SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
October 30, 1996 (October 22, 1996)
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CP FUNDING CORP.
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(A Delaware Corporation)
(Exact name of registrant as specified in its Charter)
Delaware 33-83762 13-3777023
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(State or other jurisdiction of Commission (I.R.S.
incorporation or organization) File No. Employer
Identification
No.)
CHELSEA PIERS, L.P.
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(A New York Limited Partnership)
u (Exact name of registrant as specified in its
Certificate and Agreement of Limited Partnership)
New York 33-83762 13-3668842
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(State or other jurisdiction of Commission (I.R.S.
incorporation or organization) File No. Employer
Identification
No.)
Chelsea Piers, Pier 62 - Suite 300
New York, New York 10011 10011
- --------------------------------------- ------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 336-6700
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Item 5 Other Events.
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On October 22, 1996, Chelsea Piers L.P. ("Chelsea Piers) and the
Commissioner of the Department of Transportation executed an amendment ("Lease
Amendment"), dated as of June 30, 1996, to the original lease (the "Lease")
dated June 24, 1994, with respect to the lease of premises known as Piers 59,
60, 61 and 62, located in the Borough of Manhattan, County of New York, City and
State of New York. A copy of the Lease Amendment is attached hereto as Exhibit
10.24.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Exhibits:
Exhibit 10.24 -- Amendment to Lease, dated as of June 30, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CP FUNDING CORP.
By: /s/ Tom A. Bernstein
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Tom A. Bernstein, President
CHELSEA PIERS, L.P.,
a New York limited partnership
By: Chelsea Piers Management, Inc.,
Managing General Partner
By: /s/ Tom A. Bernstein
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Tom A. Bernstein, President
Date: October 30, 1996
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Exhibit 10.24
AMENDMENT TO LEASE
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This Amendment to Lease is made as of June 30, 1996, between the State of
New York, acting by and through the COMMISSIONER OF THE DEPARTMENT OF
TRANSPORTATION having an office at 1220 Washington Avenue, Building 5, Room 506,
State Campus, Albany, New York 12232 ("Lessor") and CHELSEA PIERS L.P., a New
York limited partnership having an office at Pier 62, Room 204, West 23rd Street
and Hudson River, New York, New York 10011 ("Lessee").
W I T N E S S E T H :
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WHEREAS, Lessor and Lessee have executed and delivered that certain
Agreement dated June 24, 1994 (the "Lease") with respect to the lease of the
premises known as Piers 59, 60, 61 and 62, located in the Borough of Manhattan,
County of New York, City and State of New York, as more particularly described
in the Lease;
WHEREAS, Lessor and Lessee desire to amend and restate the Lease as more
particularly set forth herein and the parties desire otherwise to confirm their
respective obligations under the Lease;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lessor and Lessee agree as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, capitalized terms
used herein shall have the respective meanings ascribed to such terms in the
Lease.
2. LEASE PERIOD. Article 1 of the Lease is amended and restated to include
the following new defined term: "'Lease Period' shall mean each of the first
four ten year periods of the Term and the final eight year, eleven month period
of the Term (assuming in the case of each such period that each prior renewal
contemplated by Section 2.2(a) has become effective)."
3. TERM. The second sentence of Section 2.1(a) of the Lease is amended and
restated to read as follows: "TO HAVE AND TO HOLD unto Lessee, its successors
and assigns, for a term of years (the "Term") commencing on the Commencement
Date and expiring on the tenth anniversary of the Commencement Date, unless the
term of this Agreement shall be renewed as provided in Section 2.2, in which
case the Term shall refer to the term expiring on the twentieth, thirtieth,
fortieth, or forty-eighth-and-eleventh-months anniversary of the Commencement
Date, as the case may be, or, in any case, on such other date upon which this
Agreement expires or is terminated as hereinafter provided (the "Expiration
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Date"). This Agreement supersedes and replaces the Prior Lease, which Prior
Lease shall be of no further force or effect (provided, however, that any
obligation to pay rental under the Prior Lease which remains unpaid at execution
of this Agreement shall survive the termination of the Prior Lease)."
