Contract
Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Redacted portions are indicated with the notation “[**]”.
Exhibit 10.2
February 28, 2019
Transform SR Operations LLC
Transform KM Operations LLC
c/o ESL Investments, Inc.
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxx Xxxxxxx, XX 00000
Transform KM Operations LLC
c/o ESL Investments, Inc.
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxx Xxxxxxx, XX 00000
Ladies and Gentlemen:
Reference is made to that certain Master Lease of even date herewith (the “Master Lease”) by and among Seritage SRC Finance LLC and Seritage KMT Finance LLC (together with their successors and assigns, collectively, jointly and severally, “Landlord”), and Transform SR Operations LLC (“Sears Tenant”) and
Transform KM Operations LLC (“Kmart Tenant”) (together with their permitted successors and assigns, collectively, jointly and severally, “Tenant”).
The parties hereby acknowledge and agree that the following Schedules which are
attached to and described in this letter (“Side Letter”) shall constitute the respective Schedules referred to in the Master Lease, and each of such
Schedules is hereby, and for all purposes shall be deemed to have been, incorporated as a part of the Master Lease as if fully set forth therein. Capitalized terms not otherwise defined herein shall have the meaning as set forth in the Master
Lease. The respective Schedules are:
|
1.
|
Schedule 1.7(c):
|
Preliminary Recapture Plans that the parties to the Master Lease have agreed upon.
|
|
2.
|
Schedule 2:
|
Base Rent Adjustment.
|
|
3.
|
Schedule 4.5:
|
Installment Expenses.
|
|
4.
|
Schedule 20.3:
|
Initial Environmental Remediation
|
The parties acknowledge and agree that they have endeavored to provide accurate information in Schedule 2, Schedule 4.5
and Schedule 20.3 but that such schedules and, as applicable, corresponding information in the Master Lease based on such schedules shall be subject to revision as mutually agreed by the parties if the parties reasonably and in good faith determine
that such schedules did not reflect accurate information as to the matters referenced therein.
This Side Letter shall be governed by, and construed and enforced in accordance with, the laws of the
State of New York.
If the above-referenced terms are acceptable to you, please counter execute where provided for below
and return the same to the undersigned. The fully executed Side Letter will also serve to supplement the Master Lease to add the information included on the Schedules described herein, and as so supplemented, the Master Lease shall continue in full
force and effect on all of the same terms and conditions. For purposes hereof, transmission by email will be binding as if original.
