Closing or any termination of
this Agreement.
Section 10.16 Seller Approval. [Shall be omitted prior to Closing]
Section 10.17 Concurrent Closing of Related Transactions. The parties
hereto hereby agree that the Closing is expressly contingent upon the concurrent
closing of (i) those certain lease amendments of even date by and between Seller
and Purchaser concerning certain modifications to certain leases, (ii) the
execution of that certain purchase and sale agreement of __________ parcels by
and between Seller and Purchaser, and (iii) those certain purchase and sale
agreements of even date by and between Seller and Purchaser with respect a sale
of five (5) shopping centers and one distribution center and that no one of the
transactions shall be consummated without all such transactions being
concurrently consummated.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
--------------------------------
Name: Edward J. Hayes
------------------------------
16
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Title: Asst. V. P.
-----------------------------
PURCHASER:
FRED MEYER, INC.,
a Delaware corporation
By: SCOTT L. WIPPEL
--------------------------------
Name: Scott L. Wippel
------------------------------
Title: Senior Vice President
-----------------------------
17
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EXHIBIT A
Real Property Description
A tract of land in U.S. Surveys 1195, 1852, and 3800 including accretion
thereto, Juneau Recording District, First Judicial District, State of Alaska,
described as:
BEGIN at the Northwest corner (corner 5) of U.S. Survey 1852, run thence North
82(degree) 57' 30" East, on the North line of U.S. Survey 1852, a distance of
293.76 feet to the Westerly line of the access road conveyed by deed recorded
June 6, 1972 in Book 101 at Page 164, thence South 8(degree) 55' 43" West, on
said Westerly line, 537.19 feet to the Northerly line of Egan Expressway; thence
South 89(degree) 10' 09" West, on said Northerly line, 210.48 feet; thence on a
1,814.61 foot radius curve to the right 858.17 feet, the chord of which bears
North 77(degree) 16' 57" West 850.19 feet; thence North 13(degree) 39' 42" East
360.04 feet to the Southerly line of Glacier Highway; thence Easterly on said
highway line on a 1,973.73 foot radius curve to the left, 585.35 feet, the chord
of which bears South 84(degree) 50' 04" East 583.21 feet; thence North
85(degree) 33' 05" East 100.69 feet to the Westerly line of U.S. Survey 3800;
thence North 85(degree) 16' 51" East 65.59 feet to the point of beginning,
EXCEPT THEREFROM that part conveyed to the State of Alaska by deed recorded May
20, 1986 in Book 270 at Page 895.
SALE OF
FRED MEYER RETAIL STORES
COLUMBIA FALLS
&
KALISPELL
SALE AGREEMENT
BETWEEN
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation,
AS SELLER
AND
FRED MEYER, INC.,
a Delaware corporation,
AS PURCHASER
As of February 3, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE...................................................1
Section 1.1 Agreement of Purchase and Sale...............................1
Section 1.2 Property Defined.............................................2
Section 1.3 Purchase Price...............................................2
Section 1.4 Payment of Purchase Price....................................2
ARTICLE II TITLE..............................................................2
Section 2.1 Title........................................................2
Section 2.2 Conveyance of Title..........................................2
ARTICLE III REVIEW OF PROPERTY................................................3
Section 3.1 Physical and Documentary Inspection..........................3
Section 3.2 Environmental Reports........................................3
ARTICLE IV CLOSING............................................................3
Section 4.1 Time and Place...............................................3
Section 4.2 Seller's Obligations at Closing..............................3
Section 4.3 Purchaser's Obligations at Closing...........................5
Section 4.4 Credits and Prorations.......................................5
Section 4.5 Transaction Taxes and Closing Costs..........................7
Section 4.6 Conditions Precedent to Obligation of Purchaser..............7
Section 4.7 Conditions Precedent to Obligation of Seller.................8
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS...........................9
Section 5.1 Representations and Warranties of Seller.....................9
Section 5.2 Knowledge Defined...........................................10
Section 5.3 Survival of Seller's Representations and Warranties.........10
Section 5.4 Representations and Warranties of Purchaser.................11
Section 5.5 Survival of Purchaser's Representations and Warranties......11
ARTICLE VI [INTENTIONALLY OMITTED]...........................................12
ARTICLE VII [INTENTIONALLY OMITTED]..........................................12
ARTICLE VIII COMMISSIONS.....................................................12
Section 8.1 Brokerage Commissions.......................................12
ARTICLE IX DISCLAIMERS AND WAIVERS...........................................12
i
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Page
Section 9.1 No Reliance on Documents....................................12
Section 9.2 AS-IS SALE; DISCLAIMERS.....................................12
Section 9.3 Survival of Disclaimers.....................................14
ARTICLE X MISCELLANEOUS......................................................14
Section 10.1 Confidentiality.............................................14
Section 10.2 Public Disclosure...........................................14
Section 10.3 Assignment..................................................14
Section 10.4 Notices.....................................................15
Section 10.5 Modifications...............................................16
Section 10.6 Entire Agreement............................................16
Section 10.7 Further Assurances..........................................16
Section 10.8 Counterparts................................................16
Section 10.9 Facsimile Signatures........................................16
Section 10.10 Severability................................................16
Section 10.11 Applicable Law..............................................16
Section 10.12 No Third-Party Beneficiary..................................17
Section 10.13 Captions....................................................17
Section 10.14 Construction................................................17
Section 10.15 Recordation.................................................17
Section 10.16 Seller Approval.............................................17
Section 10.17 Concurrent Closing of Related Transactions..................17
A [A-1] DESCRIPTION OF LAND
B [INTENTIONALLY OMITTED]
C LIST OF OPERATING AGREEMENTS
D LIST OF ENVIRONMENTAL REPORTS
E [INTENTIONALLY OMITTED]
F [INTENTIONALLY OMITTED]
G [G-1] FORM OF DEED
H FORM OF BILL OF SALE
I [I-1] FORM OF ASSIGNMENT OF LEASES
J FORM OF ASSIGNMENT OF CONTRACTS
K FORM OF LEASE TERMINATION
L FORM OF FIRPTA CERTIFICATE
M [INTENTIONALLY OMITTED]
N LIST OF BROKERAGE AGREEMENTS
O LIST OF SPECIFIED LITIGATION AND PENDING ACTIONS
P LIST OF VIOLATION NOTICES
Q RENT ROLL
ii
<PAGE>
Page
R ALLOCATION SCHEDULE
S FIRST AMENDMENT TO AND ASSIGNMENT AND
ASSUMPTION OF SALE AGREEMENT
iii
<PAGE>
SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as of February 3, 1997 (the
"Effective Date"), by and between METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation ("Seller"), and FRED MEYER, INC., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Seller, the following:
(a) all, and not less than all, of those certain tracts or parcels of land
more particularly described in Exhibit A attached hereto and made a part hereof,
together with all rights and appurtenances pertaining to such property,
including any right, title and interest of Seller in and to adjacent streets,
alleys or rights-of-way (the property described in clause (a) of this Section
1.1 being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other improvements affixed to
or located on the Land, excluding fixtures owned by tenants (the property
described in clause (b) of this Section 1.1 being herein referred to
collectively as the "Improvements");
(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the Improvements
(the property described in clause (c) of this Section 1.1 being herein referred
to collectively as the "Personal Property");
(d) any and all of Seller's right, title and interest in and to the leases,
including the Lease Agreement[s] (as hereinafter defined) covering all or any
portion of the Real Property, to the extent they are in effect on the date of
the Closing (as such term is defined in Section 4.1 hereof) (the property
described in clause (d) of this Section 1.1 being herein referred to
collectively as the "Leases"), together with all rents and other sums due
thereunder (the "Rents")
<PAGE>
and any and all security deposits in Seller's possession in connection therewith
(the "Security Deposits"); and
(e) any and all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements (collectively, the "Operating Agreements")
listed and described on Exhibit C attached hereto and made a part hereof,
relating to the upkeep, repair, maintenance or operation of the Land,
Improvements or Personal Property, and (ii) all assignable existing warranties
and guaranties (express or implied) issued to Seller in connection with the
Improvements or the Personal Property, and (iii) all assignable existing
permits, licenses, approvals and authorizations issued by any governmental
authority in connection with the Property (the property described in clause (e)
of this Section 1.1 being sometimes herein referred to collectively as the
"Intangibles").
Section 1.2 Property Defined. The Land and the Improvements are hereinafter
sometimes referred to collectively as the "Real Property." The Land, the
Improvements, the Personal Property, the Leases and the Intangibles are
hereinafter sometimes referred to collectively as the "Property." Each parcel
thereof separately identified on Exhibit A is hereinafter referred to separately
as a "Parcel"; more than one Parcel are referred to as "Parcels."
Section 1.3 Purchase Price. Seller is to sell and Purchaser is to purchase
the Property for the amount of ___________________________________ DOLLARS
($_____________) (the "Purchase Price"), which shall be allocated to each Parcel
in accordance with the allocation schedule attached hereto as Exhibit R. Seller
is to sell and Purchaser is to purchase all, and not less than all of the
Parcels.
Section 1.4 Payment of Purchase Price. The Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, shall be payable in
full at Closing in cash by wire transfer of immediately available funds to a
bank account designated by Seller in writing to Purchaser prior to the Closing.
ARTICLE II
TITLE
Section 2.1 Title. Purchaser has reviewed, approved and accepted the state
of title of the Property.
Section 2.2 Conveyance of Title. At Closing, Seller shall convey and
transfer to Purchaser fee simple title to the Land and Improvements, by
execution and delivery of the Deeds (as defined in Section 4.2(a) hereof).
Evidence of delivery of such title shall be the issuance by First American Title
Insurance Company (the "Title Company"), or another national title company, of
CLTA (or state specific equivalent) Owner's Policies of Title Insurance (the
"Title Policies"; each such shall be known herein as a "Title Policy") covering
each Parcel of the Real Property, in the aggregate amount of the Purchase Price,
allocated to each Parcel as set forth in
2
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Exhibit R, subject only to the exceptions set forth in Exhibit B attached to the
Deeds ("Permitted Exceptions").
ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Physical and Documentary Inspection. Purchaser has inspected,
approved and accepted the physical aspects of the Property, including the
environmental condition thereof. Purchaser has examined, approved and accepted
documents and files relating to Seller's leasing, maintenance and operation of
the Property.
Section 3.2 Environmental Reports. PURCHASER ACKNOWLEDGES THAT (1)
PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL REPORTS LISTED ON EXHIBIT D
ATTACHED HERETO, (2) IF SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL REPORTS TO
PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH
REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY ENVIRONMENTAL REPORTS
DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER
ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE
RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY.
PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER
FOR ANY INACCURACY IN OR OMISSION FROM ANY ENVIRONMENTAL REPORT. PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS
OWN INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO THE EXTENT
PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the transaction
contemplated hereby (the "Closing") shall be held at the offices of Seller on
February 3, 1997. At the Closing, Seller and Purchaser shall perform the
obligations set forth in, respectively, Section 4.2 and Section 4.3 hereof, the
performance of which obligations shall be concurrent conditions; provided that
the Deeds shall not be recorded until Seller receives confirmation that Seller
has received the full amount of the Purchase Price, adjusted by prorations as
set forth herein. At Seller's option, the Closing shall be consummated through
an escrow administered by First American Title Insurance of Oregon ("Escrow
Agent"). In such event, the Purchase Price and all documents shall be deposited
with the Escrow Agent as escrowee.
3
<PAGE>
Section 4.2 Seller's Obligations at Closing. At Closing, Seller shall:
(a) deliver to Purchaser duly executed deeds (the "Deeds") for the Parcels
being conveyed in the form attached hereto as Exhibit G, conveying the Land and
Improvements, subject only to the Permitted Exceptions and a Realty Transfer
Certificate in the form attached hereto as Exhibit G-2 executed by Seller; the
warranty of title in the Deeds will be only as to claims made by, through or
under Seller and not otherwise;
(b) deliver to Purchaser a duly executed bill of sale (the "Bill of Sale")
conveying the Personal Property without warranty of title or use and without
warranty, express or implied, as to merchantability and fitness for any purpose
and in the form attached hereto as Exhibit H;
(c) assign to Purchaser, and Purchaser shall assume, the landlord/lessor
interest in and to the Leases, Rents and Security Deposits, and any and all
obligations to pay leasing commissions and finder's fees with respect to the
Leases and amendments, renewals and expansions thereof, to the extent provided
in Section 4.4(b)(v) hereof, by duly executed assignment and assumption
agreements (the "Assignments of Leases") in the forms attached hereto as Exhibit
I;
(d) to the extent assignable, assign to Purchaser, and Purchaser shall
assume, Seller's interest in the Operating Agreements and the other Intangibles
by duly executed assignment and assumption agreement (the "Assignment of
Contracts") in the form attached hereto as Exhibit J pursuant to which (i)
Seller shall indemnify Purchaser and hold Purchaser harmless from and against
any and all claims pertaining thereto arising prior to Closing and (ii)
Purchaser shall indemnify Seller and hold Seller harmless from and against any
and all claims pertaining thereto arising from and after the Closing;
(e) join with Purchaser to execute a lease termination agreement (the
"Lease Terminations") in the forms attached hereto as Exhibit K, terminating
those certain "Lease Agreements" dated October 22, 1986, by and between Fred
Meyer Real Estate Properties, Ltd., as landlord, and Purchaser, as tenant, as
such leases have been amended and assigned ("Lease Agreements");
(f) deliver to Purchaser a certificate in the form attached hereto as
Exhibit L duly executed by Seller stating that Seller is not a "foreign person"
as defined in the Federal Foreign Investment in Real Property Tax Act of 1980
and any similar form required by applicable state law;
(g) deliver to Purchaser the Leases and the Operating Agreements, together
with such leasing and property files and records located at the Property or the
property manager's office which are material in connection with the continued
operation, leasing and maintenance of the Property, but excluding any
Confidential Documents. For a period of three (3) years after the Closing,
Purchaser shall allow Seller and its agents and representatives access without
charge to all files, records and documents delivered to Purchaser at the
Closing, upon reasonable advance
4
<PAGE>
notice and at all reasonable times, to examine and make copies of any and all
such files, records and documents, which right shall survive the Closing;
(h) deliver to Purchaser possession and occupancy of the Property, subject
to the Permitted Exceptions;
(i) execute a closing statement acceptable to Seller;
(j) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement; and
(k) a legal opinion from Seller's in-house counsel with respect to the
authorization of this transaction.
Section 4.3 Purchaser's Obligations at Closing. At Closing, Purchaser
shall:
(a) pay to Seller the full amount of the Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, in immediately
available wire transferred funds pursuant to Section 1.4 hereof;
(b) join Seller in execution of the Assignments of Leases, Assignment of
Contracts and Lease Terminations;
(c) deliver to Seller such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Purchaser;
(d) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Purchaser;
(e) execute a closing statement acceptable to Purchaser; and
(f) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
Section 4.4 Credits and Prorations.
(a) Subject to the rights and obligations of the parties under the Lease
Agreement, all income and expenses of the Property between Seller and Purchaser
shall be apportioned as of 12:01 a.m., on the day of Closing, as if Purchaser
were vested with title to the Property during the entire day upon which Closing
occurs. Such prorated items shall include without limitation the following:
5
<PAGE>
(i) all rents under the Lease Agreements, if any (to the extent any
rent under the Lease Agreement has accrued but is unpaid at Closing, Seller
shall receive a credit from Purchaser for such amount);
(ii) taxes and assessments (including personal property taxes on the
Personal Property) levied against the Property;
(iii) utility charges for which Seller is liable, if any, such charges
to be apportioned at Closing on the basis of the most recent meter reading
occurring prior to Closing (dated not more than fifteen (15) days prior to
Closing) or, if unmetered, on the basis of a current bill for each such utility;
(iv) all amounts payable under Operating Agreements, pursuant to the
terms of this Agreement; and
(v) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser and a seller in the
county in which the Property is located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof, at
Closing, (A) Seller shall, at Seller's option, either deliver to Purchaser any
Security Deposits actually held by Seller pursuant to the Leases or credit to
the account of Purchaser the amount of such Security Deposits (to the extent
such Security Deposits have not been applied against delinquent Rents or
otherwise as provided in the Leases), and (B) Purchaser shall credit to the
account of Seller all refundable cash or other deposits posted with utility
companies serving the Property, but only to the extent paid by Seller.
(c) At Closing, Seller will assign to Purchaser pursuant to the Assignment
of Contracts, without warranty or recourse, all pending real property tax
appeals relating to tax years in which Purchaser, as tenant under the Lease
Agreements, paid all real property taxes with respect to the Property.
(d) Except as otherwise provided herein, any revenue or expense amount
which cannot be ascertained with certainty as of Closing shall be prorated on
the basis of the parties' reasonable estimates of such amount, and shall be the
subject of a final proration ninety (90) days after Closing, or as soon
thereafter as the precise amounts can be ascertained. Purchaser shall promptly
notify Seller when it becomes aware that any such estimated amount has been
ascertained. Once all revenue and expense amounts have been ascertained,
Purchaser shall prepare, and certify as correct, a final proration statement
which shall be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser, such statement
shall be conclusively deemed to be accurate and final.
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(e) Subject to the final sentence of Section 4.4(d) hereof, the provisions
of this Section 4.4 shall survive Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns, questionnaires and
other documents as shall be required with regard to all applicable real property
transaction taxes imposed by applicable federal, state or local law or
ordinance;
(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction and Seller's state and federal income tax
incurred by the sale of the Property. Except as provided herein, Seller shall be
responsible for no other costs.
(c) Purchaser shall pay the fees of any counsel representing Purchaser in
connection with this transaction. Purchaser shall also pay the following costs
and expenses:
(i) all escrow fees which may be charged by the Title Company or
escrow agent;
(ii) the fee for the title examination and the title commitment and
the premium for the Owner's Policies of Title Insurance to be issued to
Purchaser by the Title Company at Closing, and all endorsements thereto;
(iii) the cost of any surveys;
(iv) the fees for recording the Deed[s];
(v) any transfer tax, sales tax, documentary stamp tax or similar tax
which becomes payable by reason of the transfer of the Property (including,
without limitation, any taxes relating to a merger, if any, of the Leases with
the fee ownership of the Real Property occurring as a result of this
transaction);
(vi) the fees for Seller's Broker and Purchaser's Broker;
(vii) any other costs occasioned by this transaction (other than
Seller's federal and state income tax incurred by the sale of the Property and
fees of any counsel representing Seller in connection with this transaction);
(d) The Personal Property is included in this sale without charge, except
that Purchaser shall pay to Seller the amount of any and all sales or similar
taxes payable in connection with the transfer of the Personal Property and
Purchaser shall execute and deliver any tax returns required of it in connection
therewith; and
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(e) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 Conditions Precedent to Obligation of Purchaser. The obligation
of Purchaser to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole discretion:
(a) Seller shall have delivered to Purchaser all of the items required to
be delivered to Purchaser pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.2 hereof;
(b) All of the representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the date of
Closing (with appropriate modifications permitted under this Agreement);
(c) Seller shall have performed and observed, in all material respects, all
covenants and agreements of this Agreement to be performed and observed by
Seller as of the date of Closing; and
(d) Seller shall have accepted the evidence with respect to the Act (as
hereinafter defined) that Purchaser is required to produce pursuant to Section
4.7(e).
Section 4.7 Conditions Precedent to Obligation of Seller. The obligation of
Seller to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Seller in its sole discretion:
(a) Seller shall have received the Purchase Price as adjusted as provided
herein, pursuant to and payable in the manner provided for in this Agreement;
(b) Purchaser shall have delivered to Seller all of the items required to
be delivered to Seller pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.3 hereof;
(c) All of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement);
(d) Purchaser shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
Purchaser as of the date of Closing; and
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(e) Purchaser's providing to Seller (i) evidence reasonably satisfactory to
Seller that the notification and reporting requirements of the Hart-Scott Rodino
Antitrust Improvement Act of 1976, as amended (15 U.S.C. ss. 18a) (the "Act") do
not apply to the transaction contemplated hereby, or (ii) in the event the
notification and reporting requirements of the Act shall be applicable to the
contemplated transaction, evidence reasonably satisfactory to Seller that all
applicable notification and reporting requirements of the Act have been timely
and completely fulfilled. Purchaser acknowledges that in the event the
contemplated transaction is not approved by the Federal Trade Commission, Seller
shall be under no obligation to close the transaction contemplated. Seller and
Purchaser agree to cooperate in effecting compliance with the Act to the extent
required under applicable law.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller. Seller hereby makes
the following representations and warranties to Purchaser as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller has been duly organized and is
validly existing under the laws of the State of New York. Seller has the full
right and authority to enter into this Agreement and to transfer all of the
Property and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
Seller is authorized to do so.
(b) Pending Actions. Except as indicated on Exhibit O, to Seller's
knowledge, Seller has not received written notice of any action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Seller or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) Operating Agreements. To Seller's knowledge, the Operating Agreements
listed on Exhibit C are all of the agreements concerning the operation and
maintenance of the Property entered into by Seller and affecting the Property,
except those operating agreements that are not assignable and are to be
terminated by Seller within thirty (30) days after the Closing, and except any
agreement with Seller's property manager, which shall be terminated by Seller.
(d) Lease Brokerage. To Seller's knowledge, there are no agreements with
brokers providing for the payment from and after the Closing by Seller or
Seller's successor-in-interest of leasing commissions or fees for procuring
tenants with respect to the Property or related to this transaction, except as
disclosed in Exhibit N hereto;
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(e) Condemnation. To Seller's knowledge, Seller has received no written
notice of any condemnation proceedings relating to the Property.
(f) Litigation. To Seller's knowledge, except as set forth on Exhibit O
attached hereto, Seller has not received written notice of any litigation which
has been filed against Seller that arises out of the ownership of the Property
and would materially affect the Property or use thereof, or Seller's ability to
perform hereunder;
(g) Violations. To Seller's knowledge, except as set forth on Exhibit P
attached hereto, Seller has not received written notice of any uncured violation
of any federal, state or local law relating to the use or operation of the
Property which would materially adversely affect the Property or use thereof;
and
(h) Leases. To Seller's knowledge, Seller has not entered into any leases
currently affecting the Real Property other than as shown on Exhibit Q.
Section 5.2 Knowledge Defined. References to the "knowledge" of Seller
shall refer only to the current actual knowledge of the Designated Employees (as
hereinafter defined) of Seller, and shall not be construed, by imputation or
otherwise, to refer to the knowledge of Seller or any affiliate of Seller, to
any property manager, or to any other officer, agent, manager, representative or
employee of Seller or any affiliate thereof or to impose upon such Designated
Employees any duty to investigate the matter to which such actual knowledge, or
the absence thereof, pertains. As used herein, the term "Designated Employees"
shall refer to the following person(s): Jim Hills, Senior Investment Analyst.