4. RENEWALS.
Section 2.2 of the Lease is amended and restated to read as follows:
"SECTION 2.2. (a) During the first month of each of the 10th, 20th, 30th
and 40th years of this Agreement the Lessor will evaluate the tenancy of Lessee
based on the following criteria to determine if this Agreement may be extended
for an additional ten years (in the case of each of the first three renewals) or
for an additional eight years, eleven months (in the case of the fourth such
renewal):
o timeliness of the Base Rent and all
material Rental payments
o responsiveness of the Lessee to repair
the Premises when put on notice by
Lessor or its successor
o responsiveness of the Lessee to repair
the Premises after notices of violations
from City fire, police or building
departments
o the nature and extent of improvements
made by the Lessee during the Term
o timely performance of all material
conditions, agreements, covenants, terms
and provisions in this Agreement
o impact on the community with advice
solicited from the community in the
evaluation
A copy of the Lessor's evaluation shall be provided by the Lessor to the Lessee
at least seven months before the Term would expire if the next applicable
renewal did not become effective. The Lessee shall have 30 days to comment in
writing on the evaluation. After consideration of the Lessor's evaluation, the
Lessee's comments and the public interest, the Lessor or its agency shall give
notice to the Lessee of the Lessor's decision based on substantial compliance
with the above criteria and, if the Lessee has substantially complied with the
above criteria, shall offer to the Lessee a renewal of this Agreement for an
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additional ten (10) years (in the case of each of the first three renewals) or
for an additional eight years, eleven months (in the case of the fourth such
renewal). Such notice, which may or may not allow for renewal, shall be given at
least four months before the Term would expire if the next applicable renewal
did not become effective. In the event Lessee receives no notice from Lessor as
set forth herein, it shall notify Lessor in writing and request a determination.
Should Lessor not respond within thirty (30) days of its receipt of such notice
from Lessee, the extension shall be deemed to have been offered by Lessor. If
Lessor shall offer renewal, Lessee shall have the option to renew this Agreement
for an additional ten (10) years (in the case of each of the first three
renewals) or an additional eight years, eleven months (in the case of the fourth
such renewal) and the Term of this Agreement shall be extended on all of the
same terms and conditions set forth in this Agreement. The Lessee shall indicate
its acceptance of the renewal of this Agreement by notice given at least 60 days
prior to the Expiration Date.
(b) In the event this Agreement is not renewed as provided above, for
a second ten year period (covering the eleventh through twentieth years of the
Term) for any reason other than by reason of a termination after an Event of
Default, the Lessor, no later than the last day of the Term, shall pay to the
Lessee the depreciated value of the Lessee Improvements approved by the Lessor
and undertaken by the Lessee during the Term, (together with all construction
expenditures incurred by or on behalf of Lessee prior to the Term) calculated by
using the actual construction costs of such Lessee Improvements (together with
such prior construction expenditures) less depreciation determined on a straight
line or, at Lessor's option (if permitted by Federal tax law) an accelerated
depreciation basis, in each case utilizing useful life periods prescribed for
leasehold improvements, at the time such property was placed into service,
pursuant to IRC Section 168(i)(8) (or successor thereto in effect during the
term of the Agreement). In such event, this Agreement at Lessee's option shall
continue on the terms and conditions set forth herein until such payment has
been received by the Lessee, but such payment by Lessor shall be proportionately
reduced, based on the rent that would have been due, by the length of such
continuation and the reduced depreciation. Lessor shall have no obligation under
this Section 2.2(b) if the Term is extended to twenty years pursuant to the
first renewal described in Section 2.2(a)
(c) Although neither Lessee nor Lessor shall have any obligation to
offer or enter into any further renewal of this Agreement beyond the
forty-eighth anniversary of the Commencement Date, it is the intention of Lessee
and Lessor, provided this Agreement is renewed pursuant to each of the four
renewals described in Section 2.2(a) and continues without prior termination, to
negotiate in good faith during the forty-eighth year of the Term a possible
further renewal of this Agreement. All terms of such a renewal, including the
renewal rent, PILOT, the length of the renewal and any additional use of
development rights or obligations, shall be subject to good faith negotiations.
