1
Exhibit 10.1
March 11, 1999
COPI Cold Storage L.L.C.,
000 Xxxx Xxxxxx,
Xxxx Xxxxx, XX 00000.
Re: Formation of Partnership for Cold Storage Operations
Dear Sirs:
A. Contemporaneously herewith,
1. Americold Corporation, an Oregon corporation ("Americold"), as
seller and assignor, and AmeriCold Logistics, LLC, a Delaware limited
liability company ("OpCo I"), as purchaser and assignee, have entered
into:
a. an Asset Purchase Agreement and a Master Lease, each dated
as of February 28, 1999 and each with respect to certain assets used
in connection with the cold storage facilities owned by Americold
and/or its affiliates (collectively, the "Americold Facilities"),
and
b. various assignments and assumptions in respect of a master
lease and operating and warehouse agreements affecting the Americold
Facilities.
2. URS Logistics, Inc., a Delaware corporation ("URS"), as seller
and assignor, and the Partnership (as defined herein), as purchaser and
assignee, have entered into:
a. an Asset Purchase Agreement and a Master Lease, each dated
as of the date hereof and each with respect to certain assets used
in connection with the cold storage facilities now owned by URS
and/or its affiliates (collectively, the "URS Facilities"), and
b. various assignments and assumptions in respect of a master
lease and operating and warehouse agreements affecting the URS
Facilities.
2
COPI Cold Storage L.L.C.
March 11, 1999
Page 2
3. VC Omaha Holdings, L.L.C., a Delaware limited liability company
("VC Omaha"), as seller and assignor, and OpCo I, as purchaser and
assignee, have entered into:
a. an Asset Purchase Agreement and a Master Lease, each dated
as of the date hereof and each with respect to certain assets used
in connection with the cold storage facilities now owned by VC Omaha
and/or its affiliates (collectively, the "Freezer Services
Facilities"), and
b. various assignments and assumptions in respect of operating
and warehouse agreements affecting the Freezer Services Facilities.
4. VC Missouri Holdings, L.L.C., a Delaware limited liability
company ("VC Missouri"), as seller and assignor, and Americold Logistics
II, LLC, a Delaware limited liability company ("OpCo II"), as purchaser
and assignee, have entered into:
a. an Asset Purchase Agreement and a Master Lease, each dated
as of the date hereof and each with respect to certain assets used
in connection with the cold storage facilities now owned by VC
Missouri and/or its affiliates (collectively, the "Carmar
Facilities" and, together with the Americold Facilities, URS
Facilities and Freezer Services Facilities, the "Cold Storage
Facilities"), and
b. various assignments and assumptions in respect of operating
and warehouse agreements affecting the Carmar Facilities.
B. It is the intention and agreement of Americold, URS, VC Omaha, VC
Missouri, OpCo I and OpCo II that, from and after the date hereof, the
operations now conducted or hereafter to be conducted at the Cold Storage
Facilities (the "Cold Storage Operations Business") shall be conducted by OpCo I
and OpCo II.
X. XXXX Cold Storage L.L.C., a Delaware limited liability company
("Crescent"), and Vornado Operating L.P., a Delaware limited partnership
("Vornado"), hereby agree to form a partnership to own OpCo I and OpCo II and,
through OpCo I and OpCo II, to conduct the Cold Storage Operations Business on
the following terms. Each of us acknowledges that we have all necessary board
approvals and other
3
COPI Cold Storage L.L.C.
March 11, 1999
Page 3
organizational authorizations to enter into this transaction. Affiliates of
Vornado and Crescent are also partners in Vornado Crescent Portland Partnership,
Vornado Crescent Atlanta Partnership and Vornado Crescent Omaha Partnership, and
the business conducted by such partnerships, this Partnership and any other
partnerships entered into hereafter between affiliates of Vornado and Crescent
in respect of the cold storage business are collectively referred to herein as
the "Overall Cold Storage Business".
D. The agreed upon terms are as follows:
1. Partnership. The name of the partnership is "Vornado Crescent
Logistics Operating Partnership" (the "Partnership"). Concurrently with
the negotiation of definitive partnership agreements for Vornado Crescent
Atlanta Partnership, Vornado Crescent Portland Partnership and Vornado
Crescent Omaha Partnership, the parties (a) shall commence the negotiation
of a definitive partnership agreement evidencing the partnership created
hereby and such other terms as the parties shall mutually agree (a
"definitive partnership agreement") and (b) shall execute and deliver, or
cause to be executed and delivered, as applicable, a definitive
partnership agreement, provided that the parties' failure to execute and
deliver a definitive partnership agreement shall not affect the parties'
agreements as set forth herein, and the Partnership shall continue to be
operated, and the rights and obligations of the parties as partners in the
Partnership shall continue to be governed, pursuant to the terms of this
agreement.
2. Acquisition Vehicle. The Cold Storage Operations Business shall
be acquired and conducted by OpCo I and OpCo II, and the Partnership will
be the sole member of each of OpCo I and OpCo II. OpCo I and OpCo II each
is a limited liability company newly formed for such purpose.