[signature page follows]
IN
WITNESS WHEREOF, this Side Letter has been executed and delivered by the parties set forth above.
| Tenant: | ||||
|
|
TRANSFORM SR OPERATIONS LLC
|
|
||
|
|
|
|
||
|
|
By:
|
/s/ Xxxxxx Xxxxxxxx |
|
|
|
|
Name:
|
Xxxxxx Xxxxxxxx |
|
|
|
|
Title:
|
Authorized Signatory |
|
|
|
|
TRANSFORM KM OPERATIONS LLC
|
|
||
|
|
|
|
||
|
|
By:
|
/s/ Xxxxxx Xxxxxxxx |
|
|
|
|
Name:
|
Xxxxxx Xxxxxxxx |
|
|
|
|
Title:
|
Authorized Signatory |
|
|
Transform — RE — Seritage Master Lease Side Letter
| Landlord: | ||||
|
|
SERITAGE KMT
FINANCE LLC
|
|
||
|
|
|
|
||
|
|
By:
|
/s/ Xxxxxxxx Xxxxxx |
|
|
|
|
Name:
|
Xxxxxxxx Xxxxxx |
|
|
|
|
Title:
|
President |
|
|
|
|
SERITAGE SRC
FINANCE LLC
|
|
||
|
|
|
|
||
|
|
By:
|
/s/ Xxxxxxxx Xxxxxx |
|
|
|
|
Name:
|
Xxxxxxxx Xxxxxx |
|
|
|
|
Title:
|
President |
|
|
Transform — RE — Seritage Master Lease Side Letter
SCHEDULE 1.7(c)
PRELIMINARY
RECAPTURE PLANS
|
[**]
|
SCHEDULE 2
BASE RENT ADJUSTMENT
|
|
Site
|
Type
|
City
|
State
|
SHC SF
|
SHC Base Rent Adjustment
|
EBITDA Loss
|
Lands' End SF
|
Lands' End Rent
|
Total SHC and Lands' End SF
|
Total Base Rent
Adjustment Plus Lands' End Rent |
Occurance of
Multi-Tenancy Occupancy Date (Y/N)
|
Total SF
(including all third-party leases)
|
Tenant's
Proportionate Share |
Updated Proportionate Share
|
|||
|
1
|
1206
|
Sears
|
N Little Rock
|
AR
|
160,492
|
[**]
|
-
|
[**]
|
Y
|
185,718
|
[**]
|
|||||||
|
2
|
2218
|
Sears
|
Prescott
|
AZ
|
102,338
|
-
|
N
|
102,338
|
||||||||||
|
3
|
7653
|
K-Mart
|
Big Bear Lake
|
CA
|
69,288
|
-
|
Y
|
80,008
|
||||||||||
|
4
|
1358
|
Sears
|
Chula Vista
|
CA
|
250,092
|
-
|
N
|
250,092
|
||||||||||
|
5
|
1208
|
Sears
|
Fresno
|
CA
|
217,566
|
-
|
N
|
217,566
|
||||||||||
|
6
|
7390
|
K-Mart
|
McKinleyville
|
CA
|
94,774
|
-
|
N
|
94,774
|
||||||||||
|
7
|
1748
|
Sears
|
Montclair
|
CA
|
174,675
|
-
|
N
|
174,675
|
||||||||||
|
8
|
1868
|
Sears
|
Moreno Valley
|
CA
|
169,371
|
-
|
N
|
169,371
|
||||||||||
|
9
|
1168
|
Sears
|
North Hollywood
|
CA
|
86,954
|
-
|
Y
|
150,982
|
||||||||||
|
10
|
1968
|
Sears
|
Palm Desert
|
CA
|
136,464
|
-
|
N
|
136,464
|
||||||||||
|
11
|
3678
|
K-Mart
|
Ramona
|
CA
|
86,988
|
-
|
Y
|
107,470
|
||||||||||
|
12
|
1298
|
Sears
|
Riverside
|
CA
|
202,030
|
-
|
Y
|
214,230
|
||||||||||
|
13
|
1688
|
Xxxxx
|
Xxxxxxx
|
CA
|
132,974
|
-
|
N
|
132,974
|
||||||||||
|
14
|
1398
|
Sears
|
San Bernardino
|
CA
|
264,682
|
-
|
N
|
264,682
|
||||||||||
|
15
|
1478
|
Sears
|
San Bruno
|
CA
|
267,896
|
8,698
|
N
|
276,594
|
||||||||||
|
16
|
1488
|
Sears
|
San Jose
|
CA
|
262,491
|
-
|
N
|
262,491
|
||||||||||
|
17
|
2088
|
Sears
|
Santa Maria
|
CA
|
108,596
|
-
|
N
|
108,596
|
||||||||||
|
18
|
7639
|
K-Mart
|
Santa Paula
|
CA
|
71,257
|
-
|
N
|
71,257
|
||||||||||
|
19
|
1108