(d) Beginning at the commencement of the second renewal term pursuant
to Section 2.2 (covering the twenty-first through thirtieth years of the Term),
Lessee shall comply with the PILOT obligations described on Appendix A."
5. RENT. Article 3 of the Lease is amended and restated to provide as
follows:
"Section 3.1. (a) (i) Subject to adjustment as provided below, for the
period beginning on the Commencement Date and continuing thereafter throughout
the Term of this Agreement (including any renewal thereof), Lessee shall pay to
Lessor, without notice or demand, base rent ("Base Rent") as provided in this
Section 3.1(a).
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(ii) During each of the first and the second ten year periods of
the Term and beginning on the Commencement Date, Base Rent shall equal the
annual sum of Two Million Four Hundred Twenty Thousand One Hundred Six and
70/100 Dollars ($2,420,106.70), subject to adjustment every two (2) years from
its commencement based upon the Consumer Price Index (CPI), provided that during
the following periods such amount shall be payable as follows: (A) for the
period July 1, 1996, through June 30, 1998, 25% of the amount that would
otherwise be payable as Base Rent shall be payable during such period and 75% of
the amount that would otherwise be payable as Base Rent shall be payable as
provided in Section 3.1(a)(iii) and (B) for the period July 1, 1998 through June
30, 1999, 50% of the amount that would otherwise be payable as Base Rent shall
be payable during such period and 50% of the amount that would otherwise be
payable as Base Rent shall be payable as provided in Section 3.1(a)(iii). All
increases will be compounded in their computation so that the Base Rent for each
Lease Year when an adjustment is made will be determined by calculating the
cumulative percentage increase in the CPI from the first (base) Lease Year
through the applicable subsequent Lease Year, multiplying such compounded,
cumulative percentage increase by the original Base Rent (to wit, $2,420,106.70)
and adding the resulting increase to the original Base Rent.
(iii) Seventy-five percent of the amount that would have
otherwise been payable as Base Rent for the period July 1, 1996 through June 30,
1998 and 50% of the amount that would have otherwise been payable as Base Rent
for the period July 1, 1998 through June 30, 1999 shall be payable in a single
lump sum on July 1, 2001 (the "Base Rent 2001 Amount"), provided that (i) Lessee
may elect instead to pay, in equal monthly installments over the ten-year period
beginning July 1, 2001, the Base Rent 2001 Amount together with an installment
election fee of 5% per annum on the unpaid Base Rent 2001 Amount outstanding
from time to time, and (ii) in such event, any unpaid Base Rent 2001 Amount may
be prepaid at any time in whole or in part without penalty or premium at
Lessee's option. Lessor agrees that the Lessee's obligations in respect of the
Base Rent 2001 Amount shall be absolutely subject, and subordinate in right of
payment, to the obligations of the Lessee in respect of its debt for borrowed
money that is secured by a first mortgage on Lessee's interest in the Premises,
and Lessor agrees to execute such customary subordination agreements to such
effect as the Lessee's lenders may reasonably require from time to time.