Section 5.3 Survival of Seller's Representations and Warranties. The
representations and warranties of Seller set forth in Section 5.1 hereof shall
survive Closing for a period of one (1) year. No claim for a breach of any
representation or warranty of Seller shall be actionable or payable if the
breach in question results from or is based on a condition, state of facts or
other matter which was known to Purchaser prior to Closing. Seller shall have no
liability to Purchaser for a breach of any representation or warranty (a) unless
the valid claims for all such breaches with respect to this Property and the
Fourth Plain (WA), Tacoma Lakewood (WA), Juneau (AK), Roseburg (OR) and
Clackamas Distribution Center (OR) properties which are to be conveyed from
Seller to Purchaser contemporaneously with the Property pursuant to purchase and
sale agreements of even date, collectively aggregate more than Five Hundred
Thousand Dollars ($500,000), in which event the full amount of such valid claims
shall be actionable, up to the Cap (as defined in this Section), and (b) unless
written notice containing a description of the specific nature of such breach
shall have been given by Purchaser to Seller prior to the expiration of said one
(1) year period and an action shall have been commenced by Purchaser against
Seller within one (1) year and ninety (90) days of Closing. Purchaser agrees to
first seek recovery under any insurance policies, service contracts and Leases
prior to seeking recovery from Seller, and Seller shall not be liable to
Purchaser if Purchaser's claim is satisfied from such insurance policies,
service contracts or Leases. As used herein, the term "Cap" shall mean the total
aggregate amount of One
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Million Dollars ($1,000,000) with respect to any and all claims relating to this
Property and to the Fourth Plain (WA), Tacoma Lakewood (WA), Juneau (AK),
Roseburg (OR) and Clackamas Distribution Center (OR) properties which are to be
conveyed from Seller to Purchaser contemporaneously with the Property pursuant
to purchase and sale agreements of even date. This Section 5.3 shall have no
application to any claims of Purchaser with respect to warranties of title
conveyed by the Deeds.
Section 5.4 Representations and Warranties of Purchaser. Purchaser hereby
makes the following representations and warranties to Seller as of the Closing,
subject to Section 4.3(c) hereof:
(a) Organization and Authority. Purchaser has been duly organized and is
validly existing under the laws of Oregon. Purchaser has the full right and
authority to enter into this Agreement and to consummate or cause to be
consummated the transaction contemplated by this Agreement. The person signing
this Agreement on behalf of Purchaser is authorized to do so;
(b) Pending Actions. To Purchaser's knowledge, there is no action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Purchaser or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will not be an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is subject to Title I of ERISA, nor a plan
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (each of the foregoing hereinafter referred to collectively as "Plan"),
and (2) the assets of the Purchaser will not constitute "plan assets" of one or
more such Plans within the meaning of Department of Labor ("DOL") Regulation
Section 2510.3-101.
As of the Closing, if Purchaser is a "governmental plan" as defined in
Section 3(32) of ERISA, the closing of the sale of the Property will not
constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own behalf and not on
account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the Property to any entity,
person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this contract of sale to
any entity, person, or Plan which will cause a violation of ERISA.
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Section 5.5 Survival of Purchaser's Representations and Warranties. The
representations and warranties of Purchaser set forth in Section 5.5 hereof
shall survive Closing for a period of one (1) year. Purchaser shall have no
liability to Seller for a breach of any representation or warranty unless
written notice containing a description of the specific nature of such breach
shall have been given by Seller to Purchaser prior to the expiration of said one
(1) year period and an action shall have been commenced by Seller against
Purchaser within one (1) year and ninety (90) days of Closing.
ARTICLE VI1 ARTICLE VI
[INTENTIONALLY OMITTED]
ARTICLE VII1 ARTICLE VII
[INTENTIONALLY OMITTED]
ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to the transaction
contemplated by this Agreement, Seller represents that its sole broker is None
("Seller's Broker"), and Purchaser represents that its sole broker is None
("Purchaser's Broker"). Each party hereto agrees that if any person or entity,
other than the Seller's Broker or the Purchaser's Broker, makes a claim for
brokerage commissions or finder's fees related to the sale of the Property by
Seller to Purchaser, and such claim is made by, through or on account of any
acts or alleged acts of said party or its representatives, said party will
protect, indemnify, defend and hold the other party free and harmless from and
against any and all loss, liability, cost, damage and expense (including
reasonable attorneys' fees) in connection therewith. The provisions of this
paragraph shall survive Closing or any termination of this Agreement.
ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents. Except as expressly stated herein,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any materials, data or information delivered by or conversations
with Seller or its brokers or agents to Purchaser in connection with the
Property and the conveyance contemplated hereby. Purchaser acknowledges and
agrees that all materials, data and information delivered by Seller to Purchaser
and conversations with Seller or its brokers or agents in connection with the
transaction
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contemplated hereby are provided to Purchaser as a convenience only and that any
reliance on or use of such materials, data or information by Purchaser shall be
at the sole risk of Purchaser, except as otherwise expressly stated herein.
Neither Seller, nor any affiliate of Seller, nor the person or entity which
prepared any report or reports delivered by Seller to Purchaser shall have any
liability to Purchaser for any inaccuracy in or omission from any such reports.
Section 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT
ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND
CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS,
WITH ALL FAULTS," EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT. PURCHASER ACKNOWLEDGES THAT (I) IT OR AN ENTITY AFFILIATED WITH
PURCHASER OWNED THE PROPERTY PRIOR TO SELLER, (II) PURCHASER HAS CONTINUOUSLY
OCCUPIED AND OPERATED THE PROPERTY ON A DAY-TO-DAY BASIS SINCE THE CLOSING OF
PURCHASER'S EARLIER SALE OF THE PROPERTY TO SELLER PURSUANT TO A SALE-LEASEBACK
TRANSACTION AND IS VERY FAMILIAR WITH THE PROPERTY. PURCHASER HAS NOT RELIED AND
WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR
IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT
LIMITATION, OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
FURNISHED BY SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR
AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND
TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER
DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM
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THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION
PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT
THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS
ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED HEREIN,
UPON CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING
BUT NOT LIMITED TO, CONSTRUCTION DEFECTS, SOIL CONDITIONS AND ANY OTHER ADVERSE
PHYSICAL AND/OR ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE
WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING, WITHOUT LIMITATION, CAUSES OF ACTION IN
TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR
ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS,
VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS,
CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY, EXCEPT AS MAY BE EXPRESSLY
PROVIDED TO THE CONTRARY IN THE REPRESENTATIONS OF SELLER CONTAINED HEREIN.
Section 9.3 Survival of Disclaimers. The provisions of this Article IX
shall survive Closing or any termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Seller, Purchaser and their respective
representatives shall hold in strictest confidence all data and information
obtained with respect to the other or the other's business, whether obtained
before or after the execution and delivery of this Agreement, and shall not
disclose the same to third parties; provided, however, that it is understood and
agreed that each may disclose such data and information to its employees,
lenders, consultants, accountants and attorneys provided that such persons agree
in writing to treat such data and information confidentially. In the event this
Agreement is terminated, each shall promptly return to the other any statements,
documents, schedules, exhibits or other written information obtained from the
other in connection with this Agreement or the transaction contemplated herein.
In the event of a breach or threatened breach by Purchaser, Seller or their
respective representatives of this Section 10.1, the other shall be entitled to
an injunction restraining Purchaser, Seller or their respective representatives
from disclosing, in whole or in part, such confidential information.
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Nothing herein shall be construed as prohibiting the parties from pursuing any
other available remedy at law or in equity for such breach or threatened breach.
The provisions of this Section 10.1 shall survive Closing or any termination of
this Agreement.
Section 10.2 Public Disclosure. Prior to and after the Closing, any release
to the public of information with respect to the sale contemplated herein or any
matters set forth in this Agreement will be made only in the form approved by
Purchaser and Seller. The provisions of this Section 10.2 shall survive the
Closing or any termination of this Agreement.
Section 10.3 Assignment. Subject to the provisions of this Section 10.3,
the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Purchaser may not assign
its rights under this Agreement except to B&B Stores, Inc., a Montana
corporation, a wholly-owned subsidiary or affiliate of Purchaser, pursuant to
the terms of the First Amendment to and Assignment and Assumption of Sale
Agreement attached hereto as Exhibit S. Notwithstanding the foregoing, under no
circumstances shall Purchaser have the right to assign this Agreement to any
person or entity owned or controlled by an employee benefit plan if Seller's
sale of the Property to such person or entity would, in the reasonable opinion
of Seller's ERISA advisor, create or otherwise cause a "prohibited transaction"
under ERISA. Any transfer, directly or indirectly, of any stock, partnership
interest or other ownership interest in Purchaser shall constitute an assignment
of this Agreement. The provisions of this Section 10.3 shall survive the Closing
or any termination of this Agreement.
Section 10.4 Notices. Any notice pursuant to this Agreement shall be given
in writing by (a) personal delivery, (b) reputable overnight delivery service
with proof of delivery, (c) United States Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or, in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in accordance
with the preceding sentence, the addresses for notices given pursuant to this
Agreement shall be as follows:
If to Seller: Metropolitan Life Insurance Company
Real Estate Investments
101 Lincoln Centre Drive, 6th Floor
Foster City, California 94404
Attention: Edward J. Hayes, Assistant Vice President
Telephone No. (415) 574-8181
Telecopy No. (415) 349-4615
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If to Purchaser: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Sr. V.P./CFD
Telephone No. (503) 232-8844
Telecopy No. (503) 797-5623
with a copy to: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Attorney/CLD
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
Section 10.5 Modifications. This Agreement cannot be changed orally, and no
executory agreement shall be effective to waive, change, modify or discharge it
in whole or in part unless such executory agreement is in writing and is signed
by the parties against whom enforcement of any waiver, change, modification or
discharge is sought.
Section 10.6 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the parties pertaining to such
subject matter, other than any confidentiality agreement executed by Purchaser
in connection with the Property.
Section 10.7 Further Assurances. Each party agrees that it will execute and
deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
Section 10.8 Counterparts. This Agreement may be executed in counterparts,
all such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
Section 10.9 Facsimile Signatures. In order to expedite the transaction
contemplated herein, telecopied signatures may be used in place of original
signatures on this Agreement. Seller and Purchaser intend to be bound by the
signatures on the telecopied document, are aware that the other party will rely
on the telecopied signatures, and hereby waive any defenses to the enforcement
of the terms of this Agreement based on the form of signature.
Section 10.10 SeverabilitySection 10.10Severability. If any provision of
this Agreement is determined by a court of competent jurisdiction to be invalid
or unenforceable, the remainder of this Agreement shall
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nonetheless remain in full force and effect; provided that the invalidity or
unenforceability of such provision does not materially adversely affect the
benefits accruing to any party hereunder.
Section 10.11 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon. Purchaser and
Seller agree that the provisions of this Section 10.11 shall survive the Closing
or any termination of this Agreement.
Section 10.12 No Third-Party BeneficiarySection 10.12No Third-Party
Beneficiary. The provisions of this Agreement and of the documents to be
executed and delivered at Closing are and will be for the benefit of Seller and
Purchaser only and are not for the benefit of any third party, and accordingly,
no third party shall have the right to enforce the provisions of this Agreement
or of the documents to be executed and delivered at Closing.
Section 10.13 Captions. The section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 10.14 Construction. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
Section 10.15 Recordation. This Agreement may not be recorded by any party
hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.15 shall survive the Closing or any termination of
this Agreement.
Section 10.16 Seller Approval. [Shall be omitted prior to Closing]
Section 10.17 Concurrent Closing of Related Transactions. The parties
hereto hereby agree that the Closing is expressly contingent upon the concurrent
closing of (i) those certain lease amendments of even date by and between Seller
and Purchaser concerning certain modifications to certain leases, (ii) the
execution of that certain purchase and sale agreement of __________ parcels by
and between Seller and Purchaser, and (iii) those certain purchase and sale
agreements of even date by and between Seller and Purchaser with respect to a
sale of four (4) shopping centers and one distribution center and that no one of
the transactions shall be consummated without all such transactions being
concurrently consummated.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY,
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a New York corporation
By: EDWARD J. HAYES
-----------------------------------
Name: Edward J. Hayes
---------------------------------
Title: Ass't. V. P.
--------------------------------
PURCHASER:
FRED MEYER, INC.,
a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------
Name: Scott L. Wippel
---------------------------------
Title: Senior Vice President
--------------------------------
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EXHIBIT A
Real Property Description
PARCEL 1:
Lots 1 through 8 inclusive and the Southerly 35 feet of Lot 9 in Block 19 of
Kalispell, according to the map or plat thereof on file and of record in the
office of the Clerk and Recorder of Flathead County, Montana.
EXCEPTING THEREFROM the Northerly 4 feet of said Lot 1, Block 19 of Kalispell.
AND
Lots 1 through 5 inclusive and Lots 8 through 12 inclusive in Block 22 of
Kalispell, according to the map or plat thereof on file and of record in the
office of the Clerk and Recorder of Flathead County, Montana.
AND
That portion of vacated alley running through said Block 19 and 22 of Kalispell
affixing to the above described property and that portion of vacated Montana
Street running between said Block 19 and 22 of Kalispell.
PARCEL 2:
Lot 8 in Block 20 of Kalispell, according to the map or plat thereof on file and
of record in the office of the Clerk and Recorder of Flathead County, Montana.
PARCEL 3:
Lots 10, 11 and 12 and the Northerly 15 feet of Lot 9 in Block 19 of Kalispell,
according to the map or plat thereof on file and of record in the office of the
Clerk and Recorder of Flathead County, Montana.
EXCEPTING THEREFROM the Northerly 4 feet of said Lot 12, Block 19 of Kalispell.
AND
That portion of vacated alley running through said Block 19 of Kalispell
affixing to the above described property.
PARCEL 4:
Lots 9, 10, 11 and 12 in Block 20 of Kalispell, according to the map or plat
thereof on file and of record in the office of the Clerk and Recorder of
Flathead County, Montana.
EXCEPTING THEREFROM the North 4 feet of said Lot 12, Block 20 of Kalispell.
PARCEL 5:
A tract of land situate, lying and being in the Northeast Quarter of the
Southeast Quarter of Section 7, Township 28 North, Range 21 West, P.M.M.,
Flathead County, Montana, and more particularly described as follows:
<PAGE>
Beginning at the Southwest corner of Lot 12 of Block 19 of Kalispell, Montana,
according to the map or plat thereof on file and of record in the office of the
County Clerk and Recorder of Flathead County, Montana; thence
Westerly and parallel to the South boundary extended of said Lot 12 a distance
of 6 inches; thence
Northerly parallel to the West boundary of said Lot 12 a distance of 36 feet 2
inches; thence
Easterly parallel to the South boundary of said Lot 12 a distance of 6 inches
more of less to the Westerly boundary of said Lot 12; thence
Southerly along said Westerly boundary of said Lot 12 to the Point of Beginning.
<PAGE>
EXHIBIT A
(Columbia Falls, Montana)
Real Property Description
PARCEL 1:
Lots 1 through 15 inclusive in Block 29 of Columbia Falls Townsite, according to
the map or plat thereof on file and of record in the office of the Clerk and
Recorder of Flathead County, Montana.
AND
That portion of vacated alley running through said Block 29 of Columbia Falls
Townsite affixing to the above described property.
AND
Lots 9, 10 and 15 in Block 20 of Columbia Falls Townsite, according to the map
or plat thereof on file and of record in the office of the Clerk and Recorder of
Flathead County, Montana.
AND
Lot 11 in Block 36 of Columbia Falls Townsite, according to the map or plat
thereof on file and of record in the office of the Clerk and Recorder of
Flathead County, Montana.
PARCEL 2:
Lots 1 and 2 in Block 36 of Columbia Falls Townsite, according to the map or
plat thereof on file and of record in the office of the Clerk and Recorder of
Flathead County, Montana.
PARCEL 3:
That portion of Fifth Street East vacated between Nucleus Avenue and First
Avenue East, and further described as being between Block 29 and 36 of Columbia
Falls Townsite, according to the map or plat thereof on file and of record in
the office of the Clerk and Recorder of Flathead County, Montana.
SALE OF
FRED MEYER RETAIL STORE
CLACKAMAS DISTRIBUTION CENTER
SALE AGREEMENT
BETWEEN
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation,
AS SELLER
AND
FRED MEYER, INC.,
a Delaware corporation,
AS PURCHASER
As of February 3, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE...................................................1
Section 1.1 Agreement of Purchase and Sale..............................1
Section 1.2 Property Defined............................................2
Section 1.3 Purchase Price..............................................2
Section 1.4 Payment of Purchase Price...................................2
ARTICLE II TITLE..............................................................2
Section 2.1 Title.......................................................2
Section 2.2 Conveyance of Title.........................................2
ARTICLE III REVIEW OF PROPERTY................................................3
Section 3.1 Physical and Documentary Inspection.........................3
Section 3.2 Environmental Reports.......................................3
ARTICLE IV CLOSING............................................................3
Section 4.1 Time and Place..............................................3
Section 4.2 Seller's Obligations at Closing.............................3
Section 4.3 Purchaser's Obligations at Closing..........................5
Section 4.4 Credits and Prorations......................................5
Section 4.5 Transaction Taxes and Closing Costs.........................6
Section 4.6 Conditions Precedent to Obligation of Purchaser.............7
Section 4.7 Conditions Precedent to Obligation of Seller................8
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS...........................9
Section 5.1 Representations and Warranties of Seller....................9
Section 5.2 Knowledge Defined..........................................10
Section 5.3 Survival of Seller's Representations and Warranties........10
Section 5.4 Representations and Warranties of Purchaser................11
Section 5.5 Survival of Purchaser's Representations and Warranties.....11
ARTICLE VI [INTENTIONALLY OMITTED]...........................................12
ARTICLE VII [INTENTIONALLY OMITTED]..........................................12
ARTICLE VIII COMMISSIONS.....................................................12
Section 8.1 Brokerage Commissions......................................12
i
<PAGE>
Page
ARTICLE IX DISCLAIMERS AND WAIVERS...........................................12
Section 9.1 No Reliance on Documents...................................12
Section 9.2 AS-IS SALE; DISCLAIMERS....................................12
Section 9.3 Survival of Disclaimers....................................14
ARTICLE X MISCELLANEOUS......................................................14
Section 10.1 Confidentiality............................................14
Section 10.2 Public Disclosure..........................................14
Section 10.3 Assignment.................................................15
Section 10.4 Notices....................................................15
Section 10.5 Modifications..............................................16
Section 10.6 Entire Agreement...........................................16
Section 10.7 Further Assurances.........................................16
Section 10.8 Counterparts...............................................16
Section 10.9 Facsimile Signatures.......................................16
Section 10.10 Severability...............................................16
Section 10.11 Applicable Law.............................................16
Section 10.12 No Third-Party Beneficiary.................................16
Section 10.13 Captions...................................................17
Section 10.14 Construction...............................................17
Section 10.15 Recordation................................................17
Section 10.16 Seller Approval............................................17
Section 10.17 Concurrent Closing of Related Transactions.................17
Section 10.18 Oregon Statutory Disclaimer................................17
A [A-1] DESCRIPTION OF LAND
B [INTENTIONALLY OMITTED]
C LIST OF OPERATING AGREEMENTS
D LIST OF ENVIRONMENTAL REPORTS
E [INTENTIONALLY OMITTED]
F [INTENTIONALLY OMITTED]
G [G-1] FORM OF DEED
H FORM OF BILL OF SALE
I [I-1] FORM OF ASSIGNMENT OF LEASES
J FORM OF ASSIGNMENT OF CONTRACTS
K FORM OF LEASE TERMINATION
L FORM OF FIRPTA CERTIFICATE
M [INTENTIONALLY OMITTED]
N LIST OF BROKERAGE AGREEMENTS
ii
<PAGE>
Page
O LIST OF SPECIFIED LITIGATION AND PENDING ACTIONS
P LIST OF VIOLATION NOTICES
Q RENT ROLL
R [INTENTIONALLY OMITTED]
S [INTENTIONALLY OMITTED]
iii
<PAGE>
SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as of February 3, 1997 (the
"Effective Date"), by and between METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation ("Seller"), and FRED MEYER, INC., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Seller, the following:
(a) all, and not less than all, of those certain tracts or parcels of land
more particularly described in Exhibit A attached hereto and made a part hereof,
together with all rights and appurtenances pertaining to such property,
including any right, title and interest of Seller in and to adjacent streets,
alleys or rights-of-way (the property described in clause (a) of this Section
1.1 being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other improvements affixed to
or located on the Land, excluding fixtures owned by tenants (the property
described in clause (b) of this Section 1.1 being herein referred to
collectively as the "Improvements");
(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the Improvements
(the property described in clause (c) of this Section 1.1 being herein referred
to collectively as the "Personal Property");
(d) any and all of Seller's right, title and interest in and to the leases,
including the Lease Agreement[s] (as hereinafter defined) covering all or any
portion of the Real Property, to the extent they are in effect on the date of
the Closing (as such term is defined in Section 4.1 hereof) (the property
described in clause (d) of this Section 1.1 being herein referred to
collectively as the "Leases"), together with all rents and other sums due
thereunder (the "Rents")
<PAGE>
and any and all security deposits in Seller's possession in connection therewith
(the "Security Deposits"); and
(e) any and all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements (collectively, the "Operating Agreements")
listed and described on Exhibit C attached hereto and made a part hereof,
relating to the upkeep, repair, maintenance or operation of the Land,
Improvements or Personal Property, and (ii) all assignable existing warranties
and guaranties (express or implied) issued to Seller in connection with the
Improvements or the Personal Property, and (iii) all assignable existing
permits, licenses, approvals and authorizations issued by any governmental
authority in connection with the Property (the property described in clause (e)
of this Section 1.1 being sometimes herein referred to collectively as the
"Intangibles").
Section 1.2 Property Defined. The Land and the Improvements are hereinafter
sometimes referred to collectively as the "Real Property." The Land, the
Improvements, the Personal Property, the Leases and the Intangibles are
hereinafter sometimes referred to collectively as the "Property." Each parcel
thereof separately identified on Exhibit A is hereinafter referred to separately
as a "Parcel"; more than one Parcel are referred to as "Parcels."
Section 1.3 Purchase Price. Seller is to sell and Purchaser is to purchase
the Property for the amount of SIXTY-THREE MILLION DOLLARS ($63,000,000) (the
"Purchase Price").
Section 1.4 Payment of Purchase Price. The Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, shall be payable in
full at Closing in cash by wire transfer of immediately available funds to a
bank account designated by Seller in writing to Purchaser prior to the Closing.
ARTICLE II
TITLE
Section 2.1 Title. Purchaser has reviewed, approved and accepted the state
of title of the Property.
Section 2.2 Conveyance of Title. At Closing, Seller shall convey and
transfer to Purchaser fee simple title to the Land and Improvements, by
execution and delivery of the Deed [Deeds] (as defined in Section 4.2(a)
hereof). Evidence of delivery of such title shall be the issuance by First
American Title Insurance Company (the "Title Company"), or another national
title company, of CLTA (or state specific equivalent) of ALTA Extended Owner's
Policy of Title Insurance (the "Title Policies"; each such shall be known herein
as a "Title Policy") covering each Parcel of the Real Property, in the aggregate
amount of the Purchase Price, subject only to the exceptions set forth in
Exhibit B attached to the Deed ("Permitted Exceptions").