3. Interim Decisions. From and after the date hereof until the
execution and delivery of a definitive partnership agreement, all
decisions with respect to the acquisition of the Cold Storage Operations
Business and all operational decisions with respect thereto shall be made
by Vornado.
4. Ownership. Crescent will hold 40% and Vornado will hold 60% of
the ownership, capital and financial interest in the Partnership. Vornado
will contribute 60% and Crescent will contribute 40% of all costs required
to acquire the assets and businesses in connection with the transactions
described in paragraph A hereof (including all transaction costs).
4
COPI Cold Storage L.L.C.
March 11, 1999
Page 4
5. Management.
a. Each partner will be required to approve the following
actions:
(i) approval of the annual capital and operating budgets
of the Cold Storage Operations Business, any deviations in any
such budget by 10% or more in the aggregate (when taken
together with all other variances in the annual and capital
and operating budgets for all of the Overall Cold Storage
Business), the hiring or firing of a chief executive officer
of the Cold Storage Operations Business and any required
capital contributions by the partners of the Partnership
which, together with the required capital contributions of the
partners of the other partnerships in the Overall Cold Storage
Business, are in excess of $5 million per year,
(ii) other than transactions necessary to preserve
either Vornado's and Crescent's affiliates' REIT status or a
structural reconfiguration to achieve the optimal tax vehicle,
any transactions with an affiliate of any partner, the entry
as lessee into a lease of any capital asset or an amendment to
an existing lease of any capital asset, the sale or
acquisition of any asset (including, without limitation,
equity interests in any entity) by the Cold Storage Operations
Business with a value of more than $12 million, the creation
of any security interest, lien or other encumbrance on any of
the Partnership's assets which treats one partner differently
from another, the making of any loan, advance or extension of
credit to any partner, any guarantee of any direct or indirect
obligation of any partner, and any sale, liquidation or merger
of the Cold Storage Operations Business (other than a
combination of the Cold Storage Operations Business with other
entities or operations that are a part of the Overall Cold
Storage Business); and
(iii) Vornado is hereby authorized to execute and
deliver on behalf of the Partnership any and all documents,
instruments. filings and certificates, and take such other
steps as may be
5
COPI Cold Storage L.L.C.
March 11, 1999
Page 5
reasonably required, in connection with the purchase and
acquisition of the assets described in Paragraph A hereof.
b. Vornado will serve as operating partner of the Partnership,
and Vornado Realty L.P. ("VRLP") shall serve as the operator and
day-to-day liaison to management of the Partnership's subsidiaries.
While it is our intention that the Cold Storage Operations Business
would operate relatively autonomously, any required decisions which
would not fall within paragraph D.5.a of this agreement would be
made by VRLP. VRLP or its designee, in consideration for serving in
the manner described above in this paragraph b., shall receive a fee
per annum equal to (i) with respect to those assets and entities
described in paragraph A.1 hereof, $487,000.00 and (ii) with respect
to any other Cold Storage Operations Business entities and assets
(but not equipment, machinery and the like) acquired subsequent to
the date hereof, 1% of the cost (including for such purposes the
amount of indebtedness on the acquired entity or assets at the time
of acquisition and all expenses incurred in such acquisition) paid
by OpCo I and OpCo II to acquire such entities or assets hereafter
acquired.
6. Term. Except as otherwise agreed by the partners, the Partnership
shall continue for a term through October 30, 2027. The Partnership shall
preserve and maintain its existence and all its rights, privileges and
franchises. Neither partner shall have the right to withdraw from the
Partnership, except as provided herein, nor shall either partner have the
right to cause the dissolution, termination, liquidation or winding-up of
the Partnership without the consent of the remaining partner.
7. Agreement to Act in Good Faith. Each partner shall (and the
definitive partnership agreement shall require each partner to) cooperate
with the other partner thereto to carry out the purpose and intent of the
Partnership, including without limitation the execution and delivery to
the appropriate party of all such further documents as may reasonably be
required in order to carry out the terms of the Partnership. The parties
shall act in a commercially reasonable manner in good faith with one
another in negotiating the terms of a definitive partnership agreement and
all required contracts, agreements or documents, in operating the
Partnership, and in carrying out the terms of this agreement.
6
COPI Cold Storage L.L.C.
March 11, 1999
Page 6
8. Buy/Sell. In the event the partners fail in good faith to reach
an agreement with respect to any matters set forth in paragraph D.5.a
hereof on a timely basis during the period commencing on the date hereof
and expiring October 30, 2000, Vornado shall be entitled to buy Crescent's
interest at cost plus a 10% per annum return (taking into account all
distributions). Thereafter, for the next seven years, upon such failure,
Vornado may set a price at which it commits to either buy Crescent's
investment, or sell its own, which decision to buy or sell shall be made
by Crescent. Thereafter, upon such failure, either party may set a price
at which it commits to either buy the other party's investment, or sell
its own, which decision to buy or sell shall be made by the other party.