(iv) During the period of the Term beginning with the
twenty-first year following the Commencement Date, Base Rent for each year shall
equal the greater of (i) Base Rent for the twentieth year of the Term adjusted
every two (2) years from its commencement based upon the Consumer Price Index
(CPI) (provided that no CPI adjustment shall exceed 3.5% per annum), and (ii)
Base Rent for the twentieth year of the Term plus an amount calculated for any
given such year as (x) 3% of that portion of the Lessee's gross revenues from
the Premises for such year that exceed $60 million but are less than $90
million, plus (y) 3.5% of that portion of the Lessee's gross revenues from the
Premises for such year that exceed $90 million but are less than $100 million,
plus (z) 4% of that portion of the Lessee's gross revenues from the Premises for
such year that exceed $100 million. During each such year, Base Rent shall be
calculated as if clause (i) applied, and within 120 days after the end of each
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year an adjustment amount shall be paid if clause (ii) is applicable. All
increases described in clause (i) will be compounded in their computation so
that the Base Rent for each Lease Year when an adjustment is made will be
determined by calculating the cumulative percentage increase in the CPI (subject
to the applicable 3.5% cap) from the twentieth (base) Lease Year through the
applicable subsequent Lease Year, multiplying such compounded, cumulative
percentage increase by the Base Rent in the twentieth Lease Year and adding the
resulting increase to the Base Rent in the twentieth Lease Year. Lessee shall
deliver to Lessor prior to October 31 of each year a certificate from Lessee's
certified public accountant which shall certify the level of gross revenues from
the Premises for the previous year of the Term. Lessor shall have the right at
its expense and on reasonable notice during regular business hours to conduct
customary verification procedures to verify the amount of Lessee's gross
revenues from the Premises for the period reported on any such certificate. In
addition, so long as Lessee is regularly filing periodic reports with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, Lessee shall provide Lessor with copies of each such periodic
report promptly upon the filing of same with the SEC.
(v) The obligations of Lessee to pay Base Rent as required under
this Agreement shall be guaranteed by Silver Screen Management, Inc., and Silver
Screen Management Services, Inc. (the "Guarantors"), in accordance with Article
38 of this Agreement.
(vi) Notwithstanding the foregoing, until the New York City
Department of Sanitation or other existing governmental entities ("DOS")
completely vacate and surrender possession of the entire Premises, the Base Rent
hereunder shall be reduced to the annual sum of $2,007,046.77 (which sum shall
be subject to adjustment based upon the CPI increases pursuant to Section 3.1)
from the Commencement Date until such date that DOS has vacated and surrendered
possession of the entire Premises to Lessee. At the time DOS has so vacated and
surrendered possession of the Premises to Lessee the Base Rent shall revert to
the sum set forth in (i) above and all adjustments shall be based on that sum
and any subsequent compounded, cumulative percentage increase shall be
calculated as if DOS had never occupied any space at the Premises. Furthermore,
until any portion of the Premises occupied by DOS is thus vacated and vacant
possession of such portion is delivered, Lessee's obligations under this
Agreement (including, without limitation, insurance, indemnification and
maintenance and repair obligations) shall be deemed inapplicable to those
portions of the Premises occupied by DOS.
(b) The Base Rent that is payable for any year shall be payable in
equal monthly installments in advance commencing on the Commencement Date and on
the first Business Day of each month thereafter during the Term, provided that
Lessee shall be entitled to the following credits: (1) to the extent not already
taken as a credit against the rent due under the Prior Lease, a credit in the
amount of Fifty Thousand and 00/100 Dollars ($50,000.00) (representing a sum
previously paid by Lessee during the process of bidding on this Agreement), to
be applied towards the Base Rent for the first month of the Term; (2) commencing
on the earlier of October 1, 1995, or such time as Lessor transfers ownership or
an interest in the Premises to a successor entity, a credit in the amount of
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rents paid under the Prior Lease, but in no event more than $600,000; and (3) a
credit as provided in Section 10.7. The Base Rent shall be paid by wire
transfer, certified check, bank cashier's check or money order payable to the
order of the Department of Transportation, or such other Person as shall be
designated by the Lessor, and drawn on an account at a bank that is a member of
the New York Clearing House Association (or any successor body of similar
function) or a bank which has an office in New York City and which is a member
of any other check clearing association or system in use by money center banks
in New York City and payable in currency which at the time of payment is legal
tender for public or private debts in the United States of America. If paid by
wire transfer, payment shall be transferred to an account designated by Lessor
by notice to Lessee and if paid by check, shall be mailed or delivered to the
office of the Department of Transportation, Revenue Unit, Building 5, Room 422,
State Campus, Albany, NY 12232, Attn: Ms. Elizabeth Booth or at such other place
as Lessor shall direct by notice to Lessee. The Base Rent due for any period of
less than a full Lease Year, and any installment of the Base Rent due for any
period of less than a full month, shall be appropriately apportioned. For any
installment of the Base Rent that is not received by Lessor on its due date,
Lessee shall pay interest at the Involuntary Rate on the overdue amount until
the date of the payment.