2
<PAGE>
ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Physical and Documentary Inspection. Purchaser has inspected,
approved and accepted the physical aspects of the Property, including the
environmental condition thereof. Purchaser has examined, approved and accepted
documents and files relating to Seller's leasing, maintenance and operation of
the Property.
Section 3.2 Environmental Reports. PURCHASER ACKNOWLEDGES THAT (1)
PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL REPORTS LISTED ON EXHIBIT D
ATTACHED HERETO, (2) IF SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL REPORTS TO
PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH
REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY ENVIRONMENTAL REPORTS
DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER
ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE
RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY.
PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER
FOR ANY INACCURACY IN OR OMISSION FROM ANY ENVIRONMENTAL REPORT. PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS
OWN INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO THE EXTENT
PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the transaction
contemplated hereby (the "Closing") shall be held at the offices of Seller on
February 3, 1997. At the Closing, Seller and Purchaser shall perform the
obligations set forth in, respectively, Section 4.2 and Section 4.3 hereof, the
performance of which obligations shall be concurrent conditions; provided that
the Deed shall not be recorded until Seller receives confirmation that Seller
has received the full amount of the Purchase Price, adjusted by prorations as
set forth herein. At Seller's option, the Closing shall be consummated through
an escrow administered by First American Title Insurance of Oregon ("Escrow
Agent"). In such event, the Purchase Price and all documents shall be deposited
with the Escrow Agent as escrowee.
3
<PAGE>
Section 4.2 Seller's Obligations at Closing. At Closing, Seller shall:
(a) deliver to Purchaser a duly executed special warranty deed (the "Deed")
in the form attached hereto as Exhibit G, conveying the Land and Improvements,
subject only to the Permitted Exceptions; the warranty of title in the Deed will
be only as to claims made by, through or under Seller and not otherwise;
(b) deliver to Purchaser a duly executed bill of sale (the "Bill of Sale")
conveying the Personal Property without warranty of title or use and without
warranty, express or implied, as to merchantability and fitness for any purpose
and in the form attached hereto as Exhibit H;
(c) assign to Purchaser, and Purchaser shall assume, the landlord/lessor
interest in and to the Leases, Rents and Security Deposits, and any and all
obligations to pay leasing commissions and finder's fees with respect to the
Leases and amendments, renewals and expansions thereof, to the extent provided
in Section 4.4(b)(v) hereof, by duly executed assignment and assumption
agreements (the "Assignment of Leases") in the form attached hereto as Exhibit
I;
(d) to the extent assignable, assign to Purchaser, and Purchaser shall
assume, Seller's interest in the Operating Agreements and the other Intangibles
by duly executed assignment and assumption agreement (the "Assignment of
Contracts") in the form attached hereto as Exhibit J pursuant to which (i)
Seller shall indemnify Purchaser and hold Purchaser harmless from and against
any and all claims pertaining thereto arising prior to Closing and (ii)
Purchaser shall indemnify Seller and hold Seller harmless from and against any
and all claims pertaining thereto arising from and after the Closing;
(e) join with Purchaser to execute a lease termination agreement (the
"Lease Termination") in the form attached hereto as Exhibit K, terminating that
certain "Lease Agreement" dated October 22, 1986, by and between Fred Meyer Real
Estate Properties, Ltd., as landlord, and Purchaser, as tenant, as such lease
has been amended and assigned ("Lease Agreement");
(f) deliver to Purchaser a certificate in the form attached hereto as
Exhibit L duly executed by Seller stating that Seller is not a "foreign person"
as defined in the Federal Foreign Investment in Real Property Tax Act of 1980
and any similar form required by applicable state law;
(g) deliver to Purchaser the Leases and the Operating Agreements, together
with such leasing and property files and records located at the Property or the
property manager's office which are material in connection with the continued
operation, leasing and maintenance of the Property, but excluding any
Confidential Documents. For a period of three (3) years after the Closing,
Purchaser shall allow Seller and its agents and representatives access without
charge to all files, records and documents delivered to Purchaser at the
Closing, upon reasonable advance
4
<PAGE>
notice and at all reasonable times, to examine and make copies of any and all
such files, records and documents, which right shall survive the Closing;
(h) deliver to Purchaser possession and occupancy of the Property, subject
to the Permitted Exceptions;
(i) execute a closing statement acceptable to Seller;
(j) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement; and
(k) a legal opinion from Seller's in-house counsel with respect to the
authorization of this transaction.
Section 4.3 Purchaser's Obligations at Closing. At Closing, Purchaser
shall:
(a) pay to Seller the full amount of the Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, in immediately
available wire transferred funds pursuant to Section 1.4 hereof;
(b) join Seller in execution of the Assignment of Leases, Assignment of
Contracts and Lease Termination;
(c) deliver to Seller such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Purchaser;
(d) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Purchaser;
(e) execute a closing statement acceptable to Purchaser; and
(f) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
Section 4.4 Credits and Prorations.
(a) Subject to the rights and obligations of the parties under the Lease
Agreement, all income and expenses of the Property between Seller and Purchaser
shall be apportioned as of 12:01 a.m., on the day of Closing, as if Purchaser
were vested with title to the Property during the entire day upon which Closing
occurs. Such prorated items shall include without limitation the following:
5
<PAGE>
(i) all rents under the Lease Agreement, if any (to the extent any
rent under the Lease Agreement has accrued but is unpaid at Closing, Seller
shall receive a credit from Purchaser for such amount);
(ii) taxes and assessments (including personal property taxes on the
Personal Property) levied against the Property;
(iii) utility charges for which Seller is liable, if any, such charges
to be apportioned at Closing on the basis of the most recent meter reading
occurring prior to Closing (dated not more than fifteen (15) days prior to
Closing) or, if unmetered, on the basis of a current bill for each such utility;
(iv) all amounts payable under Operating Agreements, pursuant to the
terms of this Agreement; and
(v) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser and a seller in the
county in which the Property is located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof, at
Closing, (A) Seller shall, at Seller's option, either deliver to Purchaser any
Security Deposits actually held by Seller pursuant to the Leases or credit to
the account of Purchaser the amount of such Security Deposits (to the extent
such Security Deposits have not been applied against delinquent Rents or
otherwise as provided in the Leases), and (B) Purchaser shall credit to the
account of Seller all refundable cash or other deposits posted with utility
companies serving the Property, but only to the extent paid by Seller.
(c) At Closing, Seller will assign to Purchaser pursuant to the Assignment
of Contracts, without warranty or recourse, all pending real property tax
appeals relating to tax years in which Purchaser, as tenant under the Lease
Agreements, paid all real property taxes with respect to the Property.
(d) Except as otherwise provided herein, any revenue or expense amount
which cannot be ascertained with certainty as of Closing shall be prorated on
the basis of the parties' reasonable estimates of such amount, and shall be the
subject of a final proration ninety (90) days after Closing, or as soon
thereafter as the precise amounts can be ascertained. Purchaser shall promptly
notify Seller when it becomes aware that any such estimated amount has been
ascertained. Once all revenue and expense amounts have been ascertained,
Purchaser shall prepare, and certify as correct, a final proration statement
which shall be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser, such statement
shall be conclusively deemed to be accurate and final.
6
<PAGE>
(e) Subject to the final sentence of Section 4.4(d) hereof, the provisions
of this Section 4.4 shall survive Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns, questionnaires and
other documents as shall be required with regard to all applicable real property
transaction taxes imposed by applicable federal, state or local law or
ordinance;
(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction and Seller's state and federal income tax
incurred by the sale of the Property. Except as provided herein, Seller shall be
responsible for no other costs.
(c) Purchaser shall pay the fees of any counsel representing Purchaser in
connection with this transaction. Purchaser shall also pay the following costs
and expenses:
(i) all escrow fees which may be charged by the Title Company or
escrow agent;
(ii) the fee for the title examination and the title commitment and
the premium for the Owner's Policies of Title Insurance to be issued to
Purchaser by the Title Company at Closing, and all endorsements thereto;
(iii) the cost of any surveys;
(iv) the fees for recording the Deed[s];
(v) any transfer tax, sales tax, documentary stamp tax or similar tax
which becomes payable by reason of the transfer of the Property (including,
without limitation, any taxes relating to a merger, if any, of the Leases with
the fee ownership of the Real Property occurring as a result of this
transaction);
(vi) the fees for Seller's Broker and Purchaser's Broker;
(vii) in the event the Distribution Center Loan is satisfied, any
costs charged by the lender relating to the satisfaction of Distribution Center
Loan (such as prepayment fees) other than payment of the outstanding principal
balance of the Distribution Center Loan;
(viii) any other costs occasioned by this transaction (other than
Seller's federal and state income tax incurred by the sale of the Property and
fees of any counsel representing Seller in connection with this transaction);
7
<PAGE>
(d) The Personal Property is included in this sale without charge, except
that Purchaser shall pay to Seller the amount of any and all sales or similar
taxes payable in connection with the transfer of the Personal Property and
Purchaser shall execute and deliver any tax returns required of it in connection
therewith; and
(e) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 Conditions Precedent to Obligation of Purchaser. The obligation
of Purchaser to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole discretion:
(a) Seller shall have delivered to Purchaser all of the items required to
be delivered to Purchaser pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.2 hereof;
(b) All of the representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the date of
Closing (with appropriate modifications permitted under this Agreement);
(c) Seller shall have performed and observed, in all material respects, all
covenants and agreements of this Agreement to be performed and observed by
Seller as of the date of Closing; and
(d) Seller shall have accepted the evidence with respect to the Act (as
hereinafter defined) that Purchaser is required to produce pursuant to Section
4.7(e).
Section 4.7 Conditions Precedent to Obligation of Seller. The obligation of
Seller to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Seller in its sole discretion:
(a) Seller shall have received the Purchase Price as adjusted as provided
herein, pursuant to and payable in the manner provided for in this Agreement;
(b) Purchaser shall have delivered to Seller all of the items required to
be delivered to Seller pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.3 hereof;
(c) All of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement);
8
<PAGE>
(d) Purchaser shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
Purchaser as of the date of Closing; and
(e) Purchaser's providing to Seller (i) evidence reasonably satisfactory to
Seller that the notification and reporting requirements of the Hart-Scott Rodino
Antitrust Improvement Act of 1976, as amended (15 U.S.C. ss. 18a) (the "Act") do
not apply to the transaction contemplated hereby, or (ii) in the event the
notification and reporting requirements of the Act shall be applicable to the
contemplated transaction, evidence reasonably satisfactory to Seller that all
applicable notification and reporting requirements of the Act have been timely
and completely fulfilled. Purchaser acknowledges that in the event the
contemplated transaction is not approved by the Federal Trade Commission, Seller
shall be under no obligation to close the transaction contemplated. Seller and
Purchaser agree to cooperate in effecting compliance with the Act to the extent
required under applicable law.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller. Seller hereby makes
the following representations and warranties to Purchaser as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller has been duly organized and is
validly existing under the laws of the State of New York. Seller has the full
right and authority to enter into this Agreement and to transfer all of the
Property and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
Seller is authorized to do so.
(b) Pending Actions. Except as indicated on Exhibit O, to Seller's
knowledge, Seller has not received written notice of any action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Seller or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) Operating Agreements. To Seller's knowledge, the Operating Agreements
listed on Exhibit C are all of the agreements concerning the operation and
maintenance of the Property entered into by Seller and affecting the Property,
except those operating agreements that are not assignable and are to be
terminated by Seller within thirty (30) days after the Closing, and except any
agreement with Seller's property manager, which shall be terminated by Seller.
9
<PAGE>
(d) Lease Brokerage. To Seller's knowledge, there are no agreements with
brokers providing for the payment from and after the Closing by Seller or
Seller's successor-in-interest of leasing commissions or fees for procuring
tenants with respect to the Property or related to this transaction, except as
disclosed in Exhibit N hereto;
(e) Condemnation. To Seller's knowledge, Seller has received no written
notice of any condemnation proceedings relating to the Property.
(f) Litigation. To Seller's knowledge, except as set forth on Exhibit O
attached hereto, Seller has not received written notice of any litigation which
has been filed against Seller that arises out of the ownership of the Property
and would materially affect the Property or use thereof, or Seller's ability to
perform hereunder;
(g) Violations. To Seller's knowledge, except as set forth on Exhibit P
attached hereto, Seller has not received written notice of any uncured violation
of any federal, state or local law relating to the use or operation of the
Property which would materially adversely affect the Property or use thereof;
and
(h) Leases. To Seller's knowledge, Seller has not entered into any leases
currently affecting the Real Property other than as shown on Exhibit Q.
Section 5.2 Knowledge Defined. References to the "knowledge" of Seller
shall refer only to the current actual knowledge of the Designated Employees (as
hereinafter defined) of Seller, and shall not be construed, by imputation or
otherwise, to refer to the knowledge of Seller or any affiliate of Seller, to
any property manager, or to any other officer, agent, manager, representative or
employee of Seller or any affiliate thereof or to impose upon such Designated
Employees any duty to investigate the matter to which such actual knowledge, or
the absence thereof, pertains. As used herein, the term "Designated Employees"
shall refer to the following person(s): Jim Hills, Senior Investment Analyst.
Section 5.3 Survival of Seller's Representations and Warranties. The
representations and warranties of Seller set forth in Section 5.1 hereof shall
survive Closing for a period of one (1) year. No claim for a breach of any
representation or warranty of Seller shall be actionable or payable if the
breach in question results from or is based on a condition, state of facts or
other matter which was known to Purchaser prior to Closing. Seller shall have no
liability to Purchaser for a breach of any representation or warranty (a) unless
the valid claims for all such breaches with respect to this Property and the
Columbia Falls (MT), Kalispell (MT), Fourth Plain (WA), Tacoma Lakewood (WA),
Juneau (AK) and Roseburg (OR) properties which are to be conveyed from Seller to
Purchaser contemporaneously with the Property pursuant to purchase and sale
agreements of even date, collectively aggregate more than Five Hundred Thousand
Dollars ($500,000), in which event the full amount of such valid claims shall be
actionable, up to the Cap (as defined in this Section), and (b) unless written
notice containing a description of the specific
10
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nature of such breach shall have been given by Purchaser to Seller prior to the
expiration of said one (1) year period and an action shall have been commenced
by Purchaser against Seller within one (1) year and ninety (90) days of Closing.
Purchaser agrees to first seek recovery under any insurance policies, service
contracts and Leases prior to seeking recovery from Seller, and Seller shall not
be liable to Purchaser if Purchaser's claim is satisfied from such insurance
policies, service contracts or Leases. As used herein, the term "Cap" shall mean
the total aggregate amount of One Million Dollars ($1,000,000) with respect to
any and all claims relating to this Property and to Columbia Falls (MT),
Kalispell (MT), Fourth Plain (WA), Tacoma Lakewood (WA), Juneau (AK) and
Roseburg (OR) properties] which are to be conveyed from Seller to Purchaser
contemporaneously with the Property pursuant to purchase and sale agreements of
even date. This Section 5.3 shall have no application to any claims of Purchaser
with respect to warranties of title conveyed by the Deed.
Section 5.4 Representations and Warranties of Purchaser. Purchaser hereby
makes the following representations and warranties to Seller as of the Closing,
subject to Section 4.3(c) hereof:
(a) Organization and Authority. Purchaser has been duly organized and is
validly existing under the laws of Oregon. Purchaser has the full right and
authority to enter into this Agreement and to consummate or cause to be
consummated the transaction contemplated by this Agreement. The person signing
this Agreement on behalf of Purchaser is authorized to do so;
(b) Pending Actions. To Purchaser's knowledge, there is no action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Purchaser or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will not be an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is subject to Title I of ERISA, nor a plan
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (each of the foregoing hereinafter referred to collectively as "Plan"),
and (2) the assets of the Purchaser will not constitute "plan assets" of one or
more such Plans within the meaning of Department of Labor ("DOL") Regulation
Section 2510.3-101.
As of the Closing, if Purchaser is a "governmental plan" as defined in
Section 3(32) of ERISA, the closing of the sale of the Property will not
constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own behalf and not on
account of or for the benefit of any Plan.
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Purchaser has no present intent to transfer the Property to any entity,
person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this contract of sale to any
entity, person, or Plan which will cause a violation of ERISA.
Section 5.5 Survival of Purchaser's Representations and Warranties. The
representations and warranties of Purchaser set forth in Section 5.5 hereof
shall survive Closing for a period of one (1) year. Purchaser shall have no
liability to Seller for a breach of any representation or warranty unless
written notice containing a description of the specific nature of such breach
shall have been given by Seller to Purchaser prior to the expiration of said one
(1) year period and an action shall have been commenced by Seller against
Purchaser within one (1) year and ninety (90) days of Closing.
ARTICLE VI
[INTENTIONALLY OMITTED]
ARTICLE VII
[INTENTIONALLY OMITTED]
ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to the transaction
contemplated by this Agreement, Seller represents that its sole broker is None
("Seller's Broker"), and Purchaser represents that its sole broker is None
("Purchaser's Broker"). Each party hereto agrees that if any person or entity,
other than the Seller's Broker or the Purchaser's Broker, makes a claim for
brokerage commissions or finder's fees related to the sale of the Property by
Seller to Purchaser, and such claim is made by, through or on account of any
acts or alleged acts of said party or its representatives, said party will
protect, indemnify, defend and hold the other party free and harmless from and
against any and all loss, liability, cost, damage and expense (including
reasonable attorneys' fees) in connection therewith. The provisions of this
paragraph shall survive Closing or any termination of this Agreement.
12
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ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents. Except as expressly stated herein,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any materials, data or information delivered by or conversations
with Seller or its brokers or agents to Purchaser in connection with the
Property and the conveyance contemplated hereby. Purchaser acknowledges and
agrees that all materials, data and information delivered by Seller to Purchaser
and conversations with Seller or its brokers or agents in connection with the
transaction contemplated hereby are provided to Purchaser as a convenience only
and that any reliance on or use of such materials, data or information by
Purchaser shall be at the sole risk of Purchaser, except as otherwise expressly
stated herein. Neither Seller, nor any affiliate of Seller, nor the person or
entity which prepared any report or reports delivered by Seller to Purchaser
shall have any liability to Purchaser for any inaccuracy in or omission from any
such reports.
Section 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT
ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND
CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS,
WITH ALL FAULTS," EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT. PURCHASER ACKNOWLEDGES THAT (I) IT OR AN ENTITY AFFILIATED WITH
PURCHASER OWNED THE PROPERTY PRIOR TO SELLER, (II) PURCHASER HAS CONTINUOUSLY
OCCUPIED AND OPERATED THE PROPERTY ON A DAY-TO-DAY BASIS SINCE THE CLOSING OF
PURCHASER'S EARLIER SALE OF THE PROPERTY TO SELLER PURSUANT TO A SALE-LEASEBACK
TRANSACTION AND IS VERY FAMILIAR WITH THE PROPERTY. PURCHASER HAS NOT RELIED AND
WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR
IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT
LIMITATION, OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
FURNISHED BY SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR
AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
13
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THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND
TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER
DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY,
AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON
BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN
SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET
FORTH IN THIS AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED HEREIN, UPON CLOSING,
PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED
TO, CONSTRUCTION DEFECTS, SOIL CONDITIONS AND ANY OTHER ADVERSE PHYSICAL AND/OR
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S
INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING WITHOUT LIMITATION CAUSES OF ACTION IN
TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR
ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS,
VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS,
CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY, EXCEPT AS MAY BE EXPRESSLY
PROVIDED TO THE CONTRARY IN THE REPRESENTATIONS OF SELLER CONTAINED HEREIN.
Section 9.3 Survival of Disclaimers. The provisions of this Article IX
shall survive Closing or any termination of this Agreement.
14
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ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Seller, Purchaser and their respective
representatives shall hold in strictest confidence all data and information
obtained with respect to the other or the other's business, whether obtained
before or after the execution and delivery of this Agreement, and shall not
disclose the same to third parties; provided, however, that it is understood and
agreed that each may disclose such data and information to its employees,
lenders, consultants, accountants and attorneys provided that such persons agree
in writing to treat such data and information confidentially. In the event this
Agreement is terminated, each shall promptly return to the other any statements,
documents, schedules, exhibits or other written information obtained from the
other in connection with this Agreement or the transaction contemplated herein.
In the event of a breach or threatened breach by Purchaser, Seller or their
respective representatives of this Section 10.1, the other shall be entitled to
an injunction restraining Purchaser, seller or their respective representatives
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting the parties from pursuing any other
available remedy at law or in equity for such breach or threatened breach. The
provisions of this Section 10.1 shall survive Closing or any termination of this
Agreement.
Section 10.2 Public Disclosure. Prior to and after the Closing, any release
to the public of information with respect to the sale contemplated herein or any
matters set forth in this Agreement will be made only in the form approved by
Purchaser and Seller. The provisions of this Section 10.2 shall survive the
Closing or any termination of this Agreement.
Section 10.3 Assignment. Subject to the provisions of this Section 10.3,
the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Purchaser may not assign
its rights under this Agreement except to First Security Bank, National
Association, not individually, but solely as Owner Trustee under FM Trust 1997-1
pursuant to the terms of the First Amendment to and Assignment and Assumption of
Sale Agreement attached hereto as Exhibit S. Notwithstanding the foregoing,
under no circumstances shall Purchaser have the right to assign this Agreement
to any person or entity owned or controlled by an employee benefit plan if
Seller's sale of the Property to such person or entity would, in the reasonable
opinion of Seller's ERISA advisor, create or otherwise cause a "prohibited
transaction" under ERISA. Any transfer, directly or indirectly, of any stock,
partnership interest or other ownership interest in Purchaser shall constitute
an assignment of this Agreement. The provisions of this Section 10.3 shall
survive the Closing or any termination of this Agreement.
Section 10.4 Notices. Any notice pursuant to this Agreement shall be given
in writing by (a) personal delivery, (b) reputable overnight delivery service
with proof of delivery, (c) United States Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below,
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<PAGE>
or to such other address or to the attention of such other person as the
addressee shall have designated by written notice sent in accordance herewith,
and shall be deemed to have been given upon receipt or refusal to accept
delivery, or, in the case of facsimile transmission, as of the date of the
facsimile transmission provided that an original of such facsimile is also sent
to the intended addressee by means described in clauses (a), (b) or (c) above.
Unless changed in accordance with the preceding sentence, the addresses for
notices given pursuant to this Agreement shall be as follows:
If to Seller: Metropolitan Life Insurance Company
Real Estate Investments
101 Lincoln Centre Drive, 6th Floor
Foster City, California 94404
Attention: Edward J. Hayes, Assistant Vice President
Telephone No. (415) 574-8181
Telecopy No. (415) 349-4615
If to Purchaser: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Sr. V.P./CFD
Telephone No. (503) 232-8844
Telecopy No. (503) 797-5623
with a copy to: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Attorney/CLD
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
Section 10.5 Modifications. This Agreement cannot be changed orally, and no
executory agreement shall be effective to waive, change, modify or discharge it
in whole or in part unless such executory agreement is in writing and is signed
by the parties against whom enforcement of any waiver, change, modification or
discharge is sought.