|
Sears
|
Temecula
|
CA
|
65,184
|
-
|
Y
|
115,636
|
||||||||||
|
20
|
1148
|
Xxxxx
|
Xxxxxxx
|
CA
|
171,874
|
6,691
|
N
|
178,565
|
||||||||||
|
21
|
1189
|
Sears
|
West Covina
|
CA
|
142,000
|
-
|
N
|
142,000
|
||||||||||
|
22
|
7725
|
K-Mart
|
Rehoboth Beach
|
DE
|
65,150
|
-
|
Y
|
126,908
|
||||||||||
|
23
|
7321
|
K-Mart
|
Bradenton
|
FL
|
82,938
|
-
|
N
|
82,938
|
||||||||||
|
24
|
1495
|
Sears
|
Ft. Xxxxx
|
FL
|
146,792
|
-
|
N
|
146,792
|
||||||||||
|
25
|
0000
|
Xxxxx
|
Xxxxxxx
|
XX
|
184,442
|
-
|
Y
|
199,453
|
||||||||||
|
26
|
1365
|
Sears
|
Miami
|
FL
|
170,122
|
-
|
N
|
170,122
|
||||||||||
|
27
|
4355
|
K-Mart
|
St. Petersburg
|
FL
|
120,631
|
-
|
N
|
120,631
|
||||||||||
|
28
|
9220
|
K-Mart
|
Algona
|
IA
|
99,260
|
-
|
N
|
99,260
|
||||||||||
|
29
|
7767
|
K-Mart
|
Xxxxxxx City
|
IA
|
96,569
|
-
|
N
|
96,569
|
||||||||||
|
30
|
1212
|
Sears
|
North Riverside
|
IL
|
119,586
|
-
|
Y
|
203,001
|
||||||||||
|
31
|
1053
|
Sears
|
Saugus
|
MA
|
139,402
|
5,565
|
Y
|
210,427
|
||||||||||
|
32
|
7713
|
K-Mart
|
Edgewater
|
MD
|
117,162
|
-
|
N
|
117,162
|
||||||||||
|
33
|
4353
|
K-Mart
|
Minot
|
ND
|
108,110
|
-
|
Y
|
110,413
|
||||||||||
|
34
|
1313
|
Sears
|
Nashua
|
NH
|
167,082
|
-
|
N
|
167,082
|
||||||||||
|
35
|
1668
|
Sears
|
Las Vegas
|
NV
|
66,135
|
-
|
Y
|
150,793
|
||||||||||
|
36
|
7676
|
K-Mart
|
Xxxxxx
|
NY
|
94,428
|
-
|
N
|
94,428
|
||||||||||
|
37
|
1410
|
Sears
|
Canton
|
OH
|
210,384
|
8,979
|
N
|
219,363
|
||||||||||
|
38
|
7477
|
K-Mart
|
Marietta
|
OH
|
87,543
|
-
|
N
|
87,543
|
||||||||||
|
39
|
3243
|
K-Mart
|
North Canton
|
OH
|
84,180
|
-
|
Y
|
87,114
|
||||||||||
|
40
|
3142
|
K-Mart
|
Tallmadge
|
OH
|
84,180
|
-
|
N
|
84,180
|
||||||||||
|
41
|
3911
|
K-Mart
|
Columbia
|
PA
|
86,721
|
-
|
N
|
86,721
|
||||||||||
|
42
|
7699
|
K-Mart
|
Lebanon
|
PA
|
117,162
|
-
|
N
|
117,162
|
||||||||||
|
43
|
3954
|
K-Mart
|
Walnutport
|
PA
|
121,159
|
-
|
N
|
121,159
|
||||||||||
|
44
|
7788
|
K-Mart
|
Bayamon
|
PR
|
114,600
|
-
|
Y
|
115,191
|
||||||||||
|
45
|
1085
|
Sears
|
Caguas
|
PR
|
138,686
|
-
|
N
|
138,686
|
||||||||||
|
46
|
1925
|
Sears
|
Carolina
|
PR
|
198,009
|
-
|
N
|
198,009
|
||||||||||
|
47
|
7768
|
K-Mart
|
Guaynabo
|
PR
|
57,697
|
-
|
Y
|
213,624
|
||||||||||
|
48
|
3882
|
K-Mart
|
Mayaguez
|
PR
|
118,242
|
-
|
N
|
118,242
|
||||||||||
|
49
|
7741
|
K-Mart
|
Xxxxx
|
XX
|
126,887
|
-
|
N
|
126,887
|
||||||||||
|
50
|
1127
|
Sears
|
Shepherd
|
TX
|
201,700
|
-
|
N
|
201,700
|
||||||||||
|
51
|
1284
|
Sears
|
Alexandria
|
VA
|
252,504
|
9,608
|
N
|
262,112
|
||||||||||
|
|
|
|
Total
|
|
7,015,449
|
32,594,993
|
(11,979,910)
|
39,541
|
375,915
|
7,054,990
|
32,970,908
|
|
7,710,155
|
|
|
|||
SCHEDULE
4.5
INSTALLMENT
EXPENSES
|
Site
|
Type
|
City
|
State
|
Tenant's