(c) Prior to the tenth anniversary of the Commencement Date, Lessee
shall expend or cause to be expended not less than $50 million in connection
with the erection, construction and renovation of Lessee Improvements (including
all expenditures incurred prior to the Term). The actual amount expended for
such purposes during any Lease Period shall constitute additional rent to
Lessor, in addition to and not in lieu of all Rental or other amounts due under
this Agreement, to be deemed to be allocated pro rata over the unexpired period
of the Term that constitutes such Lease Period. All such expenditures made by
Lessee for Lessee Improvements and Equipment shall be made directly by Lessee to
the contractors and vendors involved, and contracts will be let in the name of
Lessee and will be supervised by Lessee. Lessor, or the State Comptroller, shall
have the right to audit such expenditures for a period of six years following
completion of construction.
SECTION 3.2. All amounts required to be paid by Lessee to Lessor pursuant
to this Agreement, including, without limitation, Base Rent, the Base Rent 2001
Amount, any Impositions payable to Lessor and any other payments required to be
made by Lessee to Lessor (collectively, "Rental") shall constitute rent under
this Agreement and shall be payable in the same manner as Base Rent, provided
that the expenditures provided for in Section 3.1(c) shall not be subject to the
requirements of Section 3.1(b) and provided further that (i) Impositions shall
be payable to and in the form required by the entity imposing such Imposition
and (ii) the Base Rent 2001 Amount shall be payable in accordance with Section
3.1(a)(iii). Except as expressly set forth herein, Rental shall be absolutely
net to Lessor without any abatement, deduction, counterclaim, set-off or offset
whatsoever and Lessee shall pay all costs, expenses and charges of every kind
and nature relating to the Premises except as expressly set forth to the
contrary in this Agreement, provided that the foregoing shall not require Lessee
to pay any costs or expenses of Lessor relating to Lessor's consents of
approvals, unless specifically provided for in this Agreement."
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6. CASUALTY.
(a) Section 6.1(e) of the Lease is amended and restated to provide as
follows:
"Notwithstanding the provisions of Section 6.1(a), if all or any material
part of the Improvements is substantially destroyed or damaged in whole or in
part by fire or other casualty during the period between the eighth anniversary
of the Commencement Date and the tenth anniversary of the Commencement Date (or,
if this Agreement is extended pursuant to Section 2.2, during any of the periods
between the eighteenth anniversary of the Commencement Date and the twentieth
anniversary of the Commencement Date, or the twenty-eighth anniversary of the
Commencement Date and the thirtieth anniversary of the Commencement Date, or the
thirty-eighth anniversary of the Commencement Date and the fortieth anniversary
of the Commencement Date, or the forty-sixth anniversary of the Commencement
Date and the forty-eighth-and-eleventh-month anniversary of the Commencement
Date, as the case may be), Lessee shall have the option by notice given to
Lessor within 60 days after such occurrence to terminate this entire Lease at
the end of the calendar month following that in which such notice is given, in
which event all proceeds of insurance collected as a result of such occurrence,
other than any insurance on Lessee's personal property and Trade Fixtures (which
shall be disbursed to Lessee), shall be disbursed as provided in Section 6.9,
except Business Interruption Insurance which shall be disbursed pursuant to
Section 5.2(a)."