Section 10.6 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the parties pertaining to such
subject matter, other than any confidentiality agreement executed by Purchaser
in connection with the Property.
16
<PAGE>
Section 10.7 Further Assurances. Each party agrees that it will execute and
deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
Section 10.8 Counterparts. This Agreement may be executed in counterparts,
all such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
Section 10.9 Facsimile Signatures. In order to expedite the transaction
contemplated herein, telecopied signatures may be used in place of original
signatures on this Agreement. Seller and Purchaser intend to be bound by the
signatures on the telecopied document, are aware that the other party will rely
on the telecopied signatures, and hereby waive any defenses to the enforcement
of the terms of this Agreement based on the form of signature.
Section 10.10 Severability. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall nonetheless remain in full force and
effect; provided that the invalidity or unenforceability of such provision does
not materially adversely affect the benefits accruing to any party hereunder.
Section 10.11 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon. Purchaser and
Seller agree that the provisions of this Section 10.11 shall survive the Closing
or any termination of this Agreement.
Section 10.12 No Third-Party Beneficiary. The provisions of this Agreement
and of the documents to be executed and delivered at Closing are and will be for
the benefit of Seller and Purchaser only and are not for the benefit of any
third party, and accordingly, no third party shall have the right to enforce the
provisions of this Agreement or of the documents to be executed and delivered at
Closing.
Section 10.13 Captions. The section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 10.14 Construction. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
Section 10.15 Recordation. This Agreement may not be recorded by any party
hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.15 shall survive the Closing or any termination of
this Agreement.
17
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Section 10.16 Seller Approval. [Shall be omitted prior to Closing]
Section 10.17 Concurrent Closing of Related Transactions. The parties
hereto hereby agree that the Closing is expressly contingent upon the concurrent
closing of (i) those certain lease amendments of even date by and between Seller
and Purchaser concerning certain modifications to certain leases, (ii) the
execution of that certain purchase and sale agreement of six (6) parcels by and
between Seller and Purchaser, and (iii) those certain purchase and sale
agreements of even date by and between Seller and Purchaser with respect to a
sale of six (6) shopping centers and that no one of the transactions shall be
consummated without all such transactions being concurrently consummated.
Section 10.18 Oregon Statutory Disclaimer. THE PROPERTY DESCRIBED IN THIS
INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES.
THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR
FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING A RESIDENCE AND WHICH
LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930 IN
ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE
TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING
DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION FOR
STRUCTURES.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------
Name: Edward J. Hayes
---------------------------------
Title: Asst. Vice President
--------------------------------
PURCHASER:
FRED MEYER, INC.,
a Delaware corporation
By: JAMES C. AALBERG
-----------------------------------
Name: James C. Aalberg
---------------------------------
Title: V-P Treasurer
--------------------------------
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EXHIBIT A
(CL-DC Clackamas Distribution Center, Oregon)
Real Property Description
A tract of land located in the South one-half of Section 10, Township 2 South,
Range 2 East, of the Willamette Meridian, in the County of Clackamas and State
of Oregon, more particularly described as follows:
Commencing at the Southeast corner of said Section 10; thence North along the
East line of said Section 10, a distance of 512.43 feet; thence North
89(degree)43'10" West a distance of 28.88 feet to a point which is 30.00 feet
Westerly of, when measured at right angles to, the center line of a road known
as SE 122nd Avenue, said point also being the true point of beginning of the
tract herein to be described; thence continuing North 89(degree)43'10" West, a
distance of 3575.08 feet to a point in the West line of that certain tract of
land conveyed to Southern Pacific Company by Bargain and Sale Deed recorded
April 4, 1962 in Volume 601, page 302, Deed Records; thence North
0(degree)05'10" East along the West line of said Southern Pacific Company tract,
a distance of 759.89 feet to the most Southerly Northwest corner thereof; thence
North 89(degree)40'00" East, along the North line of said Southern Pacific
Company tract, a distance of 115.00 feet; thence North 01(degree)05'10" East,
along the West line of said Southern Pacific Company tract, a distance of 157.00
feet to the most Northerly Northwest corner thereof; thence North
89(degree)40'00" East, along the North line of said Southern Pacific Company
tract, a distance of 192.80 feet (Volume 601, page 302 calls 182 feet) to the
Northeast corner thereof said corner also being in the West line of that certain
tract of land conveyed to Southern Pacific Company by Bargain and Sale Deed
recorded April 4,1962 in Volume 601, page 296, Deed Records: thence North
0(degree)29'10" West, along the West line of last said Southern Pacific Company
tract, a distance of 220.00 feet to a point in the Southerly line of Clackamas
Highway (State Highway No. 212) said point being 60 feet Southerly of, when
measured at right angles to, the center line of said Clackamas Highway (1900
relocation as noted in Warranty Deed Fee No. 82 6071); thence North
89(degree)40'00" East, along the South line of said Clackamas Highway, a
distance of 3022.10 feet to a point in the East line of that certain tract of
land conveyed to Southern Pacific Company by Bargain and Sale Deed recorded
April 4, 1962 in Volume 601, page 288, Deed Records; thence South along said
East line and the Southerly extension thereof, a distance of 780.38 feet to a
point in the North line of that certain tract of land conveyed to Southern
Pacific Company by Bargain and Sale Deed recorded April 4, 1962 in Volume 601,
page 290, Deed Records; thence East along the North line of last said Southern
Pacific Company tract, a distance of 245.68 feet to a point in the West line of
SE 122nd Avenue, said point being 30 feet Westerly of, when measured at right
angles to, the center line of said SE 122nd Avenue; thence South along the West
line of said SE 122nd Avenue, a distance of 393.37 feet to the point of
beginning.
EXCEPTING THEREFROM that portion of said property lying below a depth of 500
feet measured vertically from the contour of the surface thereof.
SALE OF
FRED MEYER RETAIL STORE
ROSEBURG
SALE AGREEMENT
BETWEEN
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation,
AS SELLER
AND
FRED MEYER, INC.,
a Delaware corporation,
AS PURCHASER
As of February 3, 1997
<PAGE>
TABLE OF CONTENTS
Page #
ARTICLE I
PURCHASE AND SALE..........................................................1
Section 1.1 Agreement of Purchase and Sale..............................1
Section 1.2 Property Defined............................................2
Section 1.3 Purchase Price..............................................2
Section 1.4 Payment of Purchase Price...................................2
ARTICLE II
TITLE......................................................................2
Section 2.1 Title.......................................................2
Section 2.2 Conveyance of Title.........................................2
ARTICLE III
REVIEW OF PROPERTY.........................................................3
Section 3.1 Physical and Documentary Inspection.........................3
Section 3.2 Environmental Reports.......................................3
ARTICLE IV
CLOSING....................................................................3
Section 4.1 Time and Place..............................................3
Section 4.2 Seller's Obligations at Closing.............................4
Section 4.3 Purchaser's Obligations at Closing..........................5
Section 4.4 Credits and Prorations......................................5
Section 4.5 Transaction Taxes and Closing Costs.........................7
Section 4.6 Conditions Precedent to Obligation of Purchaser.............7
Section 4.7 Conditions Precedent to Obligation of Seller................8
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS................................. 9
Section 5.1 Representations and Warranties of Seller....................9
Section 5.2 Knowledge Defined..........................................10
Section 5.3 Survival of Seller's Representations and Warranties........10
Section 5.4 Representations and Warranties of Purchaser................11
Section 5.5 Survival of Purchaser's Representations and Warranties.....11
1
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ARTICLE VI
[INTENTIONALLY OMITTED]...................................................12
ARTICLE VII
[INTENTIONALLY OMITTED]...................................................12
ARTICLE VIII
COMMISSIONS...............................................................12
Section 8.1 Brokerage Commissions......................................12
ARTICLE IX
DISCLAIMERS AND WAIVERS...................................................12
Section 9.1 No Reliance on Documents...................................12
Section 9.2 AS-IS SALE; DISCLAIMERS....................................13
Section 9.3 Survival of Disclaimers....................................14
ARTICLE X
MISCELLANEOUS.............................................................14
Section 10.1 Confidentiality............................................14
Section 10.2 Public Disclosure..........................................14
Section 10.3 Assignment.................................................15
Section 10.4 Notices....................................................15
Section 10.5 Modifications..............................................16
Section 10.6 Entire Agreement...........................................16
Section 10.7 Further Assurances.........................................16
Section 10.8 Counterparts...............................................16
Section 10.9 Facsimile Signatures.......................................16
Section 10.10 Severability...............................................16
Section 10.11 Applicable Law.............................................16
Section 10.12 No Third-Party Beneficiary.................................17
Section 10.13 Captions...................................................17
Section 10.14 Construction...............................................17
Section 10.15 Recordation................................................17
Section 10.16 Seller Approval............................................17
Section 10.17 Concurrent Closing of Related Transactions.................17
Section 10.18 Oregon Statutory Disclaimer................................17
2
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A [A-1] DESCRIPTION OF LAND
B [INTENTIONALLY OMITTED]
C LIST OF OPERATING AGREEMENTS
D LIST OF ENVIRONMENTAL REPORTS
E [INTENTIONALLY OMITTED]
F [INTENTIONALLY OMITTED]
G [G-1] FORM OF DEED
H FORM OF BILL OF SALE
I [I-1] FORM OF ASSIGNMENT OF LEASES
J FORM OF ASSIGNMENT OF CONTRACTS
K FORM OF LEASE TERMINATION
L FORM OF FIRPTA CERTIFICATE
M [INTENTIONALLY OMITTED]
N LIST OF BROKERAGE AGREEMENTS
O LIST OF SPECIFIED LITIGATION AND PENDING ACTIONS
P LIST OF VIOLATION NOTICES
Q RENT ROLL
R [INTENTIONALLY OMITTED]
S [INTENTIONALLY OMITTED]
4
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SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as of February 3, 1997
(the "Effective Date"), by and between METROPOLITAN LIFE INSURANCE COMPANY, a
New York corporation ("Seller"), and FRED MEYER, INC., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Seller, the following:
(a) all, and not less than all, of those certain tracts or parcels of land
more particularly described in Exhibit A attached hereto and made a part hereof,
together with all rights and appurtenances pertaining to such property,
including any right, title and interest of Seller in and to adjacent streets,
alleys or rights-of-way (the property described in clause (a) of this Section
1.1 being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other improvements affixed to
or located on the Land, excluding fixtures owned by tenants (the property
described in clause (b) of this Section 1.1 being herein referred to
collectively as the "Improvements");
(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the Improvements
(the property described in clause (c) of this Section 1.1 being herein referred
to collectively as the "Personal Property");
(d) any and all of Seller's right, title and interest in and to the leases,
including the Lease Agreement[s] (as hereinafter defined) covering all or any
portion of the Real Property, to the extent they are in effect on the date of
the Closing (as such term is defined in Section 4.1 hereof) (the property
described in clause (d) of this Section 1.1 being herein referred to
collectively as the "Leases"), together with all rents and other sums due
thereunder (the "Rents") and any and all security deposits in Seller's
possession in connection therewith (the "Security Deposits"); and
(e) any and all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements (collectively, the "Operating Agreements")
listed and described on Exhibit C attached
<PAGE>
hereto and made a part hereof, relating to the upkeep, repair, maintenance or
operation of the Land, Improvements or Personal Property, and (ii) all
assignable existing warranties and guaranties (express or implied) issued to
Seller in connection with the Improvements or the Personal Property, and (iii)
all assignable existing permits, licenses, approvals and authorizations issued
by any governmental authority in connection with the Property (the property
described in clause (e) of this Section 1.1 being sometimes herein referred to
collectively as the "Intangibles").
Section 1.2 Property Defined. The Land and the Improvements are hereinafter
sometimes referred to collectively as the "Real Property." The Land, the
Improvements, the Personal Property, the Leases and the Intangibles are
hereinafter sometimes referred to collectively as the "Property." Each parcel
thereof separately identified on Exhibit A is hereinafter referred to separately
as a "Parcel"; more than one Parcel are referred to as "Parcels".
Section 1.3 Purchase Price. Seller is to sell and Purchaser is to purchase
the Property for the amount of ___________________________________ DOLLARS
($_____________) (the "Purchase Price").
Section 1.4 Payment of Purchase Price. The Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, shall be payable in
full at Closing in cash by wire transfer of immediately available funds to a
bank account designated by Seller in writing to Purchaser prior to the Closing.
ARTICLE II
TITLE
Section 2.1 Title. Purchaser has reviewed, approved and accepted the state
of title of the Property.
Section 2.2 Conveyance of Title. At Closing, Seller shall convey and
transfer to Purchaser fee simple title to the Land and Improvements, by
execution and delivery of the Deed (as defined in Section 4.2(a) hereof).
Evidence of delivery of such title shall be the issuance by First American Title
Insurance Company (the "Title Company"), or another national title company, of
CLTA (or state specific equivalent) Owner's Policies of Title Insurance (the
"Title Policies"; each such shall be known herein as a "Title Policy") covering
each Parcel of the Real Property, in the aggregate amount of the Purchase Price,
subject only to the exceptions set forth in Exhibit B attached to the Deed[s]
("Permitted Exceptions").
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ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Physical and Documentary Inspection. Purchaser has inspected,
approved and accepted the physical aspects of the Property, including the
environmental condition thereof. Purchaser has examined, approved and accepted
documents and files relating to Seller's leasing, maintenance and operation of
the Property.
Section 3.2 Environmental Reports. PURCHASER ACKNOWLEDGES THAT (1)
PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL REPORTS LISTED ON EXHIBIT D
ATTACHED HERETO, (2) IF SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL REPORTS TO
PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH
REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY ENVIRONMENTAL REPORTS
DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER
ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE
RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY.
PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER
FOR ANY INACCURACY IN OR OMISSION FROM ANY ENVIRONMENTAL REPORT. PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS
OWN INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO THE EXTENT
PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the transaction
contemplated hereby (the "Closing") shall be held at the offices of Seller on
February 3, 1997. At the Closing, Seller and Purchaser shall perform the
obligations set forth in, respectively, Section 4.2 and Section 4.3 hereof, the
performance of which obligations shall be concurrent conditions; provided that
the Deed shall not be recorded until Seller receives confirmation that Seller
has received the full amount of the Purchase Price, adjusted by prorations as
set forth herein. At Seller's option, the Closing shall be consummated through
an escrow administered by First American Title Insurance of Oregon ("Escrow
Agent"). In such event, the Purchase Price and all documents shall be deposited
with the Escrow Agent as escrowee.
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Section 4.2 Seller's Obligations at Closing. At Closing, Seller shall:
(a) deliver to Purchaser a duly executed special warranty deed (the
"Deed")in the form attached hereto as Exhibit G, conveying the Land and
Improvements, subject only to the Permitted Exceptions; the warranty of title in
the Deed will be only as to claims made by, through or under Seller and not
otherwise;
(b) deliver to Purchaser a duly executed bill of sale (the "Bill of Sale")
conveying the Personal Property without warranty of title or use and without
warranty, express or implied, as to merchantability and fitness for any purpose
and in the form attached hereto as Exhibit H;
(c) assign to Purchaser, and Purchaser shall assume, the landlord/lessor
interest in and to the Leases, Rents and Security Deposits, and any and all
obligations to pay leasing commissions and finder's fees with respect to the
Leases and amendments, renewals and expansions thereof, to the extent provided
in Section 4.4(b)(v) hereof, by duly executed assignment and assumption
agreements (the "Assignment of Leases") in the form attached hereto as Exhibit
I.;
(d) to the extent assignable, assign to Purchaser, and Purchaser shall
assume, Seller's interest in the Operating Agreements and the other Intangibles
by duly executed assignment and assumption agreement (the "Assignment of
Contracts") in the form attached hereto as Exhibit J pursuant to which (i)
Seller shall indemnify Purchaser and hold Purchaser harmless from and against
any and all claims pertaining thereto arising prior to Closing and (ii)
Purchaser shall indemnify Seller and hold Seller harmless from and against any
and all claims pertaining thereto arising from and after the Closing;
(e) join with Purchaser to execute a lease termination agreement (the
"Lease Termination") in the form attached hereto as Exhibit K, terminating that
certain "Lease Agreement" dated October 22, 1986, by and between Fred Meyer Real
Estate Properties, Ltd., as landlord, and Purchaser, as tenant, as such lease
has been amended and assigned ("Lease Agreement");
(f) deliver to Purchaser a certificate in the form attached hereto as
Exhibit L duly executed by Seller stating that Seller is not a "foreign person"
as defined in the Federal Foreign Investment in Real Property Tax Act of 1980
and any similar form required by applicable state law;
(g) deliver to Purchaser the Leases and the Operating Agreements, together
with such leasing and property files and records located at the Property or the
property manager's office which are material in connection with the continued
operation, leasing and maintenance of the Property, but excluding any
Confidential Documents. For a period of three (3) years after the Closing,
Purchaser shall allow Seller and its agents and representatives access without
charge to all files, records and documents delivered to Purchaser at the
Closing, upon reasonable advance notice and at all reasonable times, to examine
and make copies of any and all such files, records and documents, which right
shall survive the Closing;
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(h) deliver to Purchaser possession and occupancy of the Property, subject
to the Permitted Exceptions;
(i) execute a closing statement acceptable to Seller;
(j) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement; and
(k) a legal opinion from Seller's in-house counsel with respect to the
authorization of this transaction.
Section 4.3 Purchaser's Obligations at Closing. At Closing, Purchaser
shall:
(a) pay to Seller the full amount of the Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, in immediately
available wire transferred funds pursuant to Section 1.4 hereof;
(b) join Seller in execution of the Assignment of Leases, Assignment of
Contracts and Lease Termination;
(c) deliver to Seller such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Purchaser;
(d) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Purchaser;
(e) execute a closing statement acceptable to Purchaser; and
(f) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
Section 4.4 Credits and Prorations.
(a) Subject to the rights and obligations of the parties under the Lease
Agreement, all income and expenses of the Property between Seller and Purchaser
shall be apportioned as of 12:01 a.m., on the day of Closing, as if Purchaser
were vested with title to the Property during the entire day upon which Closing
occurs. Such prorated items shall include without limitation the following:
(i) all rents under the Lease Agreement, if any (to the extent any
rent under the Lease Agreement has accrued but is unpaid at Closing, Seller
shall receive a credit from Purchaser for such amount);
(ii) taxes and assessments (including personal property taxes on the
Personal Property)
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levied against the Property;
(iii) utility charges for which Seller is liable, if any, such charges
to be apportioned at Closing on the basis of the most recent meter reading
occurring prior to Closing (dated not more than fifteen (15) days prior to
Closing) or, if unmetered, on the basis of a current bill for each such utility;
(iv) all amounts payable under Operating Agreements, pursuant to the
terms of this Agreement; and
(v) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser and a seller in the
county in which the Property is located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof, at
Closing, (A) Seller shall, at Seller's option, either deliver to Purchaser any
Security Deposits actually held by Seller pursuant to the Leases or credit to
the account of Purchaser the amount of such Security Deposits (to the extent
such Security Deposits have not been applied against delinquent Rents or
otherwise as provided in the Leases), and (B) Purchaser shall credit to the
account of Seller all refundable cash or other deposits posted with utility
companies serving the Property, but only to the extent paid by Seller.
(c) At Closing, Seller will assign to Purchaser pursuant to the Assignment
of Contracts, without warranty or recourse, all pending real property tax
appeals relating to tax years in which Purchaser, as tenant under the Lease
Agreements, paid all real property taxes with respect to the Property.
(d) Except as otherwise provided herein, any revenue or expense amount
which cannot be ascertained with certainty as of Closing shall be prorated on
the basis of the parties' reasonable estimates of such amount, and shall be the
subject of a final proration ninety (90) days after Closing, or as soon
thereafter as the precise amounts can be ascertained. Purchaser shall promptly
notify Seller when it becomes aware that any such estimated amount has been
ascertained. Once all revenue and expense amounts have been ascertained,
Purchaser shall prepare, and certify as correct, a final proration statement
which shall be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser, such statement
shall be conclusively deemed to be accurate and final.
(e) Subject to the final sentence of Section 4.4(d) hereof, the provisions
of this Section 4.4 shall survive Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns, questionnaires and
other documents as shall be required with regard to all applicable real property
transaction taxes imposed by applicable federal, state or local law or
ordinance;
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(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction and Seller's state and federal income tax
incurred by the sale of the Property. Except as provided herein, Seller shall be
responsible for no other costs.
(c) Purchaser shall pay the fees of any counsel representing Purchaser in
connection with this transaction. Purchaser shall also pay the following costs
and expenses:
(i) all escrow fees which may be charged by the Title Company or
escrow agent;
(ii) the fee for the title examination and the title commitment and
the premium for the Owner's Policies of Title Insurance to be issued to
Purchaser by the Title Company at Closing, and all endorsements thereto;
(iii) the cost of any surveys;
(iv) the fees for recording the Deed[s];
(v) any transfer tax, sales tax, documentary stamp tax or similar tax
which becomes payable by reason of the transfer of the Property (including,
without limitation, any taxes relating to a merger, if any, of the Leases with
the fee ownership of the Real Property occurring as a result of this
transaction);
(vi) the fees for Seller's Broker and Purchaser's Broker;
(vii) any other costs occasioned by this transaction (other than
Seller's federal and state income tax incurred by the sale of the Property and
fees of any counsel representing Seller in connection with this transaction);
(d) The Personal Property is included in this sale without charge, except
that Purchaser shall pay to Seller the amount of any and all sales or similar
taxes payable in connection with the transfer of the Personal Property and
Purchaser shall execute and deliver any tax returns required of it in connection
therewith; and
(e) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 Conditions Precedent to Obligation of Purchaser. The obligation
of Purchaser to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole discretion:
(a) Seller shall have delivered to Purchaser all of the items required to
be delivered to Purchaser pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.2 hereof;
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(b) All of the representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the date of
Closing (with appropriate modifications permitted under this Agreement);
(c) Seller shall have performed and observed, in all material respects, all
covenants and agreements of this Agreement to be performed and observed by
Seller as of the date of Closing; and
(d) Seller shall have accepted the evidence with respect to the Act (as
hereinafter defined) that Purchaser is required to produce pursuant to Section
4.7(e).
Section 4.7 Conditions Precedent to Obligation of Seller. The obligation of
Seller to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Seller in its sole discretion:
(a) Seller shall have received the Purchase Price as adjusted as provided
herein, pursuant to and payable in the manner provided for in this Agreement;
(b) Purchaser shall have delivered to Seller all of the items required to
be delivered to Seller pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.3 hereof;
(c) All of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement);
(d) Purchaser shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
Purchaser as of the date of Closing; and
(e) Purchaser's providing to Seller (i) evidence reasonably satisfactory to
Seller that the notification and reporting requirements of the Hart-Scott Rodino
Antitrust Improvement Act of 1976, as amended (15 U.S.C. ss.18a) (the "Act") do
not apply to the transaction contemplated hereby, or (ii) in the event the
notification and reporting requirements of the Act shall be applicable to the
contemplated transaction, evidence reasonably satisfactory to Seller that all
applicable notification and reporting requirements of the Act have been timely
and completely fulfilled. Purchaser acknowledges that in the event the
contemplated transaction is not approved by the Federal Trade Commission, Seller
shall be under no obligation to close the transaction contemplated. Seller and
Purchaser agree to cooperate in effecting compliance with the Act to the extent
required under applicable law.