Proportionate Share |
Updated
Tenant's Proportionate Share |
Estimated CAM
|
Estimated Taxes
|
Estimated
Insurance |
Estimated
Utilities |
Other
Operating Expenses |
Total |
|
|
1
|
1206
|
Sears
|
N Little Rock
|
AR
|
[**]
|
|||||||
|
2
|
2218
|
Sears
|
Prescott
|
AZ
|
||||||||
|
3
|
7653
|
K-Mart
|
Big Bear Lake
|
CA
|
||||||||
|
4
|
1358
|
Sears
|
Chula Vista
|
CA
|
||||||||
|
5
|
1208
|
Sears
|
Fresno
|
CA
|
||||||||
|
6
|
7390
|
K-Mart
|
McKinleyville
|
CA
|
||||||||
|
7
|
1748
|
Sears
|
Montclair
|
CA
|
||||||||
|
8
|
1868
|
Sears
|
Moreno Valley
|
CA
|
||||||||
|
9
|
1168
|
Sears
|
North Hollywood
|
CA
|
||||||||
|
10
|
1968
|
Sears
|
Palm Desert
|
CA
|
||||||||
|
11
|
3678
|
K-Mart
|
Ramona
|
CA
|
||||||||
|
12
|
1298
|
Sears
|
Riverside
|
CA
|
||||||||
|
13
|
1688
|
Sears
|
Salinas
|
CA
|
||||||||
|
14
|
1398
|
Sears
|
San Bernardino
|
CA
|
||||||||
|
15
|
1478
|
Sears
|
San Bruno
|
CA
|
||||||||
|
16
|
1488
|
Sears
|
San Jose
|
CA
|
||||||||
|
17
|
2088
|
Sears
|
Santa Maria
|
CA
|
||||||||
|
18
|
7639
|
K-Mart
|
Santa Paula
|
CA
|
||||||||
|
19
|
1108
|
Sears
|
Temecula
|
CA
|
||||||||
|
20
|
1148
|
Xxxxx
|
Xxxxxxx
|
CA
|
||||||||
|
21
|
1189
|
Sears
|
West Covina
|
CA
|
||||||||
|
22
|
7725
|
K-Mart
|
Rehoboth Beach
|
DE
|
||||||||
|
23
|
7321
|
K-Mart
|
Bradenton
|
FL
|
||||||||
|
24
|
1495
|
Sears
|
Ft. Xxxxx
|
FL
|
||||||||
|
25
|
0000
|
Xxxxx
|
Xxxxxxx
|
XX
|
||||||||
|
26
|
1365
|
Sears
|
Miami
|
FL
|
||||||||
|
27
|
4355
|
K-Mart
|
St. Petersburg
|
FL
|
||||||||
|
28
|
9220
|
K-Mart
|
Algona
|
IA
|
||||||||
|
29
|
7767
|
K-Mart
|
Xxxxxxx City
|
IA
|
||||||||
|
00
|
0000
|
Xxxxx
|
Xxxxx Xxxxxxxxx
|
XX
|
||||||||
|
31
|
1053
|
Sears
|
Saugus
|
MA
|
||||||||
|
32
|
7713
|
K-Mart
|
Edgewater
|
MD
|
||||||||
|
33
|
4353
|
K-Mart
|
Minot
|
ND
|
||||||||
|
34
|
1313
|
Sears
|
Nashua
|
NH
|
||||||||
|
35
|
1668
|
Sears
|
Las Vegas
|
NV
|
||||||||
|
36
|
7676
|
K-Mart
|
Xxxxxx
|
NY
|
||||||||
|
37
|
1410
|
Sears
|
Canton
|
OH
|
||||||||
|
38
|
7477
|
K-Mart
|
Xxxxxxxx
|
XX
|
||||||||
|
39
|
3243
|
K-Mart
|
North Canton
|
OH
|
||||||||
|
40
|
3142
|
K-Mart
|
Tallmadge
|
OH
|
||||||||
|
41
|
3911
|
K-Mart
|
Columbia
|
PA
|
||||||||
|
42
|
7699
|
K-Mart
|
Lebanon
|
PA
|
||||||||
|
43
|
3954
|
K-Mart
|
Walnutport
|
PA
|
||||||||
|
44
|
7788
|
K-Mart
|
Bayamon
|
PR
|
||||||||
|
45
|
1085
|
Sears
|
Caguas
|
PR
|
||||||||
|
46
|
1925
|
Sears
|
Carolina
|
PR
|
||||||||
|
47
|
7768
|
K-Mart
|
Guaynabo
|
PR
|
||||||||
|
48
|
3882
|
K-Mart
|
Mayaguez
|
PR
|
||||||||
|
49
|
7741
|
K-Mart
|
Xxxxx
|
XX
|
||||||||
|
50
|
1127
|
Sears
|
Shepherd
|
TX
|
||||||||
|
51
|
1284
|
Sears
|
Alexandria
|
VA
|
||||||||
|
Total
|
||||||||||||
SCHEDULE 20.3
REIT ENVIRONMENTAL COST
ESTIMATION SUMMARY
Schedule 20.3
Environmental Cost Estimation