(b) Section 6.9(a)(ii)(D) of the Lease is amended and restated to
provide as follows:
"(D) any remainder shall be disbursed to Lessor and Lessee as follows:
if the casualty occurs during the first year of the initial term (or
of the first, second or third renewal terms referred to in Section
2.2) Lessee shall receive 100% of such remainder and Lessor 0%, if the
casualty occurs during the second year of the initial term (or of the
first, second or third renewal terms) Lessee shall receive 90% and
Lessor 10%, if the casualty occurred during the third year of the term
(or of the first, second or third renewal terms) Lessee shall receive
80% and Lessor 20%, and so on with Lessee's share decreasing, and
Lessor's share increasing, in 10% increments each year through the
tenth year of the initial term (or of the first, second or third
renewal terms), such that if the casualty occurred in that year Lessee
shall receive 10% and Lessor 90%, and if the casualty occurs during
any year after the expiration of the third renewal term, Lessee's
share will commence at 100% and will decrease, and Lessor's share will
commence at 0% and will increase, in 11.22% increments each year
during the final eight year and eleven month period comprising the
fourth renewal term."
(c) Section 6.9(b)(ii)(D) of the Lease is amended and restated to
provide as follows:
"(D) any remainder shall be disbursed to Lessor and Lessee as follows:
if the casualty occurs during the first year of the initial term (or
of the first, second or third renewal terms referred to in Section
2.2) Lessee shall receive 100% of such remainder and Lessor 0%, if the
casualty occurs during the second year of the initial term (or of the
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first, second or third renewal terms) Lessee shall receive 90% and
Lessor 10%, if the casualty occurred during the third year of the term
(or of the initial renewal term) Lessee shall receive 80% and Lessor
20%, and so on with Lessee's share decreasing, and Lessor's share
increasing, in 10% increments each year through the tenth year of the
initial terms (or of the first, second or third renewal terms), such
that if the casualty occurred in that year Lessee shall receive 10%
and Lessor 90%, and if the casualty occurs during any year after the
expiration of the third renewal term, Lessee's share will commence at
100% and will decrease, and Lessor's share will commence at 0% and
will increase, in 11.22% increments each year during the final eight
year and eleven month period comprising the fourth renewal term."
7. CONDEMNATION.
(a) Clause (iii) of Section 7.1(c) of the Lease is amended and
restated to provide as follows: "(iii) there shall next be paid pro rata to
Lessee and Lessor so much of the award as shall equal the appraised value of the
Improvements at the time of taking with the ratio of Lessee's payment to
Lessor's payment being based on the ratio of (x) the amount that the Lessee
would have received pursuant to Section 2.2(b) hereof had the date of taking or
condemnation been the last day of the Term, as provided in such Section (to wit,
the end of either the 10th year, 20th year, 30th year, 40th year or 48th year
and eleventh month), to (y) the excess of the amount of the appraised value of
the Improvements at the time of taking over the amount described in the
preceding clause (x), but in no event shall the sums paid to any Institutional
Mortgagee and Lessee pursuant to the preceding clause (ii) and this clause (iii)
be less than the amount provided under ss.ss.2.2(b); and (iv) subject to the
rights of any Institutional Mortgagees, the balance, if any, of the award will
be distributed pro rata between Lessee and Lessor in this same ratio as that set
forth in the preceding clause (iii). If there is any dispute as to the
allocation of the award, such dispute shall be resolved by Dispute Resolution in
accordance with the provisions of Article 32."
(b) Section 7.5(c) of the Lease is amended and restated to provide as
follows:
"(c) if the taking is for a period extending beyond the Term, the
balance of such award or payment remaining after application as
provided in Section 7.5(a) shall be apportioned between Lessor
and Lessee as of the Expiration Date (calculated using the
assumption that this lease will be extended for thirty-eight
years and eleven months as contemplated by Section 2.2), and
Lessee's share thereof, (i) if paid less frequently than in
monthly installments, shall be paid to Depository and applied to
the payment of rental and (ii) if paid monthly or more
frequently, shall be paid to Lessee."
8. APPENDIX A.
Appendix A attached to this Amendment to Lease is added to the Lease as
Appendix A thereto.
9. EFFECTIVENESS OF LEASE.
Except as modified and restated by this Amendment to Lease, the Lease shall
be binding upon Lessor and Lessee in accordance with the terms and
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conditions set forth therein and the parties hereby confirm their respective
obligations to act in accordance with such Lease.
IN WITNESS WHEREOF, the parties have duly executed this Amendment to Lease
as of the date first hereinabove stated.