In addition, without limiting the requirement, as expressed in paragraph
D.10 hereof, for a party hereto seeking to transfer or otherwise assign
its rights or interests in this agreement or in the Partnership (a
"transferor") to obtain the consent of the other party hereto (the
"non-transferor") to such transfer or assignment, if such consent shall be
given, the non-transferor shall nevertheless have a right of first refusal
with respect to such transfer or assignment, except that, through October
30, 2000, Vornado's purchase price with respect to Crescent's interest
under such right of first refusal shall be cost plus a 10% return (taking
into account all distributions). In all cases under this paragraph D.8,
any purchases or sales must be made in conjunction with the purchase or
sale of the interest of the Crescent or Vornado entity in any other
partnerships in the Overall Cold Storage Business and the parties hereto
agree to purchase or sell their interests hereunder if paragraph D.8 is
triggered under the partnership agreements of any other partnerships in
the Overall Cold Storage Business.
9. Expenses. The parties shall each pay their own fees and expenses,
and those of their agents, advisors, attorneys and accountants, with
respect to the negotiation of this agreement and the formation of the
Partnership, and shall evenly split the expenses incurred on account of
the Partnership in connection with the acquisition of new businesses and
assets (as distinguished from equipment and the like) in connection with
the Cold Storage Operations Business (and with respect to the expenses
incurred by the Partnership in connection with the transactions described
in paragraph A hereof, such expenses shall be split as set forth in
paragraph D.4 above). Vornado estimates that the amount of the expenses
incurred on account of the Partnership (or for which the Partnership will
ultimately be responsible) in connection with the negotiation, preparation
and execution of the agreements and instruments described in paragraph A
hereof and all instruments to be delivered thereunder will not exceed
$1,500,000 (but the
7
COPI Cold Storage L.L.C.
March 11, 1999
Page 7
same is only Vornado's current estimate and shall not serve as a maximum
amount).
10. Assignment. The rights and interest of either party under this
agreement or in the Partnership shall not be assignable or otherwise
transferrable by either party without the other party's consent, except as
a structural reconfiguration to achieve the optimal tax vehicle and except
that Vornado shall have the right to assign its interest hereunder and in
the Partnership to an entity wholly owned directly or indirectly by
Vornado (whereupon all references herein to "Vornado" shall be deemed to
refer to such assignee).
11. Public Announcement. Vornado will act as spokesperson for the
Partnership and will provide notice to Crescent of any proposed press
release or other public announcement, and will work with Crescent on the
content of any such press release or public announcement.
12. Agreement Not to Compete. The parties agree that so long as the
Partnership continues in existence, no partner thereto shall engage in the
cold storage businesses of the type conducted in the Cold Storage
Operations Business except through the Cold Storage Operations Business or
another aspect of the Overall Cold Storage Business.
13. Miscellaneous.
a. This agreement and all transactions hereunder shall be
governed by the laws of the State of Delaware, without regard to the
application of conflict of law principles. The parties hereby
irrevocably submit to the jurisdiction of the courts of the State of
Delaware and to the U.S. District Court for the Southern District of
New York solely in respect of the interpretation and enforcement of
the provisions of this agreement, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that
it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this agreement may not
be enforced in or by such courts, and the parties hereto irrevocably
agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State court or
Federal District Court for the
8
COPI Cold Storage L.L.C.
March 11, 1999
Page 0
Xxxxxxxx Xxxxxxxx xx Xxx Xxxx. The parties hereby consent to and
grant any such court jurisdiction over the person of such parties
and over the subject matter of such dispute.
b. This agreement, together with the other partnership
agreements between the parties and their affiliates relating to the
Overall Cold Storage Business and any other instruments being
entered into by the parties concurrently herewith, constitutes the
entire agreement between the parties with respect to the subject
matter herein; provided, however, that this agreement contemplates
the negotiation and execution of a definitive partnership agreement
after the execution of this agreement as provided herein, which also
shall be binding on the parties thereto following execution thereof.
c. No amendment or waiver of any provision of this agreement
shall be effective unless in writing and signed by the party or
parties against whom enforcement is sought. No failure or delay by
any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
d. The rule that an agreement should be construed against the
party drafting it shall not apply to this agreement because both
parties have played a significant role in negotiating and drafting
this agreement.
e. This agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
f. Signatures may be transmitted by facsimile and will be
accepted and considered delivered as if an original.
9
COPI Cold Storage L.L.C.
March 11, 1999
Page 9
VORNADO OPERATING L.P.
By: Vornado Operating Company, its general
partner
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President -- Chief Financial
Officer
COPI COLD STORAGE L.L.C.
By: Crescent Operating, Inc., its sole member
By: /s/ Xxxx Xxxxxxx
-------------------------------------------
Name: Xxxx Xxxxxxx
Title: EVP & COO