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ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller. Seller hereby makes
the following representations and warranties to Purchaser as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller has been duly organized and is
validly existing under the laws of the State of New York. Seller has the full
right and authority to enter into this Agreement and to transfer all of the
Property and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
Seller is authorized to do so.
(b) Pending Actions. Except as indicated on Exhibit O, to Seller's
knowledge, Seller has not received written notice of any action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Seller or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) Operating Agreements. To Seller's knowledge, the Operating Agreements
listed on Exhibit C are all of the agreements concerning the operation and
maintenance of the Property entered into by Seller and affecting the Property,
except those operating agreements that are not assignable and are to be
terminated by Seller within thirty (30) days after the Closing, and except any
agreement with Seller's property manager, which shall be terminated by Seller.
(d) Lease Brokerage. To Seller's knowledge, there are no agreements with
brokers providing for the payment from and after the Closing by Seller or
Seller's successor-in-interest of leasing commissions or fees for procuring
tenants with respect to the Property or related to this transaction, except as
disclosed in Exhibit N hereto;
(e) Condemnation. To Seller's knowledge, Seller has received no written
notice of any condemnation proceedings relating to the Property.
(f) Litigation. To Seller's knowledge, except as set forth on Exhibit O
attached hereto, Seller has not received written notice of any litigation which
has been filed against Seller that arises out of the ownership of the Property
and would materially affect the Property or use thereof, or Seller's ability to
perform hereunder;
(g) Violations. To Seller's knowledge, except as set forth on Exhibit P
attached hereto, Seller has not received written notice of any uncured violation
of any federal, state or local law relating to the use or operation of the
Property which would materially adversely affect the Property
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or use thereof; and
(h) Leases. To Seller's knowledge, Seller has not entered into any leases
currently affecting the Real Property other than as shown on Exhibit Q.
Section 5.2 Knowledge Defined. References to the "knowledge" of Seller
shall refer only to the current actual knowledge of the Designated Employees (as
hereinafter defined) of Seller, and shall not be construed, by imputation or
otherwise, to refer to the knowledge of Seller or any affiliate of Seller, to
any property manager, or to any other officer, agent, manager, representative or
employee of Seller or any affiliate thereof or to impose upon such Designated
Employees any duty to investigate the matter to which such actual knowledge, or
the absence thereof, pertains. As used herein, the term "Designated Employees"
shall refer to the following person(s): Jim Hills, Senior Investment Analyst.
Section 5.3 Survival of Seller's Representations and Warranties. The
representations and warranties of Seller set forth in Section 5.1 hereof shall
survive Closing for a period of one (1) year. No claim for a breach of any
representation or warranty of Seller shall be actionable or payable if the
breach in question results from or is based on a condition, state of facts or
other matter which was known to Purchaser prior to Closing. Seller shall have no
liability to Purchaser for a breach of any representation or warranty (a) unless
the valid claims for all such breaches with respect to this Property and the
Columbia Falls (MT), Kalispell (MT), Fourth Plain (WA), Tacoma Lakewood (WA),
Juneau (AK) and Clackamas Distribution Center (OR) properties which are to be
conveyed from Seller to Purchaser contemporaneously with the Property pursuant
to purchase and sale agreements of even date, collectively aggregate more than
Five Hundred Thousand Dollars ($500,000), in which event the full amount of such
valid claims shall be actionable, up to the Cap (as defined in this Section),
and (b) unless written notice containing a description of the specific nature of
such breach shall have been given by Purchaser to Seller prior to the expiration
of said one (1) year period and an action shall have been commenced by Purchaser
against Seller within one (1) year and ninety (90) days of Closing. Purchaser
agrees to first seek recovery under any insurance policies, service contracts
and Leases prior to seeking recovery from Seller, and Seller shall not be liable
to Purchaser if Purchaser's claim is satisfied from such insurance policies,
service contracts or Leases. As used herein, the term "Cap" shall mean the total
aggregate amount of One Million Dollars ($1,000,000) with respect to any and all
claims relating to this Property and to the Columbia Falls (MT), Kalispell (MT),
Fourth Plain (WA), Tacoma Lakewood (WA), Juneau (AK) and Clackamas Distribution
Center (OR) properties, which are to be conveyed from Seller to Purchaser
contemporaneously with the Property pursuant to purchase and sale agreements of
even date. This Section 5.3 shall have no application to any claims of Purchaser
with respect to warranties of title conveyed by the Deed.
Section 5.4 Representations and Warranties of Purchaser. Purchaser hereby
makes the following representations and warranties to Seller as of the Closing,
subject to Section 4.3(c) hereof:
(a) Organization and Authority. Purchaser has been duly organized and is
validly existing
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under the laws of Oregon. Purchaser has the full right and authority to enter
into this Agreement and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
Purchaser is authorized to do so;
(b) Pending Actions. To Purchaser's knowledge, there is no action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Purchaser or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will not be an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is subject to Title I of ERISA, nor a plan
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (each of the foregoing hereinafter referred to collectively as "Plan"),
and (2) the assets of the Purchaser will not constitute "plan assets" of one or
more such Plans within the meaning of Department of Labor ("DOL") Regulation
Section 2510.3- 101.
As of the Closing, if Purchaser is a "governmental plan" as defined in
Section 3(32) of ERISA, the closing of the sale of the Property will not
constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own behalf and not on
account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the Property to any entity,
person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this contract of sale to any
entity, person, or Plan which will cause a violation of ERISA.
Section 5.5 Survival of Purchaser's Representations and Warranties. The
representations and warranties of Purchaser set forth in Section 5.5 hereof
shall survive Closing for a period of one (1) year. Purchaser shall have no
liability to Seller for a breach of any representation or warranty unless
written notice containing a description of the specific nature of such breach
shall have been given by Seller to Purchaser prior to the expiration of said one
(1) year period and an action shall have been commenced by Seller against
Purchaser within one (1) year and ninety (90) days of Closing.
ARTICLE VI
[INTENTIONALLY OMITTED]
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ARTICLE VII
[INTENTIONALLY OMITTED]
ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to the transaction
contemplated by this Agreement, Seller represents that its sole broker is None
("Seller's Broker"), and Purchaser represents that its sole broker is None
("Purchaser's Broker"). Each party hereto agrees that if any person or entity,
other than the Seller's Broker or the Purchaser's Broker, makes a claim for
brokerage commissions or finder's fees related to the sale of the Property by
Seller to Purchaser, and such claim is made by, through or on account of any
acts or alleged acts of said party or its representatives, said party will
protect, indemnify, defend and hold the other party free and harmless from and
against any and all loss, liability, cost, damage and expense (including
reasonable attorneys' fees) in connection therewith. The provisions of this
paragraph shall survive Closing or any termination of this Agreement.
ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents. Except as expressly stated herein,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any materials, data or information delivered by or conversations
with Seller or its brokers or agents to Purchaser in connection with the
Property and the conveyance contemplated hereby. Purchaser acknowledges and
agrees that all materials, data and information delivered by Seller to Purchaser
and conversations with Seller or its brokers or agents in connection with the
transaction contemplated hereby are provided to Purchaser as a convenience only
and that any reliance on or use of such materials, data or information by
Purchaser shall be at the sole risk of Purchaser, except as otherwise expressly
stated herein. Neither Seller, nor any affiliate of Seller, nor the person or
entity which prepared any report or reports delivered by Seller to Purchaser
shall have any liability to Purchaser for any inaccuracy in or omission from any
such reports.
Section 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT
ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
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PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND
CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS,
WITH ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT. PURCHASER ACKNOWLEDGES THAT (I) IT OR AN ENTITY AFFILIATED WITH
PURCHASER OWNED THE PROPERTY PRIOR TO SELLER, (II) PURCHASER HAS CONTINUOUSLY
OCCUPIED AND OPERATED THE PROPERTY ON A DAY-TO-DAY BASIS SINCE THE CLOSING OF
PURCHASER'S EARLIER SALE OF THE PROPERTY TO SELLER PURSUANT TO A SALE-LEASEBACK
TRANSACTION AND IS VERY FAMILIAR WITH THE PROPERTY. PURCHASER HAS NOT RELIED AND
WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR
IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT
LIMITATION, OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
FURNISHED BY SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR
AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND
TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER
DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY,
AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON
BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN
SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET
FORTH IN THIS AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED HEREIN, UPON CLOSING,
PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED
TO, CONSTRUCTION DEFECTS, SOIL CONDITIONS AND ANY OTHER ADVERSE PHYSICAL AND/OR
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S
INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING WITHOUT LIMITATION CAUSES OF ACTION IN
TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
PURCHASER MIGHT HAVE
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ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF
ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF
ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES
OR MATTERS REGARDING THE PROPERTY, EXCEPT AS MAY BE EXPRESSLY PROVIDED TO THE
CONTRARY IN THE REPRESENTATIONS OF SELLER CONTAINED HEREIN.
Section 9.3 Survival of Disclaimers. The provisions of this Article IX
shall survive Closing or any termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Seller, Purchaser and their respective
representatives shall hold in strictest confidence all data and information
obtained with respect to the other or the other's business, whether obtained
before or after the execution and delivery of this Agreement, and shall not
disclose the same to third parties; provided, however, that it is understood and
agreed that each may disclose such data and information to its employees,
lenders, consultants, accountants and attorneys provided that such persons agree
in writing to treat such data and information confidentially. In the event this
Agreement is terminated, each shall promptly return to the other any statements,
documents, schedules, exhibits or other written information obtained from the
other in connection with this Agreement or the transaction contemplated herein.
In the event of a breach or threatened breach by Purchaser, Seller or their
respective representatives of this Section 10.1, the other shall be entitled to
an injunction restraining Purchaser, Seller or their respective representatives
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting the parties from pursuing any other
available remedy at law or in equity for such breach or threatened breach. The
provisions of this Section 10.1 shall survive Closing or any termination of this
Agreement.
Section 10.2 Public Disclosure. Prior to and after the Closing, any release
to the public of information with respect to the sale contemplated herein or any
matters set forth in this Agreement will be made only in the form approved by
Purchaser and Seller. The provisions of this Section 10.2 shall survive the
Closing or any termination of this Agreement.
Section 10.3 Assignment. Subject to the provisions of this Section 10.3,
the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Purchaser may not assign
its rights under this Agreement Notwithstanding the foregoing, under no
circumstances shall Purchaser have the right to assign this Agreement to any
person or entity owned or controlled by an employee benefit plan if Seller's
sale of the Property to such person or entity would, in the reasonable opinion
of Seller's ERISA advisor, create or otherwise cause a "prohibited transaction"
under ERISA. Any transfer, directly or indirectly, of any stock,
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partnership interest or other ownership interest in Purchaser shall constitute
an assignment of this Agreement. The provisions of this Section 10.3 shall
survive the Closing or any termination of this Agreement.
Section 10.4 Notices. Any notice pursuant to this Agreement shall be given
in writing by (a) personal delivery, (b) reputable overnight delivery service
with proof of delivery, (c) United States Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or, in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in accordance
with the preceding sentence, the addresses for notices given pursuant to this
Agreement shall be as follows:
If to Seller: Metropolitan Life Insurance Company
Real Estate Investments
101 Lincoln Centre Drive, 6th Floor
Foster City, California 94404
Attention: Edward J. Hayes, Assistant Vice President
Telephone No. (415) 574-8181
Telecopy No. (415) 349-4615
If to Purchaser: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Sr. V.P./CFD
Telephone No. (503) 232-8844
Telecopy No. (503) 797-5623
with a copy to: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Attorney/CLD
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
Section 10.5 Modifications. This Agreement cannot be changed orally, and no
executory agreement shall be effective to waive, change, modify or discharge it
in whole or in part unless such executory agreement is in writing and is signed
by the parties against whom enforcement of any
15
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waiver, change, modification or discharge is sought.
Section 10.6 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the parties pertaining to such
subject matter, other than any confidentiality agreement executed by Purchaser
in connection with the Property.
Section 10.7 Further Assurances. Each party agrees that it will execute and
deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
Section 10.8 Counterparts. This Agreement may be executed in counterparts,
all such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
Section 10.9 Facsimile Signatures. In order to expedite the transaction
contemplated herein, telecopied signatures may be used in place of original
signatures on this Agreement. Seller and Purchaser intend to be bound by the
signatures on the telecopied document, are aware that the other party will rely
on the telecopied signatures, and hereby waive any defenses to the enforcement
of the terms of this Agreement based on the form of signature.
Section 10.10 Severability. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall nonetheless remain in full force and
effect; provided that the invalidity or unenforceability of such provision does
not materially adversely affect the benefits accruing to any party hereunder.
Section 10.11 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon. Purchaser and
Seller agree that the provisions of this Section 10.11 shall survive the Closing
or any termination of this Agreement.
Section 10.12 No Third-Party Beneficiary. The provisions of this Agreement
and of the documents to be executed and delivered at Closing are and will be for
the benefit of Seller and Purchaser only and are not for the benefit of any
third party, and accordingly, no third party shall have the right to enforce the
provisions of this Agreement or of the documents to be executed and delivered at
Closing.
Section 10.13 Captions. The section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 10.14 Construction. The parties acknowledge that the parties and
their counsel have
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reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any exhibits or
amendments hereto.
Section 10.15 Recordation. This Agreement may not be recorded by any party
hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.15 shall survive the Closing or any termination of
this Agreement.
Section 10.16 Seller Approval. [Shall be omitted prior to Closing]
Section 10.17 Concurrent Closing of Related Transactions. The parties
hereto hereby agree that the Closing is expressly contingent upon the concurrent
closing of (i) those certain lease amendments of even date by and between Seller
and Purchaser concerning certain modifications to certain leases, (ii) the
execution of that certain purchase and sale agreement of __________ parcels by
and between Seller and Purchaser, and (iii) those certain purchase and sale
agreements of even date by and between Seller and Purchaser with respect a sale
of five (5) shopping centers and one distribution center and that no one of the
transactions shall be consummated without all such transactions being
concurrently consummated.
Section 10.18 Oregon Statutory Disclaimer. THE PROPERTY DESCRIBED IN THIS
INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES.
THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR
FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING A RESIDENCE AND WHICH
LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930 IN
ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE
TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING
DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION FOR
STRUCTURES. IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the Effective Date.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------
Name: Edward J. Hayes
---------------------------------
Title: Ass't. V.P.
--------------------------------
PURCHASER:
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FRED MEYER, INC.,
a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------
Name: Scott L. Wippel
---------------------------------
Title: Sr. Vice President
--------------------------------
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EXHIBIT A
(Roseburg, Oregon)
Real Property Description
All that portion of Lot 15, Fruitvale, as filed and recorded in Volume 2, Page
16, Plat Records of Douglas County, Oregon, described as: Beginning at a 5/8
inch iron rod set above a 3/4 inch iron rod in the North right of way line of
Garden Valley Boulevard, from which the Southeast corner of Lot 15 bears South
89(degree) 46' 48" East 430.83 feet (a 1/2 inch iron pipe 30.00 feet South
00(degree) 25' 07" West from the Southeast corner of Lot 15 bears South
85(degree) 47' 46" East 431.77 feet, said pipe being previously referred to as
the Southeast corner of Lot 15); thence along the Northerly right of way line of
Garden Valley Boulevard, North 89(degree) 41' 30" West 412.14 feet to a 3/4 inch
iron rod; thence along the Easterly right of way line of Vine Street, North
00(degree) 42' 48" West 230.60 feet to a 5/8 inch iron rod; thence North
89(degree) 39' 45" East 98.91 feet to a 3/4 inch iron rod; thence North
00(degree) 42' 31" West 4.38 feet to a 5/8 inch iron rod on the South line of
J.M. Noyes property as described in Volume 111, Page 546, Deed Records of
Douglas County, Oregon; thence along the South property line of said Noyes
property, South 89(degree) 40' 31" East 312.90 feet to a 5/8 inch iron rod
marking the property line of F. Jenkins and R. G. Harper as described in Volume
313, Page 882, Deed Records of Douglas County, Oregon; thence along said Jenkins
and Harper property line, South 00(degree) 47' 24" East 236.01 feet to the point
of beginning.
SALE OF
FRED MEYER RETAIL STORE
FOURTH PLAIN
&
TACOMA LAKEWOOD
SALE AGREEMENT
BETWEEN
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation,
AS SELLER
AND
FRED MEYER, INC.,
a Delaware corporation,
AS PURCHASER
As of February 3, 1997
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TABLE OF CONTENTS
Page #
ARTICLE I PURCHASE AND SALE...................................................1
Section 1.1 Agreement of Purchase and Sale..............................1
Section 1.2 Property Defined............................................2
Section 1.3 Purchase Price..............................................2
Section 1.4 Payment of Purchase Price...................................2
ARTICLE II TITLE...............................................................2
Section 2.1 Title.......................................................2
Section 2.2 Conveyance of Title.........................................2
ARTICLE III REVIEW OF PROPERTY.................................................3
Section 3.1 Physical and Documentary Inspection.........................3
Section 3.2 Environmental Reports.......................................3
ARTICLE IV CLOSING.............................................................3
Section 4.1 Time and Place..............................................3
Section 4.2 Seller's Obligations at Closing.............................4
Section 4.3 Purchaser's Obligations at Closing..........................5
Section 4.4 Credits and Prorations......................................5
Section 4.5 Transaction Taxes and Closing Costs.........................6
Section 4.6 Conditions Precedent to Obligation of Purchaser.............7
Section 4.7 Conditions Precedent to Obligation of Seller................8
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS............................9
Section 5.1 Representations and Warranties of Seller....................9
Section 5.2 Knowledge Defined..........................................10
Section 5.3 Survival of Seller's Representations and Warranties........10
Section 5.4 Representations and Warranties of Purchaser................10
Section 5.5 Survival of Purchaser's Representations and Warranties.....11
ARTICLE VI [INTENTIONALLY OMITTED]............................................11
ARTICLE VII [INTENTIONALLY OMITTED]...........................................11
ARTICLE VIII COMMISSIONS......................................................12
Section 8.1 Brokerage Commissions......................................12
ARTICLE IX DISCLAIMERS AND WAIVERS............................................12
Section 9.1 No Reliance on Documents...................................12
Section 9.2 AS-IS SALE; DISCLAIMERS....................................12
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Section 9.3 Survival of Disclaimers....................................14
ARTICLE X MISCELLANEOUS.......................................................14
Section 10.1 Confidentiality............................................14
Section 10.2 Public Disclosure..........................................14
Section 10.3 Assignment.................................................14
Section 10.4 Notices....................................................15
Section 10.5 Modifications..............................................15
Section 10.6 Entire Agreement...........................................15
Section 10.7 Further Assurances.........................................16
Section 10.8 Counterparts...............................................16
Section 10.9 Facsimile Signatures.......................................16
Section 10.10 Severability...............................................16
Section 10.11 Applicable Law.............................................16
Section 10.12 No Third-Party Beneficiary.................................16
Section 10.13 Captions...................................................16
Section 10.14 Construction...............................................16
Section 10.15 Recordation................................................17
Section 10.16 Seller Approval............................................17
Section 10.17 Concurrent Closing of Related Transactions.................17
Section 10.18 Washington Statutory Provision.............................17
2
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A [A-1] DESCRIPTION OF LAND
B [INTENTIONALLY OMITTED]
C LIST OF OPERATING AGREEMENTS
D LIST OF ENVIRONMENTAL REPORTS
E [INTENTIONALLY OMITTED]
F [INTENTIONALLY OMITTED]
G [G-1] FORM OF DEED
H FORM OF BILL OF SALE
I [I-1] FORM OF ASSIGNMENT OF LEASES
J FORM OF ASSIGNMENT OF CONTRACTS
K FORM OF LEASE TERMINATION
L FORM OF FIRPTA CERTIFICATE
M [INTENTIONALLY OMITTED]
N LIST OF BROKERAGE AGREEMENTS
O LIST OF SPECIFIED LITIGATION AND PENDING ACTIONS
P LIST OF VIOLATION NOTICES
Q RENT ROLL
R ALLOCATION SCHEDULE
S FIRST AMENDMENT TO AND ASSIGNMENT AND ASSUMPTION
OF SALE AGREEMENT
3
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SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as of February 3, 1997
(the "Effective Date"), by and between METROPOLITAN LIFE INSURANCE COMPANY, a
New York corporation ("Seller"), and FRED MEYER, INC., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Seller, the following:
(a) all, and not less than all, of those certain tracts or parcels of land
more particularly described in Exhibit A attached hereto and made a part hereof,
together with all rights and appurtenances pertaining to such property,
including any right, title and interest of Seller in and to adjacent streets,
alleys or rights-of-way (the property described in clause (a) of this Section
1.1 being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other improvements affixed to
or located on the Land, excluding fixtures owned by tenants (the property
described in clause (b) of this Section 1.1 being herein referred to
collectively as the "Improvements");
(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the Improvements
(the property described in clause (c) of this Section 1.1 being herein referred
to collectively as the "Personal Property");
(d) any and all of Seller's right, title and interest in and to the leases,
including the Lease Agreement[s] (as hereinafter defined) covering all or any
portion of the Real Property, to the extent they are in effect on the date of
the Closing (as such term is defined in Section 4.1 hereof) (the property
described in clause (d) of this Section 1.1 being herein referred to
collectively as the "Leases"), together with all rents and other sums due
thereunder (the "Rents") and any and all security deposits in Seller's
possession in connection therewith (the "Security Deposits"); and
<PAGE>
(e) any and all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements (collectively, the "Operating Agreements")
listed and described on Exhibit C attached hereto and made a part hereof,
relating to the upkeep, repair, maintenance or operation of the Land,
Improvements or Personal Property, and (ii) all assignable existing warranties
and guaranties (express or implied) issued to Seller in connection with the
Improvements or the Personal Property, and (iii) all assignable existing
permits, licenses, approvals and authorizations issued by any governmental
authority in connection with the Property (the property described in clause (e)
of this Section 1.1 being sometimes herein referred to collectively as the
"Intangibles").
Section 1.2 Property Defined. The Land and the Improvements are hereinafter
sometimes referred to collectively as the "Real Property." The Land, the
Improvements, the Personal Property, the Leases and the Intangibles are
hereinafter sometimes referred to collectively as the "Property." Each parcel
thereof separately identified on Exhibit A is hereinafter referred to separately
as a "Parcel"; more than one Parcel are referred to as "Parcels".
Section 1.3 Purchase Price. Seller is to sell and Purchaser is to purchase
the Property for the amount of ___________________________________ DOLLARS
($_____________) (the "Purchase Price"), which shall be allocated to each Parcel
in accordance with the allocation schedule attached hereto as Exhibit R. Seller
is to sell and Purchaser is to purchase all, and not less than all of the
Parcels.