LESSOR
Approved as to form THE STATE OF NEW YORK, acting by
New York State Attorney General and through the COMMISSIONER OF THE
August 30, 1996 DEPARTMENT OF TRANSPORTATION
/s/Peter Favretto,
Associate Attorney
- ------------------------- By: /s/Joseph H. Boardman
Attorney General --------------------------
Approved: October 22, 1996 Agency Certification (Contract No.
XD1D807)
/s/Douglas E. Boettner
- ------------------------------- By: Signature Illegible
For the State Comptroller Under --------------------------
State Finance Law Section 112 Department of Transportation
August 13, 1996
LESSEE
CHELSEA PIERS L.P.
By: CHELSEA PIERS MANAGEMENT INC.
General Partner
By:/s/Roland Betts
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APPENDIX A
Provided this Agreement is renewed at the end of the twentieth year of the
Term, Lessee shall have the obligation to pay PILOT payments as described in
this Appendix A.
1. As used in this Appendix A, the following terms shall have the indicated
meanings:
"Applicable Payments in Lieu of Taxes" or "Applicable PILOT" for any year
of the Term means the real property taxes which the City would levy on the
Premises for such year of the Term if the Premises were not owned by a
tax-exempt entity, subject to any exemptions or abatements for which the
Premises would be eligible during such year if the Premises were not owned by
such a tax-exempt entity provided that owner has met all requirements for such
exemptions or abatements other than the requirement that the property be owned
by an entity that is not a tax-exempt entity.
"City Cost of Funds" means the actual rate of interest that the City would
incur on new 10-year tax-exempt borrowings at (i) in the case of paragraph
2(ii), the commencement of the twenty-first year of the Term, or (ii) in the
case of paragraph 5(i), the commencement of the twenty-seventh year of the Term.
"General Partner" means Chelsea Piers Management Inc., the general partner
of Lessee.
"Lessee Asset Sale" means the sale, in a single transaction or in a series
of related transactions, of substantially all of the assets of Lessee or the
assignment of a significant portion of Lessee's interest in the Premises other
than to Lessor.
"Lessee Available Cash" means, for any fiscal year of Lessee, the net
income of Lessee before depreciation and taxes for such fiscal year but
excluding (a) amounts dedicated to reserves by the General Partner that are in
excess of reasonable project reserves consistent with past practice and (b) any
cash disbursement to partners, investors or shareholders of Lessee in excess of
(i) reimbursement of actual out-of-pocket expenses to unaffiliated third parties
and (ii) reasonable and customary compensation payable to the General Partner.
"Lessee Refinancing" means a borrowing transaction in which the Lessee
refinances any indebtedness that is secured by a mortgage on the Lessee's
interest in the Premises.
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"PILOT Phase-In Period" means the twenty-first through twenty-sixth years
of the Term.
"Premium Calculation Date" means the first to occur of (i) the date of the
repayment in full of the Phase-In Shortfall (as such term is defined in
paragraph 3 below) and (ii) the date of a Lessee Asset Sale or Lessee
Refinancing, as applicable.
"Premium Period" means the period beginning at the commencement of the
twenty-seventh year of the Term and ending on the last day of the Term.
2.(i) During any period of the Term after the PILOT Phase-In Period, Lessee
shall pay PILOT payments equal to the Applicable PILOT at the times when real
property taxes are customarily paid to the City. During the period of the Term
constituting the PILOT Phase-In Period, Lessee shall make the following payments
in respect of PILOT on the corresponding terms:
Year of Term Percentage of Applicable PILOT
------------ ------------------------------
21st 16.66%
22d 33.33%
23d 50.00%
24th 66.66%
25th 83.33%
26th 100.00%
In addition to the payments provided for above, during each year of the PILOT
Phase-In Period Lessee shall also pay in respect of PILOT an amount equal to 50%
of the amount that would otherwise constitute Lessee Available Cash as of the
end of any fiscal year of Lessee up to a maximum aggregate amount for all
payments in such year of the full Applicable PILOT for such year.