Summary
|
SEARS
or KMART UNIT NUMBER |
City
|
State
|
Firm
Performing Due Diligence |
Phase I
Complet ed (Y/N) |
Phase II
Complet ed (Y/N) |
Notes and Conditions of
Environmental Issues Identified (For more detail, refer to the Phase I and II Environmental Site Assessment Reports for each location) |
Anticipated Scope of Work to Address Environmental Issues
|
Estimated Date
to Begin Remedial Efforts (To begin Within either 3 or 6 months Post Closing*) |
Projected
Duration in Months of Remedial Efforts Based on Data Compiled to Date (Duration May Vary Pending Approved SOW) |
Potential Delays or other
Assumptions1,2,3,4
|
Current
Escrow Balance |
|
1053
|
Saugus
|
MA
|
BBJ Group
|
YES
|
YES
|
[**]
|
3 months
|
12
|
[**]
|
||
|
0000
|
Xxxxxxxx
|
XX
|
Terracon
|
YES
|
YES
|
3 months
|
6
|
||||
|
0000
|
Xxxxx Xxxxxxxxx
|
XX
|
Terracon
|
YES
|
YES
|
3 months
|
6
|
||||
|
1284
|
Alexandria
|
VA
|
BBJ Group
|
YES
|
YES
|
6 months
|
48
|
||||
Schedule X Environmental Cost Estimation Summary - 1
|
SEARS
or KMART UNIT NUMBER |
City
|
State
|
Firm
Performing Due Diligence |
Phase I
Complet ed (Y/N) |
Phase II
Complet ed (Y/N) |
Notes and Conditions of
Environmental Issues Identified (For more detail, refer to the Phase I and II Environmental Site Assessment Reports for each location) |
Anticipated Scope of Work to Address Environmental Issues
|
Estimated Date
to Begin Remedial Efforts (To begin Within either 3 or 6 months Post Closing*) |
Projected
Duration in Months of Remedial Efforts Based on Data Compiled to Date (Duration May Vary Pending Approved SOW) |
Potential Delays or other
Assumptions1,2,3,4
|
Current
Escrow Balance |
|
0000
|
Xxxxxxx
|
XX
|
AECOM
|
YES
|
YES
|
[**]
|
6 months
|
48
|
[**]
|
||
|
0000
|
Xxxxx/Xxxxxxxxx
|
XX
|
AECOM
|
YES
|
YES
|
6 months
|
39
|
||||
|
0000
|
Xxx Xxxxx
|
XX
|
Terracon
|
YES
|
YES
|
3 months
|
100
|
||||
|
0000
|
Xxx Xxxx
|
XX
|
Terracon
|
YES
|
YES
|
6 months
|
40
|
||||
|
1495
|
Ft Xxxxx
|
FL
|
AECOM
|
YES
|
YES
|
6 months
|
35
|
||||
Schedule X Environmental Cost Estimation Summary - 2
|
SEARS
or KMART UNIT NUMBER |
City
|
State
|
Firm
Performing Due Diligence |
Phase I
Complet ed (Y/N) |
Phase II
Complet ed (Y/N) |
Notes and Conditions of
Environmental Issues Identified (For more detail, refer to the Phase I and II Environmental Site Assessment Reports for each location) |
Anticipated Scope of Work to Address Environmental Issues
|
Estimated Date
to Begin Remedial Efforts (To begin Within either 3 or 6 months Post Closing*) |
Projected
Duration in Months of Remedial Efforts Based on Data Compiled to Date (Duration May Vary Pending Approved SOW) |
Potential Delays or other
Assumptions1,2,3,4
|
Current
Escrow Balance |
|
4353
|
MINOT
|
ND
|
Terracon
|
YES
|
YES
|
[**]