Section 1.4 Payment of Purchase Price. The Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, shall be payable in
full at Closing in cash by wire transfer of immediately available funds to a
bank account designated by Seller in writing to Purchaser prior to the Closing.
ARTICLE II1 ARTICLE II
TITLE
Section 2.1 Title. Purchaser has reviewed, approved and accepted the state
of title of the Property.
Section 2.2 Conveyance of Title. At Closing, Seller shall convey and
transfer to Purchaser fee simple title to the Land and Improvements, by
execution and delivery of the Deeds (as defined in Section 4.2(a) hereof).
Evidence of delivery of such title shall be the issuance by First American Title
Insurance Company (the "Title Company"), or another national title company, of
CLTA (or state specific equivalent) Owner's Policies of Title Insurance (the
"Title Policies"; each such shall be known herein as a "Title Policy") covering
each Parcel of the Real Property, in the aggregate amount of the Purchase Price,
allocated to each Parcel as set forth in Exhibit R, subject only to the
exceptions set forth in Exhibit B attached to the Deeds ("Permitted
Exceptions").
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ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Physical and Documentary Inspection. Purchaser has inspected,
approved and accepted the physical aspects of the Property, including the
environmental condition thereof. Purchaser has examined, approved and accepted
documents and files relating to Seller's leasing, maintenance and operation of
the Property.
Section 3.2 Environmental Reports. PURCHASER ACKNOWLEDGES THAT (1)
PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL REPORTS LISTED ON EXHIBIT D
ATTACHED HERETO, (2) IF SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL REPORTS TO
PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH
REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY ENVIRONMENTAL REPORTS
DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER
ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE
RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY.
PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER
FOR ANY INACCURACY IN OR OMISSION FROM ANY ENVIRONMENTAL REPORT. PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS
OWN INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO THE EXTENT
PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the transaction
contemplated hereby (the "Closing") shall be held at the offices of Seller on
February 3, 1997. At the Closing, Seller and Purchaser shall perform the
obligations set forth in, respectively, Section 4.2 and Section 4.3 hereof, the
performance of which obligations shall be concurrent conditions; provided that
the Deeds shall not be recorded until Seller receives confirmation that Seller
has received the full amount of the Purchase Price, adjusted by prorations as
set forth herein. At Seller's option, the Closing shall be consummated through
an escrow administered by First American Title Insurance of Oregon ("Escrow
Agent"). In such event, the Purchase Price and all documents shall be deposited
with the Escrow Agent as escrowee.
3
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Section 4.2 Seller's Obligations at Closing. At Closing, Seller shall:
(a) deliver to Purchaser duly executed deeds (the "Deeds") for the Parcels
being conveyed in the form attached hereto as Exhibit G, conveying the Land and
Improvements, subject only to the Permitted Exceptions and an Excise Tax
Affidavit in the form attached hereto as Exhibit G-2 executed by Seller; the
warranty of title in the Deeds will be only as to claims made by, through or
under Seller and not otherwise;
(b) deliver to Purchaser a duly executed bill of sale (the "Bill of Sale")
conveying the Personal Property without warranty of title or use and without
warranty, express or implied, as to merchantability and fitness for any purpose
and in the form attached hereto as Exhibit H;
(c) assign to Purchaser, and Purchaser shall assume, the landlord/lessor
interest in and to the Leases, Rents and Security Deposits, and any and all
obligations to pay leasing commissions and finder's fees with respect to the
Leases and amendments, renewals and expansions thereof, to the extent provided
in Section 4.4(b)(v) hereof, by duly executed assignment and assumption
agreements (the "Assignment[s] of Leases") in the forms attached hereto as
Exhibit I;
(d) to the extent assignable, assign to Purchaser, and Purchaser shall
assume, Seller's interest in the Operating Agreements and the other Intangibles
by duly executed assignment and assumption agreement (the "Assignment of
Contracts") in the form attached hereto as Exhibit J pursuant to which (i)
Seller shall indemnify Purchaser and hold Purchaser harmless from and against
any and all claims pertaining thereto arising prior to Closing and (ii)
Purchaser shall indemnify Seller and hold Seller harmless from and against any
and all claims pertaining thereto arising from and after the Closing;
(e) join with Purchaser to execute a lease termination agreement (the
"Lease Terminations") in the forms attached hereto as Exhibit K, terminating
those certain "Lease Agreements" dated October 22, 1986, by and between Fred
Meyer Real Estate Properties, Ltd., as landlord, and Purchaser, as tenant, as
such leases have been amended and assigned ("Lease Agreements");
(f) deliver to Purchaser a certificate in the form attached hereto as
Exhibit L duly executed by Seller stating that Seller is not a "foreign person"
as defined in the Federal Foreign Investment in Real Property Tax Act of 1980
and any similar form required by applicable state law;
(g) deliver to Purchaser the Leases and the Operating Agreements, together
with such leasing and property files and records located at the Property or the
property manager's office which are material in connection with the continued
operation, leasing and maintenance of the Property, but excluding any
Confidential Documents. For a period of three (3) years after the Closing,
Purchaser shall allow Seller and its agents and representatives access without
charge to all files, records and documents delivered to Purchaser at the
Closing, upon reasonable advance notice and at all reasonable times, to examine
and make copies of any and all such files, records and documents, which right
shall survive the Closing;
4
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(h) deliver to Purchaser possession and occupancy of the Property, subject
to the Permitted Exceptions;
(i) execute a closing statement acceptable to Seller;
(j) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement; and
(k) a legal opinion from Seller's in-house counsel with respect to the
authorization of this transaction.
Section 4.3 Purchaser's Obligations at Closing. At Closing, Purchaser
shall:
(a) pay to Seller the full amount of the Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, in immediately
available wire transferred funds pursuant to Section 1.4 hereof;
(b) join Seller in execution of the Assignment[s] of Leases, Assignment of
Contracts and Lease Terminations;
(c) deliver to Seller such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Purchaser;
(d) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Purchaser;
(e) execute a closing statement acceptable to Purchaser; and
(f) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
Section 4.4 Credits and Prorations.
(a) Subject to the rights and obligations of the parties under the Lease
Agreement, all income and expenses of the Property between Seller and Purchaser
shall be apportioned as of 12:01 a.m., on the day of Closing, as if Purchaser
were vested with title to the Property during the entire day upon which Closing
occurs. Such prorated items shall include without limitation the following:
(i) all rents under the Lease Agreements, if any (to the extent any
rent under the Lease Agreement has accrued but is unpaid at Closing, Seller
shall receive a credit from Purchaser for such amount);
(ii) taxes and assessments (including personal property taxes on the
Personal Property) levied against the Property;
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(iii) utility charges for which Seller is liable, if any, such charges
to be apportioned at Closing on the basis of the most recent meter reading
occurring prior to Closing (dated not more than fifteen (15) days prior to
Closing) or, if unmetered, on the basis of a current bill for each such utility;
(iv) all amounts payable under Operating Agreements, pursuant to the
terms of this Agreement; and
(v) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser and a seller in the
county in which the Property is located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof, at
Closing, (A) Seller shall, at Seller's option, either deliver to Purchaser any
Security Deposits actually held by Seller pursuant to the Leases or credit to
the account of Purchaser the amount of such Security Deposits (to the extent
such Security Deposits have not been applied against delinquent Rents or
otherwise as provided in the Leases), and (B) Purchaser shall credit to the
account of Seller all refundable cash or other deposits posted with utility
companies serving the Property, but only to the extent paid by Seller.
(c) At Closing, Seller will assign to Purchaser pursuant to the Assignment
of Contracts, without warranty or recourse, all pending real property tax
appeals relating to tax years in which Purchaser, as tenant under the Lease
Agreements, paid all real property taxes with respect to the Property.
(d) Except as otherwise provided herein, any revenue or expense amount
which cannot be ascertained with certainty as of Closing shall be prorated on
the basis of the parties' reasonable estimates of such amount, and shall be the
subject of a final proration ninety (90) days after Closing, or as soon
thereafter as the precise amounts can be ascertained. Purchaser shall promptly
notify Seller when it becomes aware that any such estimated amount has been
ascertained. Once all revenue and expense amounts have been ascertained,
Purchaser shall prepare, and certify as correct, a final proration statement
which shall be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser, such statement
shall be conclusively deemed to be accurate and final.
(e) Subject to the final sentence of Section 4.4(d) hereof, the provisions
of this Section 4.4 shall survive Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns, questionnaires and
other documents as shall be required with regard to all applicable real property
transaction taxes imposed by applicable federal, state or local law or
ordinance;
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(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction and Seller's state and federal income tax
incurred by the sale of the Property. Except as provided herein, Seller shall be
responsible for no other costs.
(c) Purchaser shall pay the fees of any counsel representing Purchaser in
connection with this transaction. Purchaser shall also pay the following costs
and expenses:
(i) all escrow fees which may be charged by the Title Company or
escrow agent;
(ii) the fee for the title examination and the title commitment and
the premium for the Owner's Policies of Title Insurance to be issued to
Purchaser by the Title Company at Closing, and all endorsements thereto;
(iii) the cost of any surveys;
(iv) the fees for recording the Deed[s];
(v) any transfer tax, sales tax, documentary stamp tax or similar tax
which becomes payable by reason of the transfer of the Property (including,
without limitation, any taxes relating to a merger, if any, of the Leases with
the fee ownership of the Real Property occurring as a result of this
transaction);
(vi) the fees for Seller's Broker and Purchaser's Broker;
(vii) any other costs occasioned by this transaction (other than
Seller's federal and state income tax incurred by the sale of the Property and
fees of any counsel representing Seller in connection with this transaction);
(d) The Personal Property is included in this sale without charge, except
that Purchaser shall pay to Seller the amount of any and all sales or similar
taxes payable in connection with the transfer of the Personal Property and
Purchaser shall execute and deliver any tax returns required of it in connection
therewith; and
(e) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 Conditions Precedent to Obligation of Purchaser. The obligation
of Purchaser to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole discretion:
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(a) Seller shall have delivered to Purchaser all of the items required to
be delivered to Purchaser pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.2 hereof;
(b) All of the representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the date of
Closing (with appropriate modifications permitted under this Agreement);
(c) Seller shall have performed and observed, in all material respects, all
covenants and agreements of this Agreement to be performed and observed by
Seller as of the date of Closing; and
(d) Seller shall have accepted the evidence with respect to the Act (as
hereinafter defined) that Purchaser is required to produce pursuant to Section
4.7(e).
Section 4.7 Conditions Precedent to Obligation of Seller. The obligation of
Seller to consummate the transaction hereunder shall be subject to the
fulfillment on or before the date of Closing of all of the following conditions,
any or all of which may be waived by Seller in its sole discretion:
(a) Seller shall have received the Purchase Price as adjusted as provided
herein, pursuant to and payable in the manner provided for in this Agreement;
(b) Purchaser shall have delivered to Seller all of the items required to
be delivered to Seller pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.3 hereof;
(c) All of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement);
(d) Purchaser shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
Purchaser as of the date of Closing; and
(e) Purchaser's providing to Seller (i) evidence reasonably satisfactory to
Seller that the notification and reporting requirements of the Hart-Scott Rodino
Antitrust Improvement Act of 1976, as amended (15 U.S.C. ss.18a) (the "Act") do
not apply to the transaction contemplated hereby, or (ii) in the event the
notification and reporting requirements of the Act shall be applicable to the
contemplated transaction, evidence reasonably satisfactory to Seller that all
applicable notification and reporting requirements of the Act have been timely
and completely fulfilled. Purchaser acknowledges that in the event the
contemplated transaction is not approved by the Federal Trade Commission, Seller
shall be under no obligation to close the transaction contemplated. Seller and
Purchaser agree to cooperate in effecting compliance with the Act to the extent
required under applicable law.
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ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller. Seller hereby makes
the following representations and warranties to Purchaser as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller has been duly organized and is
validly existing under the laws of the State of New York. Seller has the full
right and authority to enter into this Agreement and to transfer all of the
Property and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
Seller is authorized to do so.
(b) Pending Actions. Except as indicated on Exhibit O, to Seller's
knowledge, Seller has not received written notice of any action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Seller or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) Operating Agreements. To Seller's knowledge, the Operating Agreements
listed on Exhibit C are all of the agreements concerning the operation and
maintenance of the Property entered into by Seller and affecting the Property,
except those operating agreements that are not assignable and are to be
terminated by Seller within thirty (30) days after the Closing, and except any
agreement with Seller's property manager, which shall be terminated by Seller.
(d) Lease Brokerage. To Seller's knowledge, there are no agreements with
brokers providing for the payment from and after the Closing by Seller or
Seller's successor-in-interest of leasing commissions or fees for procuring
tenants with respect to the Property or related to this transaction, except as
disclosed in Exhibit N hereto;
(e) Condemnation. To Seller's knowledge, Seller has received no written
notice of any condemnation proceedings relating to the Property.
(f) Litigation. To Seller's knowledge, except as set forth on Exhibit O
attached hereto, Seller has not received written notice of any litigation which
has been filed against Seller that arises out of the ownership of the Property
and would materially affect the Property or use thereof, or Seller's ability to
perform hereunder;
(g) Violations. To Seller's knowledge, except as set forth on Exhibit P
attached hereto, Seller has not received written notice of any uncured violation
of any federal, state or local law relating to the use or operation of the
Property which would materially adversely affect the Property or use thereof;
and
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(h) Leases. To Seller's knowledge, Seller has not entered into any leases
currently affecting the Real Property other than as shown on Exhibit Q.
Section 5.2 Knowledge Defined. References to the "knowledge" of Seller
shall refer only to the current actual knowledge of the Designated Employees (as
hereinafter defined) of Seller, and shall not be construed, by imputation or
otherwise, to refer to the knowledge of Seller or any affiliate of Seller, to
any property manager, or to any other officer, agent, manager, representative or
employee of Seller or any affiliate thereof or to impose upon such Designated
Employees any duty to investigate the matter to which such actual knowledge, or
the absence thereof, pertains. As used herein, the term "Designated Employees"
shall refer to the following person(s): Jim Hills, Senior Investment Analyst.
Section 5.3 Survival of Seller's Representations and Warranties. The
representations and warranties of Seller set forth in Section 5.1 hereof shall
survive Closing for a period of one (1) year. No claim for a breach of any
representation or warranty of Seller shall be actionable or payable if the
breach in question results from or is based on a condition, state of facts or
other matter which was known to Purchaser prior to Closing. Seller shall have no
liability to Purchaser for a breach of any representation or warranty (a) unless
the valid claims for all such breaches with respect to this Property and the
Columbia Falls (MT), Kalispell (MT), Juneau (AK), Roseburg (OR) and Clackamas
Distribution Center (OR) properties which are to be conveyed from Seller to
Purchaser contemporaneously with the Property pursuant to purchase and sale
agreements of even date, collectively aggregate more than Five Hundred Thousand
Dollars ($500,000), in which event the full amount of such valid claims shall be
actionable, up to the Cap (as defined in this Section), and (b) unless written
notice containing a description of the specific nature of such breach shall have
been given by Purchaser to Seller prior to the expiration of said one (1) year
period and an action shall have been commenced by Purchaser against Seller
within one (1) year and ninety (90) days of Closing. Purchaser agrees to first
seek recovery under any insurance policies, service contracts and Leases prior
to seeking recovery from Seller, and Seller shall not be liable to Purchaser if
Purchaser's claim is satisfied from such insurance policies, service contracts
or Leases. As used herein, the term "Cap" shall mean the total aggregate amount
of One Million Dollars ($1,000,000) with respect to any and all claims relating
to this Property and to the Columbia Falls (MT), Kalispell (MT), Juneau (AK),
Roseburg (OR) and Clackamas Distribution Center (OR) properties which are to be
conveyed from Seller to Purchaser contemporaneously with the Property pursuant
to purchase and sale agreements of even date. This Section 5.3 shall have no
application to any claims of Purchaser with respect to warranties of title
conveyed by the Deeds.
Section 5.4 Representations and Warranties of Purchaser. Purchaser hereby
makes the following representations and warranties to Seller as of the Closing,
subject to Section 4.3(c) hereof:
(a) Organization and Authority. Purchaser has been duly organized and is
validly existing under the laws of Oregon. Purchaser has the full right and
authority to enter into this Agreement and to consummate or cause to be
consummated the transaction contemplated by this Agreement. The person signing
this Agreement on behalf of Purchaser is authorized to do so;
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(b) Pending Actions. To Purchaser's knowledge, there is no action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Purchaser or the Property which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will not be an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is subject to Title I of ERISA, nor a plan
as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (each of the foregoing hereinafter referred to collectively as "Plan"),
and (2) the assets of the Purchaser will not constitute "plan assets" of one or
more such Plans within the meaning of Department of Labor ("DOL") Regulation
Section 2510.3-101.
As of the Closing, if Purchaser is a "governmental plan" as defined in
Section 3(32) of ERISA, the closing of the sale of the Property will not
constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own behalf and not on
account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the Property to any entity,
person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this contract of sale to any
entity, person, or Plan which will cause a violation of ERISA.
Section 5.5 Survival of Purchaser's Representations and Warranties. The
representations and warranties of Purchaser set forth in Section 5.5 hereof
shall survive Closing for a period of one (1) year. Purchaser shall have no
liability to Seller for a breach of any representation or warranty unless
written notice containing a description of the specific nature of such breach
shall have been given by Seller to Purchaser prior to the expiration of said one
(1) year period and an action shall have been commenced by Seller against
Purchaser within one (1) year and ninety (90) days of Closing.
ARTICLE VI
[INTENTIONALLY OMITTED]
ARTICLE VII
[INTENTIONALLY OMITTED]
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ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to the transaction
contemplated by this Agreement, Seller represents that its sole broker is None
("Seller's Broker"), and Purchaser represents that its sole broker is None
("Purchaser's Broker"). Each party hereto agrees that if any person or entity,
other than the Seller's Broker or the Purchaser's Broker, makes a claim for
brokerage commissions or finder's fees related to the sale of the Property by
Seller to Purchaser, and such claim is made by, through or on account of any
acts or alleged acts of said party or its representatives, said party will
protect, indemnify, defend and hold the other party free and harmless from and
against any and all loss, liability, cost, damage and expense (including
reasonable attorneys' fees) in connection therewith. The provisions of this
paragraph shall survive Closing or any termination of this Agreement.
ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents. Except as expressly stated herein,
Seller makes no representation or warranty as to the truth, accuracy or
completeness of any materials, data or information delivered by or conversations
with Seller or its brokers or agents to Purchaser in connection with the
Property and the conveyance contemplated hereby. Purchaser acknowledges and
agrees that all materials, data and information delivered by Seller to Purchaser
and conversations with Seller or its brokers or agents in connection with the
transaction contemplated hereby are provided to Purchaser as a convenience only
and that any reliance on or use of such materials, data or information by
Purchaser shall be at the sole risk of Purchaser, except as otherwise expressly
stated herein. Neither Seller, nor any affiliate of Seller, nor the person or
entity which prepared any report or reports delivered by Seller to Purchaser
shall have any liability to Purchaser for any inaccuracy in or omission from any
such reports.
Section 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT
ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND
CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS,
WITH ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT. PURCHASER ACKNOWLEDGES THAT (I) IT OR AN ENTITY AFFILIATED WITH
PURCHASER OWNED
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THE PROPERTY PRIOR TO SELLER, (II) PURCHASER HAS CONTINUOUSLY OCCUPIED AND
OPERATED THE PROPERTY ON A DAY-TO-DAY BASIS SINCE THE CLOSING OF PURCHASER'S
EARLIER SALE OF THE PROPERTY TO SELLER PURSUANT TO A SALE-LEASEBACK TRANSACTION
AND IS VERY FAMILIAR WITH THE PROPERTY. PURCHASER HAS NOT RELIED AND WILL NOT
RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY
SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT
REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN
THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND
TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER
DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY,
AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON
BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN
SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET
FORTH IN THIS AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED HEREIN, UPON CLOSING,
PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED
TO, CONSTRUCTION DEFECTS, SOIL CONDITIONS AND ANY OTHER ADVERSE PHYSICAL AND/OR
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S
INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING, WITHOUT LIMITATION, CAUSES OF ACTION IN
TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR
ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS,
VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS,
CIRCUMSTANCES OR MATTERS
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REGARDING THE PROPERTY, EXCEPT AS MAY BE EXPRESSLY PROVIDED TO THE CONTRARY IN
THE REPRESENTATIONS OF SELLER CONTAINED HEREIN.
Section 9.3 Survival of Disclaimers. The provisions of this Article IX
shall survive Closing or any termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Seller, Purchaser and their respective
representatives shall hold in strictest confidence all data and information
obtained with respect to the other or the other's business, whether obtained
before or after the execution and delivery of this Agreement, and shall not
disclose the same to third parties; provided, however, that it is understood and
agreed that each may disclose such data and information to its employees,
lenders, consultants, accountants and attorneys provided that such persons agree
in writing to treat such data and information confidentially. In the event this
Agreement is terminated, each shall promptly return to the other any statements,
documents, schedules, exhibits or other written information obtained from the
other in connection with this Agreement or the transaction contemplated herein.
In the event of a breach or threatened breach by Purchaser, Seller or their
respective representatives of this Section 10.1, the other shall be entitled to
an injunction restraining Purchaser, Seller or their respective representatives
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting the parties from pursuing any other
available remedy at law or in equity for such breach or threatened breach. The
provisions of this Section 10.1 shall survive Closing or any termination of this
Agreement.
Section 10.2 Public Disclosure. Prior to and after the Closing, any release
to the public of information with respect to the sale contemplated herein or any
matters set forth in this Agreement will be made only in the form approved by
Purchaser and Seller. The provisions of this Section 10.2 shall survive the
Closing or any termination of this Agreement.
Section 10.3 Assignment. Subject to the provisions of this Section 10.3,
the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Purchaser may not assign
its rights under this Agreement except to Roundup Company, a Washington
corporation, a wholly-owned subsidiary or affiliate of Purchaser, pursuant to
the terms of the First Amendment to and Assignment and Assumption of Sale
Agreement attached hereto as Exhibit S. Notwithstanding the foregoing, under no
circumstances shall Purchaser have the right to assign this Agreement to any
person or entity owned or controlled by an employee benefit plan if Seller's
sale of the Property to such person or entity would, in the reasonable opinion
of Seller's ERISA advisor, create or otherwise cause a "prohibited transaction"
under ERISA. Any transfer, directly or indirectly, of any stock, partnership
interest or other ownership interest in Purchaser shall constitute an assignment
of this Agreement. The provisions of this Section 10.3 shall survive the Closing
or any termination of this Agreement.