(ii)(A) If during the PILOT Phase-In Period the Lessee completes a
Lessee Refinancing pursuant to which Lessee realizes a net amount (after
transaction costs) that is in excess of the remaining principal balance that is
being refinanced, then Lessee shall apply the portion of the net proceeds of
such Lessee Refinancing (after transaction costs) that exceeds the amount of the
principal balance that is being refinanced first to (x) the payment of the
difference (an "Annual Phase-In-Difference") between the aggregate amount of
PILOT paid for the year of refinancing and for any prior year during the PILOT
Phase-In Period and the aggregate full Applicable PILOT for such years, and (y)
interest (the "Phase-In-Interest") on the amount of each Annual Phase-In
Difference from the respective dates on which each such Annual Phase-In
Difference arose to the date of payment at a rate 200 basis points in excess of
the City Cost of Funds.
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(B) If during the PILOT Phase-In Period Lessee completes a Lessee
Asset Sale and if Lessee realizes a net amount (after transaction costs) that is
in excess of Lessee's first mortgage debt, Lessee shall pay, from such net
amount, any unpaid Annual Phase-In Difference and Phase-In Interest, as
applicable.
(C) If any Lessee Refinancing or Lessee Asset Sale is completed after
the PILOT Phase-In Period and during the Premium Period, Lessee shall have no
liability under this subparagraph 2(ii) and Lessee's obligations shall instead
be governed by the provisions of paragraph 5 below.
3. At the end of the 26th year of the Term, Lessee shall calculate the
difference (the "Phase-In Shortfall") between the aggregate amount of PILOT paid
by Lessee pursuant to this Appendix A during the PILOT Phase-In Period
(including amounts paid pursuant to paragraph 2(ii) in respect of the Annual
Phase-In Difference) and the full Applicable PILOT for the full PILOT Phase-In
Period.
4. Lessee shall pay, in equal monthly installments over the ten-year period
beginning with the twenty-seventh year of the Term and ending with the
thirty-sixth year of the Term (the "Shortfall Payback Period"), the Phase-In
Shortfall together with interest on the unpaid Phase-In Shortfall outstanding
from time to time commencing at the beginning of the Shortfall Payback Period
(i.e., the twenty-seventh year of the Term) at a rate equal to the City Cost of
Funds. Lessee may at its option prepay the Phase-In Shortfall at any time in
whole or in part without penalty or premium (other than the Liquidation Premium
described in paragraph 5 below).
5. (i) If at any time during the Premium Period, Lessee completes a Lessee
Refinancing pursuant to which Lessee realizes a net amount (after transaction
costs) that is in excess of the remaining principal balance that is being
refinanced, then Lessee shall apply the portion of the net proceeds of such
Lessee Refinancing (after transaction costs) that exceeds the amount of the
principal balance that is being refinanced first to (i) the repayment of any
unpaid portion of the Phase-In Shortfall and (ii) in addition, to the payment of
a liquidation premium (the "Liquidation Premium") equal to the difference
between (x) the amount of interest that would have accrued on each component of
the unpaid Phase-In Shortfall had interest been calculated on such amount at a
rate 200 basis points in excess of the City Cost of Funds from the date on which
such component of the Phase-In Shortfall arose up to the Premium Calculation
Date, and (y) any amount of interest actually paid under paragraph 2(ii) as
Phase-In Interest plus the amount of interest actually paid under paragraph 4 on
the Phase-In Shortfall from the beginning of the Shortfall Payback Period up to
the Premium Calculation Date.
(ii) If, at any time during the Premium Period, Lessee completes a
Lessee Asset Sale and if Lessee realizes a net amount (after transaction costs)
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that is in excess of Lessee's first mortgage debt, Lessee shall pay, from such
net amount, any unpaid portion of the Phase-In Shortfall and the Liquidation
Premium, as applicable.
(iii) In no event will Lessee be obligated to pay under this paragraph
5 an aggregate amount in excess of the unpaid Phase-In Shortfall and the
Liquidation Premium associated therewith.
* * *
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