|
6 months
|
35
|
[**]
|
||
|
7321
|
BRADENTOWN
|
FL
|
AECOM
|
YES
|
YES
|
6 months
|
16
|
||||
|
$2,667,927.55
|
|||||||||||
Schedule X Environmental Cost Estimation Summary - 4
Notes:
| 1. |
Regulator Response: To complete the closure process of a reported spill, closure documentation will be submitted to the respective state regulator. Regulator
response to reporting and correspondence can vary (sometimes up to 12 months). A delayed response from the respective regulator may delay to closure of a site beyond the anticipated closure date provided above.
|
| 2 |
Complex Groundwater (GW) Regulation: State environmental regulations can vary from one state to the other; however, it is typical for cleanup guidance of
groundwater impacts to be lengthy and more stringent.
|
| 3 |
Potential Comingling: Two more RECs are identified as having subsurface impacts, as such, the impacts may have comingled making delineation efforts
morecomplex.
|
| 4 |
Source Identification: COCs identified at the REC are disconnected from the one another. i.e., solvents are not used in underground hydraulic lift components;
therefore, if solvents are found in the immediate vicinity of an XXX, it is possible for the true source of impacts to be undefined.
|
| 5 |
Remediation costs represent 110% of the costs referenced in the Recommendations Letters.
|
| – | The schedule provided above is a summary of findings based on the Phase I and II Environmental Site Assessments, which incorporates all of the reports by reference, and nothing in the schedule supersedes the findings in the reports. |
| – | Costs to clean up were triggered when any COC was detected above applicable State remediation/screening levels based on site use. |
| – | The scope of work summarized above assumes that spill reporting is required for each exceedance in every state. However, reporting obligations will be re-evaluated during the SOW preparation at the onset of each project. Should reporting be deemed unnecessary, remediation will continue without the oversight of a State regulator. |
* Closing of the prior Master Lease
Abbreviations:
|
ASTM
|
American Society for Testing and Materials
|
|
COC
|
constituent of concern
|
|
LUST
|
Leaking Underground Storage Tank
|
|
NFA
|
No Further Action
|
|
ND
|
Constituent not detected in laboratoryanalysis
|
|
OWS
|
Oil Water Separator
|
|
PCB
|
Polychlorinated Biphenyls
|
|
PCE
|
tetrachloroethelene
|
|
REC
|
Recognized Environmental Condition
|
|
SL
|
Screening levels
|
|
SRP
|
Site Remediation Program
|
|
TCE
|
Trichloroethene
|
|
TPH
|
Total Petroleum hydrocarbons
|
|
XXX
|
Underground Hydraulic Lift
|
|
UST
|
Underground Storage Tank
|
|
VOC
|
Volatile organic compounds
|
Schedule X Environmental Cost Estimation Summary - 5