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Section 10.4 Notices. Any notice pursuant to this Agreement shall be given
in writing by (a) personal delivery, (b) reputable overnight delivery service
with proof of delivery, (c) United States Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or, in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in accordance
with the preceding sentence, the addresses for notices given pursuant to this
Agreement shall be as follows:
If to Seller: Metropolitan Life Insurance Company
Real Estate Investments
101 Lincoln Centre Drive, 6th Floor
Foster City, California 94404
Attention: Edward J. Hayes, Assistant Vice President
Telephone No. (415) 574-8181
Telecopy No. (415) 349-4615
If to Purchaser: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Sr. V.P./CFD
Telephone No. (503) 232-8844
Telecopy No. (503) 797-5623
with a copy to: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Attorney/CLD
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
Section 10.5 Modifications. This Agreement cannot be changed orally, and no
executory agreement shall be effective to waive, change, modify or discharge it
in whole or in part unless such executory agreement is in writing and is signed
by the parties against whom enforcement of any waiver, change, modification or
discharge is sought.
Section 10.6 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the
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parties pertaining to such subject matter, other than any confidentiality
agreement executed by Purchaser in connection with the Property.
Section 10.7 Further Assurances. Each party agrees that it will execute and
deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
Section 10.8 Counterparts. This Agreement may be executed in counterparts,
all such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
Section 10.9 Facsimile Signatures. In order to expedite the transaction
contemplated herein, telecopied signatures may be used in place of original
signatures on this Agreement. Seller and Purchaser intend to be bound by the
signatures on the telecopied document, are aware that the other party will rely
on the telecopied signatures, and hereby waive any defenses to the enforcement
of the terms of this Agreement based on the form of signature.
Section 10.10 Severability. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall nonetheless remain in full force and
effect; provided that the invalidity or unenforceability of such provision does
not materially adversely affect the benefits accruing to any party hereunder.
Section 10.11 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon. Purchaser and
Seller agree that the provisions of this Section 10.11 shall survive the Closing
or any termination of this Agreement.
Section 10.12 No Third-Party Beneficiary. The provisions of this Agreement
and of the documents to be executed and delivered at Closing are and will be for
the benefit of Seller and Purchaser only and are not for the benefit of any
third party, and accordingly, no third party shall have the right to enforce the
provisions of this Agreement or of the documents to be executed and delivered at
Closing.
Section 10.13 Captions. The section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 10.14 Construction. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
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Section 10.15 Recordation. This Agreement may not be recorded by any party
hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.15 shall survive the Closing or any termination of
this Agreement.
Section 10.16 Seller Approval. [Shall be omitted prior to Closing]
Section 10.17 Concurrent Closing of Related Transactions. The parties
hereto hereby agree that the Closing is expressly contingent upon the concurrent
closing of (i) those certain lease amendments of even date by and between Seller
and Purchaser concerning certain modifications to certain leases, (ii) the
execution of that certain purchase and sale agreement of __________ parcels by
and between Seller and Purchaser, and (iii) those certain purchase and sale
agreements of even date by and between Seller and Purchaser with respect to a
sale of four (4) shopping centers and one distribution center and that no one of
the transactions shall be consummated without all such transactions being
concurrently consummated.
Section 10.18 Washington Statutory Provision. Purchaser represents and
warrants to Seller that it is not acquiring the Property for personal, family or
household purposes, and Purchaser hereby acknowledges Seller's rights to obtain
a forfeiture of the earnest money deposit regardless of whether Seller incurs
any actual damages, consistent with Substitute House Bill 2042, which provides
as follows:
"A provision in a written agreement for the purchase and
sale of real estate which provides for the forfeiture of an
earnest money deposit to the seller as the seller's sole and
exclusive remedy if the purchaser fails, without legal
excuse, to complete the purchase, is valid and enforceable,
regardless of whether the seller incurs any actual damages."
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------
Name: Edward J. Hayes
---------------------------------
Title: Asst - V.P.
--------------------------------
PURCHASER:
FRED MEYER, INC.,
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a Delaware corporation
By: SCOTT L. WIPPEL
-----------------------------------
Name: Scott L. Wippel
---------------------------------
Title: Sr. Vice President
--------------------------------
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EXHIBIT A
Real Property Description
A parcel of land lying within the Northeast quarter of Section 2, Township 19
North, Range 2 East of the Willamette Meridian, and the Northwest quarter of
Section 1, Township 19 North, Range 2 East of the Willamette Meridian, North of
100th Street Southwest and East of 54th Avenue Southwest, described as follows:
Commencing at the center of the Northeast quarter of Section 2, Township 19
North, Range 2 East of the Willamette Meridian; thence North 89(degree)54'11"
East 655.41 feet to a point on the centerline of 54th Avenue Southwest; thence
along said centerline North 0(degree)44'30" West 59.05 feet; thence North
89(degree)15'30" East 35.00 feet to a point on the Easterly line of 54th Avenue
Southwest, being a strip of land appropriated by Pierce County in Decree of
Appropriation entered October 31, 1972 in Pierce County Superior Court Cause No.
209287, recorded under Auditor's No. 2481393, and the true point of beginning;
thence along said Easterly line North 0(degree)44'30" West 72.45 feet; thence on
a curve to the right having a radius of 681.20 feet and a central angle of
40(degree)42'18" an arc distance of 483.95 feet; thence North 39(degree)57'50"
East 57.84 feet; thence leaving said Easterly line of 54th Avenue Southwest,
South 89(degree)47'14" East 960.74 feet; thence South 0(degree)26'15" East
623.51 feet; thence North 89(degree)23'38" West 526.66 feet to a point on a line
between said Sections 1 and 2; thence North 01(degree)02'45" West along said
Section line 10.00 feet; thence South 89(degree)54'11" West 583.85 feet; thence
on a curve to the right having a radius of 50.00 feet and a central angle of
89(degree)21'19" an arc distance of 77.98 feet to the true point of beginning,
in Lakewood, Pierce County, Washington.
EXCEPT that portion conveyed to Pierce County by Deed recorded under
Auditor's No. 2605304.
ALSO EXCEPT Lot 1 of PIERCE COUNTY SHORT PLAT NO. 76-459, according to Map
recorded in Volume 11 of Short Plats at Page 29.
(Being balance of original Tract of Short Plat No. 76-459, according to Plat
recorded September 7, 1976 in Volume 11 of Short Plats at Page 29.)
TOGETHER WITH those appurtenant easements set forth in that mutual utility
easement agreement dated April 11, 1974 and recorded May 3, 1974 under Auditor's
No. 2551063.
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EXHIBIT A
Real Property Description
PARCEL A
The West 20.08 feet of Lot 2, the West 83.17 feet of Lot 8; the West 87.5 feet
of Lot 9, and all of Lots 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19,
20, 21, 22, 23, 24, 25, 26, 27 and 28, all in Block "A", GARDEN ACRES REPLAT,
according to the plat thereof, recorded in Volume "E" of Plats, Page 12, records
of Clark County, Washington.
EXCEPT that portion of said Lots 2, 3, 4, and 5, lying in Fourth Plain Boulevard
on the North and Grand Avenue on the West.
PARCEL B
Lots 8, 9, 10, 11, 12, 13, 14, 15, 16, 17 and 18, Block "E", GARDEN ACRES
REPLAT, according to the plat thereof, recorded in Volume "E" of Plats, Page 12,
records of Clark County, Washington.
EXCEPTING THEREFROM the above described Parcels A and B that portion conveyed to
the CITY OF VANCOUVER, a municipal corporation by deed recorded May 14, 1991
under Auditor's File No. 9105140073.
AGREEMENT CONCERNING MISCELLANEOUS PARCELS
This Agreement Concerning Miscellaneous Parcels ("Agreement") is made
as of February 4, 1997 by and between METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation ("Metropolitan") and FRED MEYER, INC., a Delaware corporation,
for itself and on behalf of its wholly owned corporate affiliates which lease
certain shopping centers from Metropolitan under existing leases (collectively,
"Fred Meyer"), with respect to the following:
A. Metropolitan owns certain properties, consisting of shopping centers,
which have been leased to Fred Meyer, or its wholly-owned subsidiaries (each
shall be known herein as a "Shopping Center"; more than one Shopping Center
shall be known herein as "Shopping Centers"), pursuant to existing lease between
such parties (the "Leases").
B. Fred Meyer, has requested, and Metropolitan has agreed to grant to Fred
Meyer, an option whereby Fred Meyer may require Metropolitan to convey to Fred
Meyer, Metropolitan's interest in certain Parcels (as hereinafter defined) which
consist of portions of the Shopping Centers, all subject to the terms of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Parcels; Subdivision or Other Partition. Those portions of
Metropolitan's property described or shown on Exhibit A attached hereto and
incorporated herein, shall be known as "Parcels." Any Parcel which is not
presently a legal lot in compliance with applicable laws concerning partition,
subdivision and/or lot line adjustment is referred to herein as an "Unsubdivided
Parcel." At such time as an Unsubdivided Parcel becomes a legal lot in
compliance with applicable laws concerning partition, subdivision, and/or lot
line adjustment such Parcel is referred to herein as a "Subdivided Parcel."
As used herein, the term "partition" will mean any procedure available
under applicable law to cause a Parcel and the Remaining Center (as defined
below) to be separate legal lots that are legally capable of separate ownership,
including (without limitation) partition, short plat, parcel map, lot line
adjustment, and/or other procedures. Use of the term "Subdivided Parcel" will
not be construed to require a subdivision, as compared to a partition, of the
Subdivided Parcel and the Remaining Center.
2. Remaining Center. That portion of each Shopping Center which shall
continue to be owned by Metropolitan and leased to Fred Meyer following the
conveyance to Fred Meyer of a Parcel which is part of such Shopping Center,
shall be known as a "Remaining Center."
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Concerning Pads at Shopping Centers
February 4, 1997
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3. Option. Metropolitan hereby grants to Fred Meyer an irrevocable option
("Option") to require Metropolitan to convey and release the Parcels subject to
the terms of this Agreement. Exercise of the Option by Fred Meyer with respect
to some or all of the Parcels will be no later than the end of the term of the
Option, as set forth herein. The Option price for each Parcel is as stated on
the attached Exhibit B and totals Nine Million Dollars ($9,000,000) ("Option
Price") for all Parcels; provided, however, if either (i) the term of this
Option expires and Fred Meyer has not taken title to all of the Parcels, or (ii)
Fred Meyer elects not to pursue the partition of one or more of the Parcels,
then the Option Price for such Parcels shall be re-allocated to the other
Parcels on a prorata basis, in accordance with their respective percentages set
forth in Exhibit B, so that the entire Option Price will be re-allocated to the
Parcels acquired by Fred Meyer pursuant to the Option. The Option Price shall be
paid to Metropolitan contemporaneously with the mutual execution of this
Agreement (the "Effective Date"), subject to the holdback provided below.
The term of the Option ("Term") shall expire on February 15, 1999;
provided, that the Term will be extended, pursuant to the procedures set forth
herein, on a day-for-day basis equal to the number of days in which Metropolitan
may fail to respond, within the time periods provided herein, to a matter that
requires Metropolitan's consent or approval under this Agreement.
Of the total Option Price, $50,000 for each group of Parcels with respect
to each Remaining Center will be placed into a holdback escrow pursuant to the
terms of the escrow agreement approved by the parties, a copy of which is
attached as Exhibit C to this Agreement (the "Holdback Escrow"). The escrow
agent for the Holdback Escrow and for the closing of the conveyance of the
Parcel to Fred Meyer will be First American Title Insurance Company of Oregon
("FATCO"), utilizing the offices of FATCO at Portland, Oregon. As and at the
time that Fred Meyer exercises its Option and a Subdivided Parcel is released to
Fred Meyer, the $50,000 of funds in the Holdback Escrow that were attributable
to the Remaining Center of which that Parcel is a part will be released to
Metropolitan at the closing of the conveyance of the Parcel to Fred Meyer (or
the first Parcel, if more than one Parcel in a particular Shopping Center is
contemplated to be conveyed). Interest on the Holdback Escrow will accrue to the
benefit of Metropolitan. The remaining balance, including all accrued interest,
will be disbursed to Metropolitan on February 15, 1998 (the "Holdback
Disbursement Date").
The Option Price is fully earned by Metropolitan upon mutual execution of
this Agreement and is non-refundable. Regardless of whether Fred Meyer exercises
its Option and satisfies the conditions of this Agreement concerning release of
the Parcel by the end of the Term, the Option will expire and terminate, and the
entire Option Price will be retained by Metropolitan.
Notwithstanding any other provision of this Agreement, Fred Meyer may
elect, in its discretion, at any time after the Effective Date to abandon its
efforts to obtain a subdivision or partition of one or more of the Parcels
and/or to acquire such Parcel(s) at which time that portion
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February 4, 1997
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of the Holdback Escrow attributable to the Shopping Center of which the Parcel
is a part shall be released to Metropolitan. No such abandonment or any
inability to obtain such subdivision or partition, or any failure by Fred Meyer
to satisfy the conditions of this Agreement for conveyance of the Parcel to Fred
Meyer, will entitle Fred Meyer to any reimbursement of the Option Price paid for
the Parcel.
During the Term of the Option and unless Fred Meyer has notified
Metropolitan of Fred Meyer's abandonment of efforts5 to obtain a subdivision or
partition of such Parcel(s), Metropolitan will not place liens or encumbrances
on the Parcel(s) that cannot be released by the payment of monies and that would
be binding on the Parcel(s) after the closing of Fred Meyer's purchase, without
Fred Meyer's consent or approval, which will not be unreasonably withheld.
4. Procedures Concerning Approval of Subdivision or Partition.
4.1 Approval of Legal Description and Proposed Site Plan. Fred Meyer
will submit to Metropolitan: (i) a perimeter legal description of the Parcel
prepared by a surveyor licensed in the state in which the Parcel is situated;
and (ii) a proposed site plan of the Shopping Center showing the Parcel and
showing the location of the main Fred Meyer retail store at the Shopping Center,
the gross building area of the main Fred Meyer store, the gross land area of the
Parcel and of the Shopping Center, and the number of parking spaces within the
Shopping Center other than the Parcel. The perimeter legal description of the
Parcels shall be consistent with the Parcels shown on Exhibit A (i.e. that there
are only de minimis variations compared to that shown on Exhibit A, and there is
no detriment to the value and utility to the Remaining Center resulting from any
variation).
Metropolitan will reasonably approve or disapprove (with reasons stated)
the legal description and site plan within fifteen calendar days after receipt.
If disapproved, the legal description and site plan will be revised by Fred
Meyer and re-submitted to Metropolitan, and the parties will continue to follow
the foregoing procedures until such matters are mutually and reasonably
acceptable to the parties (or such earlier date as the Term expires or Fred
Meyer abandons its efforts to get Metropolitan's approval as to the subdivision
or partition).
4.2 Application for Subdivision or Partition Approval. Upon approval
of the legal description and site plan, Fred Meyer will cause the surveyor to
prepare the subdivision or partition application and related drawings or surveys
required to obtain necessary governmental approvals of the subdivision or
partition. Such application and drawings or survey must show the Parcel as
approved by Metropolitan and otherwise be in compliance with the requirements of
this Agreement. Fred Meyer shall submit the application and related documents to
Metropolitan for its approval, which, subject to Metropolitan's approval rights
under Section 4.3, shall not be unreasonably withheld, in which case the parties
will follow the same time periods and observe the same procedures as set forth
in Section 4.1 above.
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February 4, 1997
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4.3 Approval of Conditions or Requirements of Authorities. Fred Meyer
will keep Metropolitan informed about the status of Fred Meyer's application for
subdivision or partition approval and any conditions that are proposed to be
imposed by the governmental authorities as a condition for approval. From time
to time until Fred Meyer has obtained final approval of the subdivision or
partition pursuant to conditions that are approved by Metropolitan in writing,
Fred Meyer will submit to Metropolitan for its approval any changes or
conditions for approval requested or required by the governmental authorities in
connection with the subdivision or partition, in which case the parties will
follow the same time periods and observe the same procedures as set forth in
Section 4.1 above.
Without limiting the foregoing, but subject to Fred Meyer's right to
abandon or discontinue its efforts as provided in Section 3, Fred Meyer will
diligently pursue obtaining the necessary governmental approvals required for
the partition or subdivision. Fred Meyer will be responsible for paying the
costs of its surveyor, all application fees required by the governmental
authority, all filing and recording fees related to the partition or subdivision
of the Parcels, and all costs of Fred Meyer's attorneys and consultants.
Metropolitan will be responsible (only) for its own attorneys' fees and the cost
of its administrative time in administering this Agreement.
Fred Meyer may approve (without the need for approval by Metropolitan, and
in which event Metropolitan shall be deemed to have approved) any condition or
requirement that can be satisfied by Fred Meyer by the payment of money (and
shall promptly make such payment), or that is imposed solely against the Parcel,
and which is not binding on Metropolitan or the Remaining Center. If the
condition or requirement involves the dedication, grant or conveyance of
additional right-of-way area, sidewalks or public easements, Metropolitan will
not unreasonably withhold its approval thereof, provided that (i) the
dedication, grant or conveyance does not affect the value or utility of the
Remaining Center in more than a de minimis manner, and (ii) any proceeds
received for the conveyance is paid to Metropolitan and does not affect the rent
to be paid by Fred Meyer as tenant under the existing Leases.
4.4 Access and Parking Requirements. The Parcel must have legal
access, directly or pursuant to the CC&R's described in Section 5.3 below, onto
a public road. The Parcel and the remaining Center must independently have
sufficient parking to comply with current applicable parking codes (without
consideration of any reciprocal parking arrangements between the Parcel and the
Remaining Center).
4.5 Authorized Representatives or Contact Person(s). Each party will
at all times have one or more persons to be designated by it to be the contact
person with respect to any request for a decision or any consent or approval
required under this Agreement. Fred Meyer's initial designated contact persons,
each of whom also has authority to bind Fred Meyer, are its: Senior Vice
President of Corporate Facilities Division (Scott L. Wippel); and Vice President
of Acquisition and Development (Robert Currey-Wilson). Metropolitan's initial
contact person is
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February 4, 1997
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its: Asset Manager, Real Estate Investments (Jim Hills). Designation of, and any
change to the designation of, authorized representatives or contact persons will
be by written notice given in the manner provided herein.
4.6 Reports and Related Matters. Fred Meyer will provide written
status reports on the progress in preparing and applying for necessary
governmental approvals for the subdivision or partition of Parcels and the
conditions and requirements of the governmental authorities therefor.
Metropolitan will promptly notify Fred Meyer of any matter in such reports that
is not acceptable to Metropolitan.
4.7 Execution of Permits and Approvals. With respect to execution of
applications for permits and approvals required by governmental authorities from
the record owner of the Parcel in connection with the subdivision and/or
partition of the Parcels, Metropolitan shall execute such applications and
return same to Fred Meyer within five (5) business days after receipt of such
applications, provided that (i) the matters set forth in the application has
been approved (or deemed approved) by Metropolitan, to the extent approval is
otherwise required by this Agreement, and (ii) the applications contain a legend
or other writing notifying the governmental authority substantially as follows:
"Metropolitan Life Insurance Company has executed the
attached application solely because Metropolitan is the
record owner of the subject property. Fred Meyer has applied
for and is seeking the subject permit. The subject property
is currently under contract to Fred Meyer, but title has not
been transferred. Metropolitan understands that the
governmental authority shall look solely to Fred Meyer for
compliance with the terms of the permit."
The Option Term shall be extended on a day-to-day basis equal to the number
of days in which Metropolitan may fail to respond, within the time periods
provided herein, to a matter that requires Metropolitan's execution under this
Section.
5. Procedures Concerning Conveyance of Parcels. Upon approval of the
matters that require approval under Section 4 above, Fred Meyer will be entitled
to finalize the subdivision or partition and exercise its Option to obtain a
conveyance of the Subdivided Parcel, pursuant to the terms of this Section 5,
provided that each of the following can be accomplished with respect to such
Subdivided Parcel within the Term of this Agreement:
5.1 As-Is Sale; Closing. Fred Meyer will prepare and submit to
Metropolitan, for its review and approval, the form of purchase and sale
agreement and deed for the conveyance of the Subdivided Parcel. The form of
purchase and sale agreement is attached hereto as Exhibit D.
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Concerning Pads at Shopping Centers
February 4, 1997
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The closing of the conveyance of the Subdivided Parcel will be on a date,
to be selected by Fred Meyer and reasonably acceptable to Metropolitan, within
thirty (30) days after Fred Meyer's delivery of the form of purchase and sale
agreement, the deed and the materials required under this Section 5. The
Subdivided Parcel shall be conveyed to Fred Meyer on an "as-is, where-is" basis,
with all faults. The form of deed and terms of such conveyance are as set forth
in Exhibit D. The closing will be on a Parcel-by Parcel basis (but the parties
will reasonably co-operate on efforts to consolidate the closings, if feasible).
If an escrow or closing agent is desired to close the conveyancing of the
Parcel, the parties will use First American Title Insurance Company (Portland
office), provided that Metropolitan receives a closing protection letter from
FATCO's parent, First American Title Insurance Company substantially in the form
Metropolitan received with respect to the Holdback Escrow.
5.2 Existing Loans. Any loans encumbering the fee interest in a Parcel
(except for the ground lease trust deed created February 14, 1994 encumbering
Beaverton Town Center) shall be satisfied by Metropolitan or released from the
Parcel at the time of conveyance of such Parcel. Fred Meyer will be responsible
for paying any prepayment premium payable to the lender upon release of the
Parcel if the loan on the Parcel was one of the Existing Mortgages (as defined
in the Leases) on the Shopping Center. The parties will reasonably cooperate and
keep the other party informed about the status of communications with the
lenders on any loans encumbering the Shopping Center and the requirements for
release of the Parcel therefrom.
Subject to the qualifications stated below, Metropolitan will be
responsible for paying (from the Option Price or otherwise) any principal
payment required for the partial release and any accrued but unpaid interest.
Title insurance endorsements or updates required by the lender, or reasonable
transfer, release or processing fees required by the lenders on the Existing
Mortgages will be paid by Fred Meyer. The recording fees for release of the
Existing Mortgages will be paid by Fred Meyer. Recording fees and any transfer,
release or processing fees required by any lenders on loans other than the
Existing Mortgages will be paid by Metropolitan. If the holder of one of the
Existing Mortgages has the right to refuse prepayment, or will not release its
lien from the Parcel, then Metropolitan will be under no obligation to convey
the Parcel to Fred Meyer.
5.3 CC&R's. The parties have approved the form of Covenants,
Conditions and Restrictions ("CC&R's") to be executed and recorded against the
Subdivided Parcel and Remaining Center immediately prior to or contemporaneously
with the conveyance of the Subdivided Parcel. The form of the CC&R's is attached
as Exhibit E, except that the CC&R's for the Beaverton property is attached as
Exhibit F. The CCR's will bind the parties' respective interests and not be
subordinate to any financing placed thereon (except for the ground lease trust
deed created February 14, 1994 encumbering Beaverton Town Center).
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February 4, 1997
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As to any matter under the CCR's which by its terms may be "deemed
approved" by Metropolitan, Metropolitan will, within ten (10) days after receipt
of a request for acknowledgment that the matter was deemed approved, confirm in
writing the approval of the matter in question. Except for the first such
acknowledgment in any twelve (12) month period (for which there will no charge
for the confirming letter), Metropolitan may charge, and Fred Meyer will pay, a
fee of $1,000 for each confirming letter that Fred Meyer requires to confirm
such approval (as a result of expiration of a time period after which the matter
was "deemed approved") under this Agreement.
Pursuant to the CCR's for each of the Shopping Centers, Metropolitan has
granted (or shall grant) Fred Meyer a license to exercise the rights of
Declarant in accordance with the terms thereof. Metropolitan shall not revoke
any such license, or any portion thereof, or notify any of the respective Owners
(as defined in the CCR's) under such CCR's that such license, or any portion
thereof, has been revoked, unless one or more of the following events occurs:
(i) expiration or termination of the respective Lease covering a portion of the
Shopping Center encumbered by such CC&Rs; (ii) any material breach by Fred
Meyer, or any of its corporate subsidiaries or affiliates, under any of the
Leases; or (iii) any material default by Fred Meyer, or any of its corporate
subsidiaries or affiliates, under the CCR's; or (iv) Fred Meyer improperly
exercising the license granted under such CCR's, but excluding any exercise done
in a good faith belief that Fred Meyer was permitted to execute which only has a
de minimis detrimental effect on the Shopping Center. In the event of any events
described in subsection (ii), (iii) or (iv) above, Metropolitan shall have the
option, exercisable upon written notice to Fred Meyer to revoke the entire
license, or any portion thereof.
This provision will survive the closing of the purchase of the Parcel by
Fred Meyer and the recordation of the deed for the Parcel to Fred Meyer.
5.4 Final Subdivision or Partition; Hart-Scott-Rodino Compliance. At
the time of closing, the Subdivided Parcel and the Remaining Center will each be
separate legal lots, in final compliance with all applicable legal requirements
concerning subdivision and partition, and a copy of the final subdivision or
partition map (as approved by the parties and as filed with the City/County)
will have been delivered to Metropolitan. Metropolitan's approval of the final
subdivision or partition map shall be subject to the approval standards set
forth in Sections 4.2 and 4.3. For purposes of this Agreement, compliance with
all applicable legal requirements concerning subdivision and partition will not
be considered "final" until all rights of third-party appeal of the governmental
action have expired. Fred Meyer shall take all necessary steps, at Fred Meyer's
cost, to comply with all notification and reporting requirements, if applicable,
of the Hart-Scott Rodino Antitrust Improvement Act of 1976, as amended (15
U.S.C. ss. 18a) (the "Hart-Scott-Rodino Act") and to advise Metropolitan as to
whether notification on reporting would be required by Metropolitan, and to
ensure that the conveyance of each Subdivided Parcel shall not violate, or
create a state of facts that would violate, (i) any zoning, use or other laws,
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February 4, 1997
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or (ii) restrictions placed on the Shopping Centers by encumbrances, such as
leases and CC&R's with respect to both the Subdivided Parcel and the Remaining
Center, and shall furnish evidence reasonably satisfactory to Metropolitan to
such effect. Metropolitan shall reasonably cooperate with Fred Meyer, at no cost
or detriment to Metropolitan, in Fred Meyer's efforts to achieve such
compliance.
5.5 Title Endorsements; Survey. At Fred Meyer's cost, Metropolitan's
owner's title policies (and title coverage for the Leases, if any) with respect
to the Shopping Center shall be endorsed at the time each Subdivided Parcel is
conveyed, to conform the legal descriptions set forth in the existing title
policies to the legal description of the Remaining Centers and to provide
coverage that the Remaining Center is properly subdivided. Fred Meyer will
provide to Metropolitan a boundary survey of the Subdivided Parcel and of the
Remaining Center.
5.6 Tax Parcelization. In the event that a Subdivided Parcel and the
applicable Remaining Center are not separate tax parcels at the time of
conveyance of the Subdivided Parcel, Fred Meyer shall take all necessary steps
to cause the creation of the Subdivided Parcel as a separate tax parcel at the
earliest available time (which may not be until the next tax year after the year
in which the closing of the conveyance occurred). Fred Meyer shall indemnify
Metropolitan from payment of taxes, fees and penalties relating to the Remaining
Center and the applicable Subdivided Parcel for the remainder of the term of the
Lease covering the Shopping Center or until the separate tax parcels have been
created.
5.7 Lease Amendment. Metropolitan and Fred Meyer shall cause each
Lease relating to a Shopping Center to be amended, at the time of such
conveyance, to reflect the conveyance of the applicable Subdivided Parcel. The
form of the Lease amendment will be as attached hereto as Exhibit G. In no event
shall the Lease amendment result in any reduction in the rent payable by tenant
under the Lease.
5.8 Prompt Response to Requests. If Metropolitan has questions or
reasonably requires additional information to verify that the conveyance of the
Subdivided Parcel will not cause the Remaining Center to be in violation of any
applicable laws, Fred Meyer will promptly respond to the request and use all
commercially reasonable efforts to satisfy the same.
If Metropolitan has objections to any request, report, application or
document submitted to Metropolitan, under this Section 5 or Section 4 above
(except as provided in Section 4.7 above), Metropolitan will notify Fred Meyer
as to its objections promptly and in any event within fifteen (15) calendar days
of receipt of all information pertaining to the request, report, application or
document that Metropolitan reasonably needs to make an informed decision.
Failure to notify Fred Meyer as to an objection within such 15-day period will
conclusively be deemed an approval of the request, report, application or
document; provided, that if Fred Meyer reasonably requires execution of an
application or document or written confirmation of such approval from
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Metropolitan before proceeding on the matter in question and notified
Metropolitan of such at the beginning of such 15-day period, Fred Meyer will not
be required to rely on the "deemed approved" provision of this Agreement and may
require written confirmation or execution of the application or document by
Metropolitan (and each day after the 15-day period in which Metropolitan delays
in providing such written confirmation or execution will extend the Term of this
Agreement). In the event that Metropolitan reasonably believes that more than
fifteen (15) days are necessary to evaluate the request due to the complexity of
the particular matter which Metropolitan is then reviewing, Metropolitan shall
notify Fred Meyer of such within such fifteen (15) day period and the parties
shall reasonably agree to an extended period (but the extension beyond the
15-day period will extend the Option Term).
5.9 Effect of Expiration of Term. At the expiration of the Term of the
Option (as it may be extended for Metropolitan's delays, as provided herein),
Metropolitan's obligation to convey the Parcels not yet conveyed will cease.
5.10 Metropolitan's Delays. With respect to any extension of the
Option Term to which Fred Meyer believes it is entitled under the terms of this
Agreement, Fred Meyer shall notify Metropolitan in writing of Fred Meyer's
calculation of the number of days of delay for each consent or approval sought
no later than ten (10) business days after the last day of such delay, together
with Fred Meyer's determination of the new Option Term expiration date. Delivery
of the notice shall be a requirement of Fred Meyer's entitlement to such
extensions.
6. Costs and Expenses. Unless otherwise allocated herein, all costs and
expenses relating to the transactions described herein shall be borne solely by
Fred Meyer, except for Metropolitan's attorneys' fees (which shall be paid by
Metropolitan) and the administrative cost of Metropolitan's time in
administering this Agreement. Any taxes or increases in taxes on the Remaining
Centers caused by or relating to the conveyance of the Parcels to Fred Meyer
shall be borne solely by Fred Meyer throughout the term of the Leases.
7. Independent Conveyance. The fact that one or more Parcels may not be
conveyed, whether due to noncompliance with the terms of this Agreement or
otherwise, shall, in and of itself, (i) have no effect on the conveyance of the
other Parcels, and other Parcels shall be conveyed pursuant to the terms of this
Agreement, or (ii) not entitle Fred Meyer to any reduction or refund of any
portion of the Option Price. However, no provision of this Agreement will be
construed to limit a party's right to pursue any right or remedy permitted under
applicable law (including, without limitation, specific enforcement) in the
event of the other party's breach under this Agreement.
8. Repurchase Option. Metropolitan will have a repurchase option pursuant
to which Metropolitan may elect to re-acquire, exercisable within thirty (30)
days after the date of termination or expiration of the Lease of the Remaining
Center, any Parcel conveyed to Fred
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February 4, 1997
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Meyer pursuant to this Agreement and with respect to which Fred Meyer has not
entered into a sale, exchange or bona fide ground lease to an unaffiliated third
party or improved such Parcel with additional retail space (whether or not the
Parcel was sold, exchanged or leased) (an "Unconveyed Parcel"). The purchase
price for the Unconveyed Parcel will be its Option Price. This option to
repurchase will automatically terminate as of the closing date for the sale or
exchange or the effective date for the bona fide ground lease of a Parcel to a
bona fide third party not affiliated with Fred Meyer or the date on which Fred
Meyer has completed construction of improvements with additional retail space
(whether or not the Parcel has been sold, exchanged or leased). Metropolitan,
upon request, will execute an acknowledgment of termination of the repurchase
option or other document reasonably required by Fred Meyer or the title company
to evidence the termination of the repurchase option.
In addition, in the event Fred Meyer discontinues its plan to sell,
exchange or ground lease a Parcel or to improve a Parcel with additional retail
space, Fred Meyer will have a right, by written notice to Metropolitan, to offer
to Metropolitan the option to re-acquire the Parcel. Metropolitan will have 180
days after receipt of such notice to notify Fred Meyer of its election to
re-purchase the Parcel (in which event the parties will proceed to close the
repurchase on the terms stated herein), or Metropolitan's option to repurchase
under this Section 8 will cease and terminate.
9. Confidentiality. Subject to the qualifications stated below, each party
and its representatives shall hold in strictest confidence all data and
information obtained with respect to the other party or its business, whether
obtained before or after the execution and delivery of this Agreement, and shall
not disclose the same to others; provided, however, that it is understood and
agreed that a party may disclose such data and information in confidence (and
will not be liable for any breach of confidentiality by the recipient) to its
employees, directors, officers, partners, or to its accountants, legal counsel
and professional advisors; (ii) such data and information may be disclosed or
submitted as may be required in connection with any litigation, arbitration or
other proceeding between the parties; and/or (iii) such data and information may
be disclosed or submitted as may be legally required by any governmental or
court order or law or regulation.
In the event this Agreement is terminated or a party fails to perform
hereunder, the party will, upon the other party's request, promptly return to
the other party any written statements, documents, schedules, exhibits or other
written information obtained from the other party in connection with this
Agreement or the transaction contemplated herein with respect to those aspects
of the Agreement which are then not consummated. In the event of a breach or
threatened breach by a party or its agents or representatives of this Section 9,
the non-defaulting party shall be entitled to an injunction restraining other
party or its agents or representatives from disclosing, in whole or in part,
such confidential information. Nothing herein shall be constructed as
prohibiting a party from pursuing any other available remedy at law or in equity
for such breach
Fred Meyer-Metropolitan Agreement
Concerning Pads at Shopping Centers
February 4, 1997
10
<PAGE>
or threatened breach. The provisions of this Section 9 shall survive closing of
the sale of the Parcels or any termination of this Agreement.
10. Public Disclosure. Prior to and after the closing of the sale of the
Parcels, any release to the public of information with respect to the sale
contemplated herein or any matters set forth in this Agreement will be made only
in the form reasonably approved by Fred Meyer and Metropolitan. The provisions
of this Section 10 shall survive the closing of the sale of the Parcels or any
termination of this Agreement.
11. Assignment. Subject to the provisions of this Section 11, the terms and
provisions of this Agreement are to apply to and bind the permitted successors
and assigns of the parties hereto, and will be deemed a covenant on the
respective Shopping Centers to which it pertains. Fred Meyer may not assign its
rights under this Agreement other than to a wholly owned subsidiary or affiliate
of Fred Meyer.
Notwithstanding the foregoing, under no circumstances shall Fred Meyer have
the right to assign this Agreement to any person or entity owned or controlled
by an employee benefit plan if Metropolitan's sale of a Parcel to such person or
entity would, in the reasonable opinion of Metropolitan's ERISA advisor, create
or otherwise cause a "prohibited transaction" under ERISA. The provisions of
this Section 11 shall survive the closing of the sale of the Parcels or any
termination of this Agreement.
12. Notices. Any notice pursuant to this Agreement shall be given in
writing by (a) personal delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United States Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designed by written notice sent in accordance herewith, and shall be deemed to
have been given upon receipt or refusal to accept delivery, or in the case of
facsimile transmission, as of the date of the facsimile transmission provided
that an original of such facsimile is also sent to the intended addressee by
means described in clauses (a), (b) or (c) above. Unless changed in the
accordance with the preceding sentence, the addresses for notice given pursuant
to this Agreement shall be as follows:
If to Metropolitan:
Metropolitan Life Insurance Company
Real Estate Investments
101 Lincoln Centre Drive, 6th Floor
Foster City, California 94404
Attention: Edward J. Hayes, Assistant Vice President
Telephone No. (415) 574-8181
Telecopy No. (415) 349-4615
Fred Meyer-Metropolitan Agreement
Concerning Pads at Shopping Centers
February 4, 1997
11
<PAGE>
With a copy to:
Metropolitan Life Ins. Co.
Real Estate Investments
Dol Devill, Vice President
2001 Spring Road, Suite 400
Oakbrook, IL 60521
If to Fred Meyer:
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Senior Vice President,
Director of Real Estate
Telephone No. (503) 797-3450
Telecopy No. (503) 797-3539
If any notice to Fred Meyer is mailed, the address for notices will not be the
street address shown herein but will be: PO Box 42121, Portland, Oregon 97242.
With a copy to:
Fred Meyer, Inc.
Real Estate Division
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: Corporate Real Estate Counsel
Telephone No. (503) 797-7390
Telecopy No. (503) 797-5623
13. Modifications. This Agreement cannot be changed orally, and no
executory agreement shall be effective to waive, change, modify or discharge it
in whole or in part unless such executory agreement is in writing and is signed
by the parties against whom enforcement of any waiver, change, modification or
discharge is sought.
Fred Meyer-Metropolitan Agreement
Concerning Pads at Shopping Centers
February 4, 1997
12
<PAGE>
14. Entire Agreement. This Agreement, including the exhibits and schedules
hereto, contains the entire agreement between the parties hereto pertaining to
the subject matter hereof and fully supersedes all prior written or oral
agreements and understandings between the parties pertaining to such subject
matter.
15. Relation of the Agreement to Leases. This Agreement does not supersede
or otherwise affect the purchase option and other rights in favor of Fred Meyer
(exercisable at the end of the Lease term as to the Shopping Center) as set
forth in the Leases (except to the extent the purchase option in the Lease would
be inapplicable to a Parcel already conveyed under this Agreement), or otherwise
affect the rental or other rights and obligations of the parties under the
Leases covering the Shopping Centers, but will constitute an addition and
addendum to such Leases, to which reference is hereby made.
16. Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action, whether prior or subsequent to
the closing of the sale of the Parcels, as may be reasonably requested by the
other party to consummate the transaction contemplated by this Agreement. The
provisions of this Section 16 shall survive the closing of the sale of the
Parcels.
17. Counterparts. This Agreement may be executed in counterparts, all such
executed counterparts shall constitute the same agreement, and the signature of
any party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
18. Facsimile Signatures. In order to expedite the transaction contemplated
herein, telecopied signatures may be used in place of original signatures on
this Agreement. Metropolitan and Fred Meyer intend to be bound by the signatures
on the telecopied documents, are aware that the other party will rely on the
telecopied signatures, and hereby waive any defenses to the enforcement of the
terms of this Agreement based on the forms of signature.
19. Severability. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall nonetheless remain in full force and effect; provided that
the invalidity or unenforceability of such provision does not materially
adversely affect the benefits accruing to any party hereunder.
20. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon. Fred Meyer and Metropolitan
agree that the provisions of this Section 20 shall survive the closing of the
sale of the Parcels or any termination of this Agreement.
21. No Third-Party Beneficiary. The provisions of this Agreement and of the
documents to be executed and delivered at the closing of the sale of the Parcels
are and will be
Fred Meyer-Metropolitan Agreement
Concerning Pads at Shopping Centers
February 4, 1997
13
<PAGE>
for the benefit of Metropolitan and Fred Meyer only and are not for the benefit
of any third party, and accordingly, no third party (other than an approved
successor and assign of the parties' interest, subject to the provisions hereof)
shall have the right to enforce the provisions of this Agreement or of the
documents to be executed and delivered at the closing of the sale of the
Parcels.
22. Captions. The section headings appearing in this Agreement are for
convenience or reference only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any subsection hereof.
23. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any exhibits or amendments hereto.
24. Attorneys' Fees. In the event suit or action is instituted to interpret
or enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge reasonable as
attorneys' fees at trial, on appeal of such suit or action, upon any petition
for review or in connection with any arbitration proceeding between the parties,
in addition to all other sums provided by law, and such prevailing party shall
also be entitled to recover reasonable non-litigation attorneys' fees incurred
in enforcing the terms of this Agreement prior to or separate from such trial or
appeal or other action or proceeding. As used herein, "attorneys' fees" will
include (without limitation) both attorney's and paralegals' fees and expenses.
25. Waiver. Any failure by a party at any time to require performance of
any provision of this Agreement shall not limit the party's right to enforce the
provision in the future. Any waiver of any breach of any provision shall not be
a waiver of any succeeding breach or a waiver of the provision itself or any
other provision of this Agreement.
26. Recordation. This Agreement may not be recorded to any party hereto
without the prior written consent of the other party hereto. The provisions of
this Section 26 shall survive the closing of the sale of the Parcels or any
termination of this Agreement.
27. Time of the Essence. The parties hereto expressly agree that time is of
the essence of this Agreement.
28. Authority. By execution of this Agreement, each party represents and
covenants with the other that the party has the corporate authority and right to
enter into this Agreement and to perform its terms, and that each person signing
this Agreement for the party is duly and validly authorized to do so.
Fred Meyer-Metropolitan Agreement
Concerning Pads at Shopping Centers
February 4, 1997
14
<PAGE>
29. Covenants Concerning Beaverton Property. As to the Beaverton property,
the following will also be applicable:
(i) unless and until the Ground Lease, Ground Lease Interests and
Lessee Financing Instruments (as defined in the document attached as Exhibit F
to this Agreement) are subject to the CCR's attached as Exhibit F ("Beaverton
CCR's") to this Agreement, or the Ground Lease, Ground Lease Interests and
Lessee Financing Instruments are terminated, Fred Meyer (or its successor as
holder of the lessor's interest in the Ground Lease) will (a) not modify the
Ground Lease in a manner that would permit an action that is restricted or
prohibited by the Beaverton CCR's without the prior written approval of the
Declarant, (b) obtain the approval of Declarant as to any matter which the
Beaverton CCR's require to be approved by Declarant, if and to the extent that
Fred Meyer's consent or approval to such matter is required under the Ground
Lease, (c) will use commercially reasonable efforts to enforce obligations under
the Ground Lease whose performance is required to comply with the restrictions
and requirements of the Beaverton CCR's, and (d) to the extent that Fred Meyer
(as holder of the lessor's interest in the Ground Lease) has the right under the
Ground Lease to grant (or deny) approval of improvements thereon, Fred Meyer
will not approve such improvements without first obtaining Declarant's approval
to the extent the improvement would have required the approval of Declarant
under the Beaverton CCR's, except for reconstruction of improvements in
connection with restoration of casualty, major remodeling or other events where
the reconstructed improvements are substantially the same as existing as of the
date hereof, and except for Minor Improvements (as defined below) therein. A
"Minor Improvement" is any alteration or addition that is not structural in
nature (including, without limitation, interior tenant improvements, which may
be without Declarant's consent), or which (singularly or in the aggregate in any
calendar year) involve less than a capital expenditure of $2,000,000 (which
threshold figure will be adjusted from time to time after the date of
recordation of this Declaration by changes in the CPI as provided in Section 12
of the Beaverton CCR's). Changes to the Common Areas within the Town Center
Property (as defined in the Beaverton CCR's) may be made without Declarant's
consent provided that the restrictions in Section 15.26 of the CCR's are
satisfied.
(ii) at such time as Fred Meyer desires to convey fee title to the
Beaverton property to a third party (other than a wholly-owned affiliate of Fred
Meyer), Fred Meyer will either (a) cause the Beaverton property to be subject to
the Beaverton CCR's, and the holders of the Ground Lease, Ground Lease Interests
and Lessee Financing Instruments must subordinate their interests to the
Beaverton CCR's (as referenced in Section 15.24) or (b) the Ground Lease, Ground
Lease Interests and Lessee Financing Instruments to be terminated as a condition
to Fred Meyer's right to convey the fee title to the Beaverton property; and
(iii) this Section 29 will constitute an addition to the lease of the
Beaverton Fred Meyer Lease, and will survive the closings under the Option (if
Fred Meyer acquires a parcel at the Beaverton property), and will be fully
enforceable thereafter as a covenant of Fred Meyer, and
Fred Meyer-Metropolitan Agreement
Concerning Pads at Shopping Centers
February 4, 1997
15
<PAGE>
shall run the land of the Beaverton property, and any default in the
performance of such covenant will be a non-monetary default under the Beaverton
Fred Meyer Lease.
30. Approvals. Metropolitan shall not be arbitrary or capricious in
withholding its consent or approval under this Agreement or revoking the license
referred to in Section 5.3.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date.
METROPOLITAN:
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: EDWARD J. HAYES
-----------------------------------
Name: Edward J. Hayes
---------------------------------
Title: Ass't. V. P.
--------------------------------
FRED MEYER:
FRED MEYER, INC.,
a Delaware corporation,
for itself and its wholly owned corporate subsidiaries
who are collectively referred to as "Fred Meyer"
By: SCOTT L. WIPPEL
-----------------------------------
Name: Scott L. Wippel
---------------------------------
Title: SR Vice President
--------------------------------
Fred Meyer-Metropolitan Agreement
Concerning Pads at Shopping Centers
February 4, 1997
16
EXHIBIT 11
<TABLE>
<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)
16 Weeks Ended
---------------------------
May 24, May 25,
1997 1996
------- -------
<S> <C> <C>
Weighted average number of shares
outstanding............................................................ 26,525 26,706
Weighted average number of shares
under option........................................................... 3,026 3,722
Shares assumed to have been purchased
under the treasury stock method...................................... (1,734) (1,889)
------- -------
Weighted average number of common and
common equivalent shares outstanding................................... 27,817 28,539
======= =======
Net income................................................................ $13,259 $9,444
======= =======
Earnings per common share................................................. $.48 $.33
==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> MAY-24-1997
<CASH> 64,152
<SECURITIES> 0
<RECEIVABLES> 25,265
<ALLOWANCES> 0
<INVENTORY> 624,356
<CURRENT-ASSETS> 763,910
<PP&E> 1,658,881
<DEPRECIATION> 660,886
<TOTAL-ASSETS> 1,788,589
<CURRENT-LIABILITIES> 542,208
<BONDS> 558,089
0
0
<COMMON> 291
<OTHER-SE> 592,541
<TOTAL-LIABILITY-AND-EQUITY> 1,788,589
<SALES> 1,193,936
<TOTAL-REVENUES> 1,193,936
<CGS> 838,515
<TOTAL-COSTS> 320,428
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,607
<INCOME-PRETAX> 21,386
<INCOME-TAX> 8,127
<INCOME-CONTINUING> 13,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,259
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
